Acceptance of payments via SMS - what is it, where is it used, pros and cons

[CarderPlanet]

Payment for goods and services via SMS has long ceased to be a novelty. Often, the buyer is offered to purchase a service or product by sending an SMS message to a short number. The cost of sending such a message is indicated in small print below the offer. In this way, you can pay for access to content, a subscription on the site, a set of stickers and gifts for social networks, and much more.

Someone considers payments via SMS to be a convenient form of payment, while others are mistrustful, because they have not yet come across such a payment method. To relieve a little fears, let's figure out how it works and where payment via SMS is used.

The principle of SMS payment​

Payment via SMS became popular in the late 90s - early 2000s: this is how the owners of mobile phones bought ringtones. To pay for a new melody, it was necessary to send a message to a short number, and indicate the code of the selected melody in the message. After that, the cost of SMS and the service itself was deducted from the subscriber's account, and the melody was installed on the phone for one or more months.

Today, payments via SMS messages are used a little more widely than at the beginning of the 2000s: this payment system is used even on Internet resources. For example, using this method, you can buy a movie, pay for access to content on the site, vote for a contestant you like, or purchase a game without leaving your chair.

• You can pay for a product or service via SMS in two ways: payment for an outgoing message: the client sends an SMS and a certain amount is withdrawn from his mobile account;
• payment for incoming SMS: the user sends a message, but the money will be withdrawn from the account when he receives a reply SMS from the service.

In the first case, funds are withdrawn instantly. And in the second, the company that provides services first checks two points: whether the buyer has the required amount in the account, and whether the seller can provide the service / sell the product. Only after that the service will withdraw money from the client's mobile account.

The amount of the payment does not depend on the specific volume of the service, but on the established tariff. According to the agreement between the seller and the payment service, the cost of sending a message to a specified number is fixed. The amount can be the same for all messages, or it can be different.

For example, by sending a message with the text “Light” to the number indicated on the website, the client pays 20 UAH for simplified account features, and when sending the word “Premium” to the same number - 50 UAH for advanced features.

Pros and cons of SMS payment​

From the point of view of the seller and the buyer, this method of payment has its advantages and disadvantages.

Benefits for the seller:​

• automation: all functions of receiving and transferring money are taken over by the operator;
• low commissions for services;
• simple connection to the site.

Pros for users:​

• accessibility: unlike the Internet or bank terminals, mobile communications are available even in small towns and villages. So everyone who has a mobile phone can pay for and receive the required service;
• wide geography of coverage: using SMS messages, not only citizens of Russia or Ukraine, but also citizens of neighboring countries can pay for the desired product;
• minimal probability of user error when entering details, as opposed to using card and wallet numbers.

Disadvantages of SMS payment​

There are practically no downsides for the client - there is an agreed amount for access to a product or service, and it is possible to pay for it from a mobile account.

There are a number of disadvantages for a seller to consider before connecting a mobile payment system:

• it is impossible to change the cost: each operator provides a fixed transfer amount for each short number;
• commission for services: no one will provide money transfers for free;
• malfunctions in the operation of the payment system are possible: the longer the path of transferring funds from the buyer to the seller, the greater the likelihood of a system error.

What goods and services can be paid via SMS​

Almost any type of goods or services can be sold via SMS payments. Today, the most successfully sold:

• software;
• multimedia content;
• term papers and theses;
• subscriptions and access to materials;
• SMS-voting for the participants of the competitions;
• sets of smiles and gifts in social networks.

Payment procedure via SMS - how it works​

What is SMS payment in technical language:

• the seller connects the ability to receive payments using SMS messages through a service provider;
• the service accumulates funds received from users on its accounts;
• the payment service provider transfers money to the seller within the periods specified in the agreement (week, month).

The participants in the payment service system are:

• operator - a communications provider that delivers payment services via SMS;
• aggregator - an intermediary who, for a commission, provides payment services on behalf of the operator to smaller companies and entrepreneurs;
• subaggregator - another intermediary link that enters into a direct sublease agreement with aggregators;
• seller - a direct customer of payment services who sells goods and services via SMS.

What factors affect the cost of SMS​

The cost of SMS depends on the product or service, on the location of the client, as well as on the mobile operator.

• destination number - for example, according to an SMS agreement, one number costs 25 UAH, and another - 40 UAH;
• country code - for Russians, the cost will be charged in rubles, for citizens of Ukraine - in hryvnia, for the rest - in dollars at the current exchange rate;
• sender's operator - sometimes sending SMS to short numbers of other operators is additionally charged by its own network;
• text - the conditional code of the product or service (for example, the type of subscription).

To connect payments via SMS, you must select a provider. The choice of operator, aggregator or sub-aggregator varies by country and region. That is, if the main traffic of the site is made by citizens of Russia or Ukraine, it makes sense to choose a supplier with a focus on these regions. Before concluding an agreement, you should carefully study the conditions and size of the commission, as well as the restrictions and a list of options for entrepreneurs.