How to set up and run an SMS payment campaign

There has been a mobile payment mechanism in place for a number of years: it’s robust, secure and accepted by consumers as a way to pay for goods and services. SMS has played a huge part in the growth of mobile as a payment channel.

By James Marscheider at Oxygen8

In this article we’ll provide:

1.    The importance of understanding your customer
2.    Things to consider when choosing a supplier
3.    Guidance on how to create a new customer base

Supplement not complement

One of the most important aspects of any SMS payment campaign is understanding why you want consumers to have the option to pay by mobile. It could be convenience, it could be because you are selling digital content, or it could be because your services are consumed ‘on the go’.

Whatever the reason, you have to consider SMS Payments alongside other payment options such as cards and cash. Imagine a customer doesn’t have their wallet with them or has hit their credit limit; where you may have lost their custom in the past, offering SMS payments as an alternative ensures that you get their business.

Partner with a reliable network aggregator

Just like with other payment service providers, a percentage of the money the consumer pays is given to other parties in the chain when an SMS payment transaction takes place. When looking for a supplier, do your homework and compare rate cards and technical infrastructure of different providers to ensure you get the best deal.

Key items to consider are:

Pay-out rates – with an SMS payment, the money actually arrives with the merchant last. The initial benefactor is the mobile network that the consumer belongs to. Secondly, the aggregator that links you to the mobile networks take their share and finally the merchant is passed the remainder.

The commercial terms are up to you to negotiate, but it would be obvious for us to suggest that the higher the volume of transactions you anticipate, the better the out-payment to you.

Out-payment schedules – when paying by SMS, there is a longer period of time between the transaction taking place and you receiving payment for your goods or services, so it is vital you agree an out-payment schedule that fits your business model.

Good providers of SMS payment solutions will be flexible and work with you towards a mutually beneficial payment plan. Make sure that you avoid any suppliers who have a history of holding back out-payments without valid reason and also get assurances in writing from your supplier that they are able to support you with compliance, to ensure your SMS campaigns operate within regulatory guidelines.

Compliance and regulation – in the UK, Ofcom and PhonePayPlus are the market regulators and it is their role to ensure that consumers are treated fairly and that merchants are provided with as much support as possible to keep mobile payments, particularly premium rated services including PSMS, successfully running.

We have all seen or heard of ‘scams’ that have had a detrimental effect on consumer confidence in mobile payments, but here again is where it is vital that you identify a partner that has the appropriate levels of control in place to keep your campaigns safe and secure. The best suppliers will have dedicated Compliance and Customer Services teams who are ready to support merchants with all their operational needs, often 24 hours a day.

Create a whole new customer base through mobile

For every customer you have that pays via SMS, there is an opportunity for you to capture data and learn more about each individual you interact with. As long as you are giving people the option to opt-out of receiving further communications, you should be continuing to interact with consumers via mobile, offering sales promotions, upselling complimentary products and providing continued customer service.

The leading suppliers will not only provide you with the capabilities to do SMS payments but also the tools to manage customer data and utilise it to further your relationship. It is not unusual for companies to create whole new business models because of the success they have had when combining SMS payments with continued mobile interactions.

Find out more at www.oxygen8.com