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What Is An SMS Payment & How Does Text To Pay Work?

SMS payments are becoming increasingly popular as an alternative payment method. This list of viable providers includes Paysley, Relay, Podium, and others.

    Chris Motola
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  • Updated on:
Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

We all know and love our Short Messaging Service (SMS) — better known simply as the text message. But did you know that you can start taking SMS payments for your business? And that it is relatively easy to get started?

In the United States, we are just now warming up to the idea of sending and receiving payments by text, but businesses throughout the world have already adopted SMS payments for everything from mass transit tickets to lattes.

While Americans are less likely to pay by text for everyday purchases, text payments are still an undeniably growing trend. You may already be familiar with payments by text when it comes to charitable donations. Now, home service providers (e.g., AT&T) are also starting to offer SMS payments for their customers.

Text payments offer potential growth for many other types of businesses, too. Pizza shops, salons, or any business that has ‘regulars’ could benefit from text payments. SMS payment services are probably not for everyone, however, so let’s look at how a text to pay service works and if it’s right for your business.

Learn More About Our Top Picks

CompanyBest ForNext StepsBest For
Paysley

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Best for businesses that do in-person sales.
Best for businesses that do in-person sales.

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Read More

Relay

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Best for low-risk eCommerce businesses.
Best for low-risk eCommerce businesses.

Visit Site

Read More

Podium Payments

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Best for large businesses looking for a marketing platform.
Best for large businesses looking for a marketing platform.

Visit Site

Read More

Everyware

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Best for businesses looking for a simple SMS payment system.
Best for businesses looking for a simple SMS payment system.

Visit Site

Read More

PaymentSavvy

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Best for high-risk businesses.
Best for high-risk businesses.

Visit Site

Read More

Read more below to learn why we chose these options.

What Is An SMS Payment?

An SMS payment uses a text message service to invoice a customer. The customer can then complete the purchase by texting a response or clicking on a link, which sends the transaction information to the merchant’s payment processor.

How Does Text To Pay Work?

When it comes to the nuts and bolts of how SMS payments work, it’s pretty simple, really. While there may be some variations with each company that offers text messaging payment services, you can generally expect the following elements when it comes time to pay:

  1. A business sends a text to their customer’s phone number, or the customer texts a shortcode number to the business to initiate the sale.
  2. After communicating what product or service the customer wishes to purchase, the business sends the customer a link to a secure, mobile-friendly payment form.
  3. The customer enters their payment information and can typically approve saving the card on file for recurring payments or a future purchase.
  4. The customer may get a unique code to complete the purchase.

The customer may also get another verification text from the payment processing company to confirm their intent to buy. As stated above, the exact process may vary by company, but you can expect a similar procedure to complete the sale.

Mobile Carriers VS Payment Processors For Text Payments

Many people associate text message payments with charity donations (often, the amount is added to their phone bill). What is lesser known is that phone carriers generally only allow organizations to accept donated amounts in $5 or $10 increments. By setting up these limits, phone carriers reduce their own risk from non-paying customers.

While the phone carrier setup can work great for flash-giving campaigns and allow an organization to avoid paying some payment processing fees, it isn’t a viable solution for businesses. Read our guide on NFC payments to learn more on this topic.

Enter companies such as Relay, Pagato, and Sonar. These companies, and those like them, support SMS payments by integrating their messaging services with secure, PCI-compliant payment processing.

5 Text To Pay Services For Small Businesses

To get started accepting SMS payments, you’ll need to choose the company with the services that fit your needs best. There are a number of payment gateways that offer some form of text to payment functionality as well as services that focus on SMS payments. We’ve gathered a few of the more interesting services below.

1. Paysley

Paysley



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Best for businesses that do in-person sales.

Paysley, like many text payment services, heavily touts its ability to provide contactless payments. Merchants can use Paysley to invoice a customer through text or email or as a POS alternative using a scan-to-pay QR code. In the latter case, you’d display the QR code to your customers. They scan it with their smartphone and then confirm the transaction.

Paysley charges a number of fees for its service:

A Monthly Fee

  • Primary is $15/month and includes invoicing, email transactions, text transactions, and virtual terminal
  • Plus is $49/month and adds additional user accounts, POS Link, recurring billing, and analytics
  • Pro is $99/month and adds campaigns, auction support, bulk payment requests, and personalized training

Transaction Fees (Same For All Plans)

  • Email Invoicing & Payment Requests: $0.02
  • Text Invoicing & Payment Requests: $0.03/SMS, $0.05/MMS
  • All Transactions: $0.20

Paysley won’t be an ideal fit for every business, but businesses looking for an alternative way to invoice or looking to ditch traditional POS terminals should give it a look. (Read our guide on accepting online invoice payments for more information.)

Pros

  • Comprehensive contactless payment service
  • Potential POS replacement
  • Developer tools available
  • Transparent pricing

Cons

  • You’ll need a separate payment processing service
  • Monthly fee
  • Intriguing features (POS Link, auction, bulk payments) are only available at higher tiers

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2. Relay (formerly Rhombus)

Relay



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Best for low-risk eCommerce businesses.

Relay, formerly Rhombus, is one of the older text-to-pay services and began as a Stripe integration. It still uses Stripe to process credit and debit card transactions, so you’ll want to be sure Stripe is an appropriate payment processor for your business. Relay goes a bit beyond typical pay-to-text features by combining it with elements of marketing and customer service that it calls conversations.

Rather than charge an additional fee per transaction, Relay provides businesses a certain number of “closed tickets” and SMS transactions per month based on their plan:

  • 250 Tickets + 1,000 SMS: $50/month
  • 1,000 Tickets + 3,000 SMS: $150/month
  • 5,000 Tickets + 7,000 SMS: $350/month
  • Unlimited Tickets + 15,000 SMS + Premium Support: $700/month

A ticket is considered closed when the conversation is complete. For credit and debit card payments, you’ll be paying Stripe’s standard 2.9% + $0.30 per successful transaction fee.

Pros

  • Versatile text-based service
  • Doesn’t require a separate merchant account
  • Strong marketing tools
  • Transparent pricing

Cons

  • Monthly fee
  • Can be expensive
  • Not suitable for high-risk businesses

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3. Podium Payments

Podium Payments



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Best for large businesses looking for a marketing platform.

Podium is a reputation management platform for businesses that combines chat features, marketing campaigns, automated responses, and review monitoring. It can also process ACH payments and debit/credit card transactions. Most of these features, including the payments, are conducted via text messaging.

Podium is a fairly heavy platform best suited for larger businesses. Podium’s pricing is custom to each client, but based on customer reviews, you can expect it to fall, in most cases, somewhere between $350 and $450. That’s a lot to ask of most small businesses. The good news is there’s a free version of Podium you can try out to see if the platform is compatible with your business model. It doesn’t include Podium Payments, however.

Pros

  • Versatile text-based service
  • Strong marketing tools
  • Suitable for larger businesses
  • Free version available

Cons

  • Not suited for smaller businesses
  • Can be expensive
  • Opaque pricing/reports of short-term contracts
  • Mixed public reputation

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4. Everyware

Everyware



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Best for businesses looking for a simple SMS payment system.

Everyware, which we did a spotlight on recently to describe what the company does, is a relatively new text-to-pay service that’s made strategic partnerships with Visa’s Cybersource and Authorize.net services. The partnership pairs Visa’s first-party payment gateway credit card features with Everywear’s SMB-based payment abilities.

Authorize.net serves as the payment gateway for many merchant services, making Everywear one of the easier SMB payment services to integrate with the existing accounts of many small businesses. You can also directly sign up for the service. Unfortunately, like many SMB-based payment companies, Everywear does not divulge its pricing upfront.

Pros

  • Integrates with popular payment gateways
  • Free trial available
  • API available
  • HIPAA compliant

Cons

  • Opaque pricing
  • Limited feature set

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5. PaymentSavvy

PaymentSavvy



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Best for high-risk businesses.

High-risk merchants looking for a merchant account provider that can also offer text to pay may want to consider PaymentSavvy. Almost more of a payment service buffet than a single platform, PaymentSavvy provides a number of alternative payment arrangements that you can sign up for individually or as part of a more traditional basket of payment options.

PaymentSavvy’s SMS service allows your customers to opt into either a full pay-by-text program or just receive payment reminders. If the customer chooses the former, the customer signs up for an account that will store their payment information for future use.

As is the case with most high-risk payment services, PaymentSavvy does not publicly post its pricing.

Pros

  • Offers a variety of novel payment options
  • High-risk merchant accounts are available
  • Debit-card only processing available
  • No early termination fees

Cons

  • Opaque pricing
  • Small user review footprint for its age

Jump back to comparison chart

8 Benefits To Using SMS Payments

The benefits of using SMS payments may not always be immediately apparent, but it’s a growing niche for a number of reasons. Some of the benefits of using SMS payments include:

  1. Truly Contactless Payments: “Contactless payments” became a buzz phrase during the COVID-19 pandemic for payment methods that don’t involve touching anyone else’s hardware or cash. SMS payments are a simple and quick way to go contactless.
  2. Easy Invoicing: SMS payments can be a convenient way to combine your invoices with payment processing.
  3. Over One In Three Customers Wants The Option: An independent study commissioned by Weave found that 35% of customers were interested in paying by text.
  4. Younger Customers Especially Want The Option: Sixty-two percent of customers under the age of 35 say they would pay by text message frequently or always if they could.
  5. Text Bills Are More Likely To Be Read: Texts have a higher chance of being read than snail mail and email. The chances of a text being read are somewhere around 90%.
  6. Most Americans Have Smartphones: Over 85% of Americans own a smartphone, making SMS payments a viable option for most customers.
  7.  It Can Support Multiple Payment Types: Depending on your service provider, pay by SMS can be used to make credit/debit card transactions, ACH payments, or digital wallet payments.
  8. It Can Eliminate The Need For POS Hardware: While high-volume businesses probably don’t want to give up their POS terminal just yet, SMS payments can be a viable alternative to a traditional POS setup for some businesses.

Should You Add A "Pay By Text" Option For Your Business?

Being able to take payments by text offers potential — as long as the benefits outweigh the costs. Features vary by company, so do compare service packages before making a decision. One company may find a lot of value in the extra capabilities to target and segment lists, while another may be more focused on cutting down telephone orders.

What services you choose mainly depends on your business model. Because text messaging offers a clear path to your customers’ hands, it may be worth finding the right balance to connect, engage, and encourage your customers to pay via text message, too.

If you are discovering what else is out there in payment processing, be sure to check out our resources here at Merchant Maverick. Our Merchant Account Comparison Chart is a great starting point for payment providers! 

Common Questions About SMS Payments

How do I set up SMS payments?

To get started accepting SMS payments, you’ll need to choose the company with the services that fit your needs best. There are some differences in how each company’s system works, but it’s usually pretty simple to set up.

Is SMS payment safe?

Yes, if the service is PCI-compliant. Just remember not to put card information in the text itself.

What is an SMS payment gateway?

An SMS payment gateway is just a payment gateway that supports SMS payments. A payment gateway transmits payment data between a customer and a payment processor. It does not actually process the payment, for which you need a payment processor or a merchant services provider.

How do SMS payments work?

SMS payments allow businesses to invoice customers by text. The customer can then initiate a payment using a supported payment method by tapping on a link or typing in a confirmation.

In Summary: 5 Text To Pay Services For Small Businesses

  1. Paysley: Best for businesses that do in-person sales.
  2. Relay: Best for low-risk eCommerce businesses.
  3. Podium Payments: Best for large businesses looking for a marketing platform.
  4. Everyware: Best for businesses looking for a simple SMS payment system.
  5. PaymentSavvy: Best for high-risk businesses.
Chris Motola

Chris Motola

Expert Analyst & Reviewer at Merchant Maverick
An expert in personal and business loans and financial health, Chris Motola has been writing about small business finance and payments for over 5 years. He has been cited in various industry publications, including Forbes Advisor, GoBankingRates, and Medium. Chris is a graduate of the University of Central Florida.
Chris Motola
View Chris Motola's professional experience on LinkedIn.

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2 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Gozie Prosoer

    I want my ecommerce shop operated by SMS payment where customers generate an invoice and text the invoice to a designated number and are charged for their intending purchases and the purchases verified by the system automatically and delivered to them. Do you have this service and how do I integrate it on my end using your API

      This comment refers to an earlier version of this post and may be outdated.

      Jessica Dinsmore

      Hi Gozie,

      We actually don’t offer any of the services we review, but you could reach out to any/all of the vendors named in this post to see if they can accommodate you. Best of luck!

        This comment refers to an earlier version of this post and may be outdated.

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