Introduction
SMS reverse billing, also known as SMS premium billing, is a billing method that allows businesses to bill users directly through their mobile carrier for SMS services. With SMS reverse billing, the payment is handled by the mobile operators, and the user is only charged on their monthly phone bill. This removes the need for credit cards or online payments.
For businesses, SMS reverse billing provides an easy way to monetize SMS services without the need to build a complex billing system. Users also benefit from a simplified payment process by getting billed directly by their trusted mobile operator.
Let's take a deeper look at how SMS reverse billing works, the benefits it provides, and how businesses can implement it.
How SMS Reverse Billing Works
The SMS reverse billing process involves three main parties - the merchant, the mobile operator, and the end user. Here are the typical steps:
A user signs up for an SMS service from the merchant, such as daily horoscopes or sports score alerts.
The merchant sends a premium SMS to the user. This specially formatted SMS triggers the reverse billing process.
The mobile operator identifies the premium SMS and bills the user based on the premium rate assigned to that service.
The mobile operator collects the payment from the user on their monthly phone bill.
After deducting a commission, the operator pays the merchant for the SMS service rendered.
The premium SMS contains service information that allows the mobile operator to identify the merchant to pay and the billing rate for that service. This allows seamless billing of the user without any additional steps.
SMS reverse billing uses premium short codes - special 5 or 6-digit numbers - that are leased by businesses to identify their services. The mobile operators assign pricing for these shortcodes, normally in tiers, that determine how much the user is charged for sending SMS.
Key Benefits of SMS Reverse Billing
SMS reverse billing offers several advantages over traditional billing methods:
Easy and Convenient Payments for Users
No credit cards are required. Users simply pay via their existing mobile plan.
Frictionless experience - no signup, passwords, or payment info needed.
Charges appear on trusted mobile bills already paid monthly.
Lower Billing Costs for Merchants
No need to build complex billing systems. Mobile operators handle payments.
Much lower transaction fees compared to app stores or credit card processors.
No bad debt risk - mobile operators handle collection.
Higher User Engagement
More users complete purchases without signup and payment hurdles.
No billing details to manage means users engage more with SMS services.
Trusted Carrier Branding
Users feel comfortable paying via their mobile carrier's billing.
Merchants benefit from the mobile operator's branding and trust.
Easy Integration
Simple APIs provided by mobile operators to integrate premium SMS billing.
Wide support across global carriers for reverse SMS billing.
Regulatory Compliance
Mobile operators ensure regulatory compliance in each country.
Merchants avoid the burden of varying regulations across markets.
With these advantages, it is easy to see why SMS reverse billing is gaining popularity as a payment option. It offers convenience for users and an easy way to monetize services for merchants.
Implementing SMS Reverse Billing
To start leveraging SMS reverse billing, businesses will need to take the following steps:
1. Engage With a Mobile Operator
The first step is to open an account with a supported mobile operator in the desired countries. The major operators globally include Vodafone, Orange, China Mobile, Airtel, AT&T, Verizon, T-Mobile, and others.
The mobile operator will provide documentation on integration requirements, premium short code pricing, and commissions. Business and compliance requirements may also need to be met.
2. Integrate the SMS API
Mobile operators provide APIs to integrate premium SMS sending and receiving into apps and systems. This allows programmatically triggering the reverse billing process from your application.
Most SMS APIs are simple REST or SOAP-based services that are easy to integrate with using common languages and platforms like Java, Python, PHP, Ruby, C#, or JavaScript.
3. Assign Short Codes
To identify your service in the reverse billing process, one or more 5 or 6-digit premium short codes need to be assigned. Mobile operators manage short code assignments which are leased to businesses for set durations, normally annual contracts.
4. Market Premium SMS Services
Once the technical integration is done, the SMS reverse billing services can be marketed to users. This includes promoting the short code number and instructions on how to initiate the purchase via SMS.
User opt-in needs to be collected for billing consent in most regions. This ensures users understand they will be charged via their mobile account.
5. Manage Services and Billing
Admin panels and reports provided by the mobile operator allow ongoing management of SMS services. This includes monitoring traffic volumes, revenue, billing issues, and user complaints. New services can also be configured through the admin tools.
With these steps complete, businesses can offer users a seamless SMS billing option and monetize services directly from mobile messaging. Users can conveniently pay through their phone bill while enjoying a simplified experience.
Future Innovations in SMS Reverse Billing
SMS reverse billing has proven to be a popular and effective mobile monetization method, even as app store and mobile web payments gain popularity. We are likely to see more innovations emerge in this space:
Integration of SMS billing into messaging apps like WhatsApp to complement in-app purchases.
SMS payment links that trigger the billing process when clicked via messaging apps.
Enabling impulse and subscription recurring payments via SMS.
Combining SMS billing with mobile wallets for hybrid payment options.
SMS billing for the Internet of Things allows connected devices to transact via SMS triggers.
Increased use of SMS billing in emerging markets where credit card penetration remains low.
New integration options to allow any app or website to invoke SMS billing through APIs.
Conclusion
SMS reverse billing allows businesses to overcome the challenges of monetizing digital services by tapping into mobile operator billing. It provides a frictionless user payment experience that increases conversions and retention.
With continued innovation, SMS billing is likely to play an important role in the payments landscape well into the future. Partnerships between merchants, mobile operators, and developers will drive further enhancements.
Businesses looking to improve monetization through new mobile payment methods would benefit from evaluating SMS reverse billing. With the right implementation, it provides unique advantages over other billing models in terms of both user experience and commercial benefits.