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A guide to transactional SMS

Despite being only 160 plain text characters, companies are sending more transactional texts than ever before.

According to UK research agency, Mobile Squared,

‘96% of brand spend on business messaging will be on A2P SMS this year. (2023)’
Nick Lane, Chief Insight Analyst & Founder

With a projected global growth of 87% by 2025, it’s clear that the simple SMS is here for the long term.

What is a transactional SMS?

A transactional SMS is a text message sent from a business to a customer that provides important account information about their service or product.

A transactional or A2P (application-to-person) text might also relate to an upcoming event such as an arranged appointment or delivery notification.

Transactional texts are often time sensitive and contain important account information

A transactional SMS does not contain any marketing information and does not attempt to sell or upgrade.

Integrated SMS into company workflows are usually transactional texts.

What’s the difference between a transactional and a marketing text?

A marketing text promotes a product or service and usually incentivises the customer with an offer.

A transactional SMS provides information about a customer’s account, purchase or appointment.

If a message is intended to sell in any way it is a marketing text.

Here’s a typical marketing text you’ll be familiar with.

Welcome transactional text

What can a transactional text be used for?

There are almost limitless ways that an organisation can use transactional SMS to communicate with its customers.

Here are a few of the most common uses along with examples

SMS appointment reminders
Sending an appointment reminder by text can reduce ‘no shows’ by up to 35%.

Kwik fit, a car repair company in the UK, sends very detailed and effective text reminders

Kwik fit appointment reminder by SMS

Delivery notification by transactional text
This is the most common of all transactional texts sent to customers. 
It simply let’s customers know when their delivery is due and helps prevent customers clogging up customer support with delivery enquiries.

Delivery notification by transactional SMS

2 factor authentication by SMS – 2fa
Although not as secure as other 2fa methods, SMS is still the most popular because it’s so easy to deploy.

A user receives a code by SMS that they use to verify their identity.

2fa code by transactional SMS

Payment reminder transactional SMS
People rarely ignore an SMS, so sending a reminder by transactional text is great way to get a customer attention.

Payment reminder by transactional text

Support Ticket Confirmation
A support ticket by text  gives customers the confidence that their query is being handled promptly and efficiently.

Support ticket by transactional text

Subscription or policy renewal notification
A monthly or annual subscription notification sent by transactional SMS will be read by 98% of customers within 5 minutes.

Insurance policy renewal by SMS

Welcome messages
Sending new customers a welcome message by text is a great way to make a great first impression.

Welcome transactional text

How long can a transactional text be?

A standard transactional text message is 160 characters in length

You can however send longer messages which will arrive on the customers’ phones as a single text message. Longer texts that have been combined so they display as one long text are known as concatenated textsSMS API providers will charge more than one text credit for longer transactional texts.

The absolute maximum SMS character limit varies from provider to provider and is between around 500 and 3000 characters. Even the lower end of this range will be far more than you would need for a typical transactional text.

Can you set the sender ID on a transactional SMS?

The sender ID or originator is the message header and is who the message is from. It’s the text display name that appears at the top of the message screen.

Simple sender ID
The sender ID on this text is Hermes

There are no specific restrictions on setting the sender ID for transactional texts. 
The sender ID can either be 11 alphanumeric characters or 15 numeric digits.

There are country restrictions on whether you have control of the sender ID. In the UK for example, there are restrictions, however in the US all texts must come from a local long code.

To see restrictions by country, contact your SMS API provider.

Do you need to include an opt out on transactional SMS messages?

In the UK, you are not required to include an opt out on transactional text messages.

Be aware that if your text contains any element of marketing then you will need to provide a way that the customer can opt out of receiving further marketing texts.

Do you need to opt in to receive transactional texts?

No, you do not need to opt in to receive transactional SMS. Because the texts are about your account and contain no marketing element, no consent in is required.

Note that this is the situation in the UK, other countries will have different rules regarding opt in.

How do you send a transactional SMS?

Beige retro computer

Transactional texts are almost always automated, so you’ll need to integrate your existing customer contact or CRM platform with one of the many SMS API providers.

Here are the basic steps to send a transactional text

1. Conduct a thorough assessment of the transactional texts your organisation needs to send.

2. Investigate the SMS functionality of your existing contact or CRM platform. It may have an SMS tool already and a chosen supplier for sending texts. Many industry specific platforms already have an SMS functionality and you purchase text credits form the software company directly.

3. Open an account with your chosen SMS API or CPaaS provider. Most will provide you with a free account and some test credits.

4. Thoroughly explore their documentation and make sure that the SMS API provider can deliver the functionality that you need. Most SMS gateway companies provide code snippets in your chosen coding language which makes testing much more streamlined.

5. Check that you will be able to send texts to all the countries that you need to.

6. Set up a test SMS from within your CRM platform and check that all aspects were handled as expected. Record and resolve any issues.

7. Implement the full range of transactional texts, making sure that you’re logging all the texts sent. Ensure that individual customers aren’t receiving too many or too few texts.

What are the benefits of sending transactional SMS to customers?

SMS is the only messaging channel which every phone ever made can access. There’s no app to download or terms to sign up to. 98% of texts sent are read within 5 minutes. Here are some of the main benefits of using transactional SMS.

People don’t ignore SMS
If you need to get your message read then, SMS is the only practical option. Despite so many other messaging apps vying for our attention, SMS is the only effective one for transactional texts and has far higher open rates than email.

Transactional texts are automated
Transactional texts are almost always triggered by an event such as a purchase or upcoming appointment. So once the texts have been configured, they will be dispatched without further intervention.

Transactional texts are low costs
The cost to send a text has dropped by about 70% over the past 10 years. 

SMS pricing will obviously vary from provider to provider but you can expect to pay between 2.5 pence and 5 pence a text, depending on the volume of message you send every month.

You are not required to obtain customer consent to send transactional SMS
Unlike marketing texts, you do not need to obtain your customers’ permission before sending them a transactional text.

This removes a layer of friction from your customer communications.

Transactional texts enhance customer engagement and build loyalty
Every text you send is an opportunity to impress your customers with your efficiency and professionalism.

Customers who feel confidence in your service because of your outstanding communication are more likely to remain loyal customers.

How much does it cost to send a transactional SMS

There are hundreds of SMS suppliers globally, All of them have different SMS cost structures. The amount you pay per transactional text will depend on the supplier and the country that you are sending to.

Most transactional SMS providers will also offer discounts for larger SMS credit bundles.

It’s a fiercely competitive market, so further discounts can often be won by contacting the supplier directly.

Here is a cost comparison table, displaying SMS prices from many of the leading transactional text providers.

Company Website Transactional SMS Price per text for 1000 text credits Do they refund non delivered texts? Cost for unique reply number Do SMS credits expire? Head Office Location
Bulk SMS 4.5p No £7.50 No South Africa
Text Marketer 3.8p No £10 No UK
Voodoo SMS 2.9p No £10 No UK
Text Local 4.9p No Cost not available Yes UK
Sendmode 3.4p No Cost not available Yes Ireland
Esendex 6p No Cost not available No UK
Reach Interactive 3.2p No Cost not available Unknown UK
Fire Text 4p No £5 No UK
Text Anywhere 4.9p No £25 Yes UK
Text Magic 4p No £2.50 Yes UK
Mobivate 3.28p No £35 Unknown UK
Clickatell 3.5p No £8.33 Yes South Africa
World Text 6.4p No £25 Unknown UK
Kapow 6.25p No £50 Yes UK
Text Burst 4.5p No Cost not available Yes UK
Intellisoftware 6.2p No £16.50 Unknown UK
2SMS 10p No Unknown Yes UK

Most providers also support the sending of emojis by SMS although message length is reduced to 70 characters so 2 credits will be used for sending most messages.

Verified SMS – A new type of transactional SMS service

In December 2019 Google launched a new transactional SMS service called verified SMS (VSMS).

The idea behind this was to provide reassurance to consumers that certain transactional texts were from a genuine source. The texts contained the company’s logo along with a ‘verified badge’.

The service used the RCS (Rich Communication Services) platform to deliver the texts. Take up of the service was very low and verified SMS failed to take off and was mothballed by Google in October 22, having only been active for less than 3 years.

Related articles

What is A2P SMS? Is A2P SMS the same as transactional SMS? This brief article explain the difference.

What is a virtual mobile number? Virtual mobile numbers allow you to receive replies to your outbound text messages. What else do you need to know? This article reveals all.

What is MO and MT SMS? Discover what these slightly technical terms mean in this short article.

author avatar
Henry Cazalet Managing Director
Co-founder and Director of The SMS Works, a low cost and powerful SMS API for developers. About Henry