Could SMS be the answer to Australia's $45 billion credit card debt?

Could SMS be the answer to Australia's $45 billion credit card debt?

Businesses widely utilise SMS for everything from cybersecurity, 2-factor authentication, marketing, customer service, appointment scheduling, human resources and much more. Using an SMS gateway has become an integral part of business communication. And for good reason. According to Morgan Stanley, over 90% of all smartphone users keep their mobile within arms-reach at all times, and 95% of SMS messages will be read within 3 minutes of being received. This makes SMS the most effective means of delivering a message available today.

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It perhaps comes as little surprise then that new research by BETA (the Behavioral Economics Team of the Australian Government) suggests business text messaging could potentially be the solution to Australia's credit debt crisis.

Credit Card Debt

Nearly 2 million Australian's (approximately 15% of adults, according to ASIC) are struggling with problematic credit card debt. As a country, despite having one of the highest levels of medium wealth per adult, the sobering reality is that we also have one of the highest levels of household debt in the world.

It's not all doom and gloom though. In partnership with Westpac and the Australian Treasury, BETA's research showed that SMS reminders increased monthly credit card repayments by 28%, as reported in the Australian Financial Review.

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In the study, those receiving SMS 'nudges' paid an average of $134 extra off their credit card within the following month than those who did not receive a text message reminder. Within 12 months, those who received an SMS reminder had balances approximately $365 lower than those who did not receive a message. That's no small feat. In fact, based on this research, if lenders across Australia implemented an effective SMS strategy, Australia's $45 billion credit card debt could potentially be slashed by $12.6 billion.

Decrease debt with SMS payment reminders

The Assistant Minister for Treasury and Finance, the Hon. Zed Seselja also believes that SMS reminders could also provide significant savings over the life of debt by helping minimise high-interest fees. He recommends that every bank offering a credit card consider these results and the options for assisting customers in reducing debt.

So how do lenders coordinate the delivery of thousands or even millions of reminder messages to customers each week? The easiest and most common way would be through partnering with an SMS provider, who already has the infrastructure in place. From there, it can be as simple as inputting contacts, curating a message and hitting send. Using standard features such as message scheduling, merge send and systems integration, lenders can send personalised reminders en masse at any given time.

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