Transactional SMS might not be the flashiest part of your product - but it could be one of the most important. It’s the kind of tool that quietly powers key interactions: the login code that gets you back into your account, the reminder that saves you from missing an appointment, the message that reaches your customer at exactly the right time.
In this Telerivet article, we’ll look at what transactional SMS really is, how it works, and why it’s such a valuable channel for modern businesses. Whether you're sending alerts, building engagement flows, or just trying to communicate more reliably, transactional SMS is one of the simplest ways to connect with users - directly, immediately, and effectively.
We’ll cover:
- What is transactional SMS?
- Why use transactional SMS?
- 3 transactional SMS use cases
- Appointment reminders and real time alerts
- Two Factor Authentication
- Gathering customer feedback
- Transactional SMS alternatives
What is transactional SMS?
Transactional SMS is normally an automated message sent in response to an action or an event that’s triggered - either by a customer or by another part of your software.
The thing about transactional SMS is that it's messaging built into your product as a part of your product offering.
You're probably connecting to it via a third-party provider, like Telerivet, and you're triggering SMS to be sent - perhaps via an API or by an automated flow.
Transactional SMS is a bit different from marketing SMS, which is primarily used for outreach and promotions.
The mission critical, time-sensitive use cases around transactional SMS often means there are special high performance routes available for it. A 20% voucher can be impactful, but it’s not as time-sensitive as a One Time Password or critical service alert.
Transactional SMS is one of the easiest ways for an organization to build a popular communications channel - that almost everyone has access to - directly into their product for real-time communication.
Why use transactional SMS?
Transactional SMS is a valuable tool to have at your disposal within your business or organization, for a wide variety of reasons.
The central use cases typically revolve around alerting or engaging your customers, users, or other stakeholders of some kind. Transactional SMS is a real-time channel to your users or customers and gives you an immediate link for critical services. The speed and delivery success rates are unmatched.
While you can use SMS as an outreach strategy - contacting people who have not had connection with your organization before - that can often feel very intrusive, and this type of behavior would typically be labeled spam.
It’s useful to remember that SMS is not like email. For one, the open rates for SMS are way higher than email.
For email - though it depends on a range of factors - you’ll see typical open rates of around about 20%. Sometimes this is lower, sometimes it’s higher.
And these numbers assume you're following best practices with email accounts that are considered safe and reputable, and you're not using silly attention grabs like full capitalization in subject lines, or using too many exclamation points, or including spammy or offensive language.
Email providers have gotten really good at filtering out the bad stuff - so you need to be careful with that.
For SMS, however, what you need to be careful of is the user feeling and user intent, because for SMS, open rates can be as high as 98%. You’ll find multiple sources reiterating the 98% figure.
And this is why it's important not to be spammy when using this channel.
This is a channel users trust - a channel users engage with. When they receive a text message, they receive a push notification. Even someone with their phone on silent may have it vibrate.
For many people, their phone is an extension of themselves - and the SMS message is a way to gain their attention immediately.
Because it’s so valued, we have to be careful with it and treat it right. We should only send messages that add value to the user in some way.
The fact that nearly everybody on the planet has a mobile phone - and every mobile phone uses SMS - and the open rates are so absurdly high, makes SMS maybe the most valuable single channel for your business.
And transactional SMS is how you bake that into your product.
3 transactional SMS use cases
We'll touch on a few use cases for transactional SMS - mainly centered around alerts and engagement - but there’s no real limit to how many use cases you can come up with.
Transactional SMS provides you with access to a simple but flexible engagement channel for your customers.
And Telerivet’s system, with its campaign management functions, also allows you to create logic and timings behind the way your SMS messages are sent.
And the magic of transactional SMS - versus a manual system - is you can connect to your API and have control over the necessary elements too.
Transactional SMS use case #1: Appointment reminders and real time alerts
A key use case for transactional SMS is in alerts and reminders.
These are ideal for transactional SMS because the text messages themselves are being sent in response to either an event that has just happened, or a structured datum in a calendar.
As in - it's really easy to set it up and program an SMS to be sent a day before a booking, with the information of that booking included, perhaps in the context of the message.
This is also the type of use case that real people love.
Now, maybe "love" is a strong word. No one celebrates getting a reminder from their dentist. However, people are thankful they received a reminder - from their dentist, or their dinner reservation, or whatever else they may have booked.
It’s very useful to receive that notification a day before or two days before you're due to have it.
If people were not receiving those notifications, then they would likely miss a lot of appointments - and that can be both expensive and inconvenient in a range of different ways.
This is an example where SMS - specifically transactional SMS - makes people’s lives easier and better.
And if your product, or business, or organization isn’t currently reminding people about key things they don’t want to miss, then sign up right now - so you can put these systems in place and give appropriate reminders to add value and keep people happy.
That’s what we’re all trying to do at the end of the day.
Transactional SMS use case #2: Two Factor Authentication
Still one of the most popular use cases for SMS - and by definition, requiring transactional SMS - is the use of two-factor authentication.
Two-factor authentication is when you try to log in to a service, using perhaps a username and password, and the service requires you to confirm that it’s you doing the login via an alternative route.
There are many ways you can confirm your identity - including biometric data, codes sent to emails or backup emails, voice calling, authentication apps, or, in this case, trusted SMS.
Some systems use more than one of these channels. In that case, it’s called multi-factor authentication.
These different channels have different strengths. Most of them, as described, use your mobile phone - so if you're logging into something on a computer or in a browser, then a confirmation method that involves your mobile phone is pretty useful.
It’s a secondary device, as well as a secondary channel.
These different approaches vary in how secure they can be. Biometric data or authentication apps are typically seen as the most secure approaches.
However, that doesn't mean SMS isn't useful.
If you're James Bond, then you should probably consider being careful if you're only using SMS for your two-factor authentication - because there are ways that a high-value target could be intercepted.
But for the vast majority of people, SMS will work perfectly well.
How you build this in your organization - for your product, for example - depends on your specific needs. But SMS to send a code to your mobile phone via text, to then re-enter the code into the product, is one of the most popular forms of two-factor authentication.
And because of SMS's affordability, this is a simple way for companies of all sizes to add extra security to their products.
It’s easy to get started building a two-factor authentication process with Telerivet.
Transactional SMS use case #3: Gathering customer feedback
So far, most of our SMS examples have focused on one-way communication.
These are use cases that could, in theory, have been achieved with something like a pager. But the magic of SMS is that it’s not one-way communication.
It’s two-way communication - and it’s open world. You can write whatever you like. You can use a range of symbols and characters.
As such, instead of just alerting and notifying your users or customers, you can converse with them.
The difficulty, however, is that when we talk about transactional SMS - though you can use it to build a live chat SMS system - typically, we’re talking about the automated sending of text messages.
And if you’re not sending them manually, then maybe you won’t be responding to them manually in real time either. Though of course, exceptions exist.
However, you can take the best parts of transactional SMS - automated, large-scale, affordable sending - and you can factor the conversational element into it.
Take, for example, with Telerivet: you can construct a survey, and you can send a text message to one of your customers asking them if they’d like to complete that survey.
And if they say yes, then the first survey question is sent, and they can respond - and the second one is sent - and they can respond again. And you can program the system to be responsive and to continue the flow of messages in a useful way.
The magic of transactional SMS, of course, is that you could do this not just for one customer, but for 10,000 customers - all at once, in the moment.
Now, maybe not all 10,000 will respond to you. But you could very quickly - within a day - have gathered hundreds and hundreds, perhaps even thousands, of survey responses from your customers.
That type of research is incredibly valuable.
With SMS and a platform like Telerivet, you can set it up and deliver it incredibly quickly, easily, and affordably.
Transactional SMS alternatives
Of course, transactional SMS is not the only game in town.
There are many other messaging protocols to keep in mind.
If you want to send more complicated - what we call rich messages - you could use an open protocol like RCS, which stands for Rich Communication Services. Or you could use another platform like WhatsApp or Viber, depending on which geography you're operating in.
You could also use MMS - Multimedia Messaging Service - to deliver information, images, and digital flyers, for example.
Using Telerivet’s system, you could also, for many of the use cases we’ve described, use automated voice calling, and leverage features such as interactive voice response - IVR.
IVR lets you implement the same type of logic as described above in the customer feedback use case example. Except with interactive voice response, the system listens - and hears what the person says, records it, understands it, and then provides a further question.
This isn’t the AI of large language models - but it is the intelligence of natural language processing and natural language understanding.
There are a range of SMS alternatives when thinking about transactional systems.
But I will pull your attention to WhatsApp, which is already one of the world’s biggest messaging platforms - particularly outside of the United States. But even within the United States, among more international audiences or demographics, WhatsApp is huge.
With Telerivet, you can send to WhatsApp in a transactional manner - and this can be a very effective way of ensuring high open rates by meeting users on platforms they already use the most.
So if your audience is a high-usage WhatsApp audience, maybe you can try to reach them there instead.
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