In this blog post, Traderoot Africa CEO, Louis Volschenk, delves into the topic of SMS payment and the role this technology still plays in facilitating commerce globally.
SMS payments, also known as text-based payments or mobile payments, are a convenient and secure way to make transactions using a mobile device. Instead of using a credit card or cash, SMS payments allow users to complete transactions using a simple text message.
As mobile connectivity increases globally, SMS payments are becoming increasingly popular as more and more people use their smartphones for a variety of tasks, including making payments. With the mobile payment market value predicted to reach $12.06 Trillion by 2027, the role of SMS payments is expected to play a significant role for years to come, despite the proliferation of more technical solutions such as QR-codes, NFC and digital wallets.
So, how do SMS payments work?
First, a user must have a mobile phone that is capable of sending and receiving text messages. ”This alone reduces almost all barriers to using SMS payment solutions,” says Volschenk. “A basic feature phone and network connectivity is all that a person needs to transact via SMS, provided the user must also have a bank account or credit card that is linked to their mobile phone.”
To make an SMS payment, the user simply sends a text message to a designated number with the amount they wish to pay and the recipient’s information. The payment is processed through the user’s bank or credit card company and the funds are transferred to the recipient’s account.
What are the Advantages of SMS Payments?
One of the key advantages of SMS payments is their convenience. Instead of having to carry around a wallet full of cash or credit cards, users can make payments simply by sending a text message. This is especially useful for small transactions, such as buying a cup of coffee or paying for a taxi ride.
SMS payments are also secure. “The transactions are processed through the user’s bank or credit card company,” Volschenk explains, “so the user’s financial information is not shared with the recipient. Additionally, most SMS payment systems use encryption to protect the user’s information from being intercepted.”
Another advantage of SMS payments is that they are widely accepted. Many businesses, including retailers, restaurants, and service providers, accept SMS payments, so users can make transactions with a wide range of merchants.
Who can Benefit from Offering an SMS Payment Solution?
One of the disadvantages of SMS payments is that not all Mobile Network Operator support SMS payments, so users may have to switch to a new Mobile Network in order to use the service.
“Of course, this presents a major opportunity for Mobile Network Operators (MNOs),” says Volschenk. “MNOs that offer SMS Payment options are likely to attract more customers than their competitors. Traderoot’s Fintech products offer a fast, simple and cost-effective solution to MNOs that want to offer a variety of payment and other financial services.”
Another opportunity sits with Payment Service Providers (PSPs) who are able to integrate, SMS payments as a traditional payment within the merchant and retail market.
How can you Implement an SMS Payment Solution?
SMS payments are a convenient and secure way to make transactions using a mobile device. As more and more people are using their smartphones for a variety of tasks, including making payments, SMS payments are expected to become an increasingly popular option.
Traderoot’s solutions offer a comprehensive, end-to-end solution that is driven by APIs to facilitate seamless integration into any platform. To learn more, visit our website here or email firstname.lastname@example.org.