Pay by Text: Three Reasons Every Lender Should Offer It

June 4, 2020
pay by text for lenders
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Text messaging is an integral part of everyday life. Estimates suggest that the average American sends and receives 94 text messages per day. This near universal familiarity with the technology makes payments by text message a natural, fast, and convenient way to accept payments from customers.

The State of Text Messaging

The average adult spends a staggering 23 hours per week texting. Add to that an extremely high engagement rate – 99% of text messages are opened, 95% within three minutes – and the full potential of text messaging is clear.

Reminders, alerts and other marketing assets are commonly delivered by text, giving companies a reliable channel of direct communication with customers. More and more businesses are leveraging text messages to facilitate payments through a process called ‘Pay by Text.’

What Is Pay by Text?

Pay by Text allows you to send payment links to customers by SMS. This process enables customers to complete a one-click payment directly from the text message.

How Pay by Text Works

Step 1: You send customers a text message with a unique payment link tied to their specific loan or account. This text can be automatically scheduled, pushed via mass text or manually triggered by a call center agent.

Step 2: The customer receives and opens the text message. Because the payment link is securely pre-authenticated and unique to each account, there’s no need for the customer to enter their credentials – no account number, email, username, or password is required.

Step 3: The customer completes the payment by clicking the link and selecting their preferred payment method, such as bank account, debit card, cash, or Apple Pay. Upon completion, the customer will be sent a receipt by text message.

Benefits of Pay by Text

Pay by Text is the most convenient way to get payment options in front of your customers, increasing your chances of receiving on-time payments. Additional benefits include:

  • Reduced PCI compliance. Payment links encourage self-service payments. This eliminates your need to request card details over the phone and reduces your overall PCI-DSS compliance burden.
  • Frictionless user experience. No more fumbling with password resets or remembering long account numbers. Payments by text message can minimize friction by sending users directly to a secure payments page in a single click.
  • Timely communication. Text messages can be used for mass reminders, automated payment receipts, and one-off texts from call center agents. Reach customers where they already are.

Three Reasons Lenders Should Adopt Pay by Text

Why adopt Pay by Text? Here are three convincing cases.

1. Service Mobile-First Customers

The amount of mobile web traffic has grown steadily over the years, jumping from 31.16 percent of all web traffic in Q1 2015 to 52.6 percent in Q4 2019.

For the mobile-preferred customer, paying by text message is an intuitive process that fits in with their existing habits. It’s an extension of what they already do, what they are already familiar with.

Text messages are a high-engagement, direct communication channel that enables your business to meet consumers where they are, making their payments experience easier and faster.

Adopting text message payments isn’t just about better servicing your existing mobile-preferred customers; it’s about future-proofing your business. Some predict that almost three-quarters of the world will exclusively access the internet via their mobile device by 2025.

If your payments are not optimized for mobile use, you risk losing a significant portion of consumers to competing companies that have prioritized mobile payments.

2. Reduce Delinquent Payment Rates

Reminders and payment links can encourage your customers to make their payments on time.

Text message reminders may be more effective than email and mail reminders. The average open rate of an email is between 15 and 20 percent. The average open rate of a text message is significantly higher at 99 percent.

Consider the customer’s journey when receiving a one-click-to-pay text message. Because they are not required to input their credentials, they are less likely to opt-out or abandon the payment process, meaning you increase your likelihood of receiving timely payments.

3. Give Customers the Power of Choice

Today’s consumers expect choice. Flexibility is of paramount value, and convenience is a critical factor in modern customer experience design.

By enabling Pay by Text, you are giving your customers the power of choice. Interested customers can opt-in to receive these texts, while others can continue receiving payment reminders through other methods.

Further, SMS payments give your customers the ability to make payments anywhere, any time. A one-click-to-pay link can be actioned regardless of a user’s current circumstances – whether they are commuting to work, at a weekend brunch, or in line at the grocery store, they can pay a bill in minutes.

Find Out More About Pay by Text

Simplifying bill payments involves delivering a user-friendly experience to the channels your customers use most.

Find out more about how Pay by Text can benefit your business by contacting our team today.

Research: Consumer Trends Driving the Future of Loan Payments

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