What Is an SMS Gateway and How Does It Work?

Dec 18, 2024

Text messaging is a highly effective tool for businesses, with SMS boasting a 98% global delivery rate. This reliability makes it ideal for reaching customers quickly and consistently.

However, managing high volumes of customer communications manually can be challenging for businesses. An SMS gateway makes it possible for a broader range of devices and applications to communicate with each other.

Whether you want to launch a marketing campaign, send automated alerts, or engage in two-way conversations with customers, an SMS gateway simplifies the process.

Using SMS gateway services, you can send a message from your computer to a phone (or vice versa).

In this guide, we’ll dive into how SMS gateway providers work, the different applications of SMS gateway services, and how you can choose the right provider for your business’ needs.

So, let’s begin!

What is an SMS gateway?

An SMS gateway is a technology that allows software applications or computers to send text messages to mobile phones. Often, messages sent from a computer are not in a format that’s compatible with SMS. In such cases, SMS gateways serve as translators, converting the message into a format that mobile devices can understand.

The main job of an SMS gateway is to ensure the message is compatible with mobile networks. Businesses use SMS gateways to send bulk text messages to customers directly from a computer or software platform.

Interestingly, SMS gateway services can also work in reverse, allowing mobile users to send messages back to computers.

While previously SMS gateways were offered as physical hardware with SIM cards and embedded radios, businesses and consumers no longer need hardware-based solutions today. Instead, they use cloud-based systems that seamlessly translate and transmit messages.

These advancements are powered by SMS APIs, which allow messages to be delivered to specific devices at the right time, without the need for physical hardware.

How does SMS gateway technology work?

Here’s a simple step-by-step breakdown of how modern SMS gateway services operate:

Create the message: Compose your text message within your business application.
Send via API: The message is sent to the SMS gateway through an SMS API.
Convert the message: The gateway uses protocols like HTTP or SMPP (Short Message Peer-to-Peer) to format the message for mobile networks. Protocols like SMPP play a key role in the smooth operation of SMS gateways. They enable fast and reliable communication between the gateway and mobile carriers, ensuring your messages reach their destination promptly — even during high-volume campaigns.
Route the message: The gateway forwards the message to the appropriate telecom carrier.
Deliver the message: The telecom carrier ensures the text reaches the recipient’s phone.
Confirm delivery: The SMS gateway receives a delivery report from the carrier and relays it back to your application, confirming the message was received.

Imagine you’re running SMS marketing campaigns and want to send a promotional text to all your customers. Your audience is spread across the U.S., using different carriers like AT&T, Verizon, or T-Mobile.

Instead of dealing with each network separately, an SMS gateway simplifies the process. You connect once, and the gateway handles the rest — distributing your message to everyone at the same time, no matter which network they’re on.

Types of SMS gateways

When it comes to SMS marketing campaigns, two types of SMS gateways are most commonly used:

Email to SMSThis type of gateway converts email messages into SMS format, ensuring they meet the technical requirements for mobile delivery. It’s a two-way system, allowing businesses to send text messages to email inboxes and receive replies in return.

Web to SMSFrequently used by application-to-person SMS platforms, this gateway connects mobile phones with web applications. It enables businesses to send both SMS and MMS messages directly from a web application to recipients’ mobile devices. Web to SMS gateways are more feature-rich than other options, offering enhanced flexibility and functionality.

Applications of SMS gateways

SMS gateways have a wide range of applications for businesses and organizations, enabling them to communicate quickly and effectively with their customers. Here are some use cases:

Marketing campaigns

SMS marketing is a powerful tool for businesses to connect directly with their customers. It allows you to send promotional messages, special offers, and important updates right to your customers' mobile phones.

According to the 2023 Mobile Consumer Trends Report, SMS is a preferred communication channel for 52% of customers, making SMS an essential part of any marketing strategy.

A great example of effective SMS marketing is GoCheckin, an app developed by Fastboy Marketing.

GoCheckin helps beauty salons send appointment reminders and promotional messages to their clients. Fastboy uses Plivo as their communication platform and SMS gateway provider to efficiently handle high SMS volumes, ensuring seamless message delivery.

This switch made it easier for Fastboy to send texts without requiring customers to download an app.

Customer engagement

Text message gateways boost customer engagement by enabling businesses to send timely and personalized alerts and notifications.

Common use cases:

Appointment reminders

Appointment reminders are a highly effective way to engage customers and reduce no-shows.

Once you integrate an SMS API into your existing systems, when a trigger event occurs, for example, an appointment reminder, the system will communicate with the SMS gateway. The gateway then processes and sends the message to the customer's mobile network within seconds.

For example, a dental clinic could automatically send reminders to patients a day before their appointments, increasing the likelihood of attendance.

Customer feedback requests

SMS gateways make it easy for businesses to request feedback after a purchase or service interaction.

For instance, a restaurant might send a text asking customers to rate their dining experience. This provides valuable insights to help businesses improve.

Notifications and alerts

Automated notifications and account alerts keep customers informed and build trust. SMS is particularly effective for delivering quick and reliable updates about orders, security alerts, or account changes.

Businesses like ecommerce platforms use SMS to keep customers updated at every stage of their order process.

For instance, Luxer One, a California-based company that provides secure package lockers for residential properties, uses SMS to send package delivery notifications.

Previously relying on email, they found many residents overlooked or missed their emails, leading to uncollected packages and dissatisfaction. By switching to SMS, Luxer One achieved over 99% consistent delivery, improving customer satisfaction and the package pickup experience.

Similarly, Deckers, a footwear giant, uses SMS to keep customers informed about their order and delivery statuses.

After placing an order, customers receive real-time shipment updates via text until the package arrives. This transparency reduced track-package inquiries by 15–20% annually, significantly enhancing the overall customer experience.

Why should businesses use SMS gateways?

Effective communication is essential for businesses to engage customers, streamline operations, and improve efficiency. SMS gateways offer a reliable solution for sending text messages between businesses and their audiences.

Here are some benefits:

Reliability and speed

80.5% of consumers read SMS messages within five minutes of receiving a notification. This ensures that time-sensitive information, such as appointment reminders or transaction alerts, reaches recipients quickly.

Efficient bulk SMS messaging

Bulk SMS gateways leverage the SMPP protocol, enabling businesses to send large volumes of messages simultaneously without compromising speed or delivery rates.

This is particularly valuable for marketing campaigns, promotions, and mass notifications. For example, during major sales events, businesses can instantly reach thousands of customers, driving both engagement and sales.

Global reach with multilingual support

In today’s global market, businesses must communicate effectively across regions and languages. Some SMS gateway providers like Plivo enable international messaging to 220+ countries and territories while supporting localization features for various languages and cultural nuances. This helps businesses expand and connect with a diverse customer base.

Personalized and automated messaging

SMS gateway services provide other features for personalizing messages and automating communication. Personalization increases engagement by addressing customers by name and tailoring messages to their preferences.

Automation allows businesses to schedule messages, trigger responses, and manage follow-ups efficiently, reducing the need for manual effort.

Cost-effectiveness compared to other communication channels

Marketing your products or services can get expensive fast, and there’s no guarantee your efforts will hit the right audience.

That’s where an SMS API and SMS gateway come in.

They let you reach thousands of interested people quickly and at a fraction of what traditional marketing methods cost. It’s an efficient, cost-effective way to promote your business and make sure your message lands where it matters most.

How to choose the right SMS gateway provider

Most business texting platforms act as SMS gateway providers by leveraging cloud-based technology, enabling companies to send texts directly from a computer.

Choosing the right provider, however, is key to ensuring your SMS strategy works seamlessly. Here’s what to look for:

Coverage and international reach

Not all platforms deliver texts to every international number. Ensure your provider can reach the countries and numbers you need.

For example, Plivo uses test nodes in multiple countries to optimize delivery, ensuring fast and reliable messaging to 220+ countries and territories.

Moreover, Plivo’s built-in GSM Unicode character set lets your users communicate in any language, including Chinese, Japanese, and Arabic, and with symbols and emojis.

API availability and integrations

The right SMS gateway service should offer easy-to-use APIs and integrations with your existing systems. This makes adding SMS functionality to your workflows effortless.

Pricing and cost structure

Understand the platform’s cost structure, including message fees and any additional charges. For instance, Plivo offers competitive pay-as-you-go pricing.

Delivery speed and throughput

Fast message delivery is critical, especially when handling high volumes. Choose an SMS gateway that guarantees quick delivery without delays. Plivo, for example, dynamically manages message priority and expiry, handling message queueing for you.

Security and data privacy

Your provider must secure your data and that of your customers. Plivo, for instance, offers robust protections, including SOC 2 Type 2 and PCI DSS Level 1 certifications, with HIPAA compliance available for Enterprise users. Plivo is also GDPR compliant.

Experience the benefits of SMS gateways with Plivo

When selecting an SMS gateway for mass communication, it’s essential to choose a trusted cloud platform known for reliability, security, and ease of use. Here’s why Plivo is a top choice for businesses:

Global connectivity: Plivo enables instant messaging to customers worldwide through a network of premium carriers.
Advanced features: Manage sender IDs, support special characters for better readability, and access detailed analytics to optimize campaigns in real time.
Seamless integration: Plivo’s SMS API integrates effortlessly with popular tools like Zapier, simplifying workflows.
High reliability: Plivo is built on a strong, reliable infrastructure designed to handle anything you throw at it. With fault-tolerant systems and high availability, it guarantees 99.99% uptime for all its global carrier connections.
Competitive pricing: Pay only for what you use with transparent and affordable rates. Plivo offers volume discounts for committed usage, enabling greater savings as your messaging requirements expand.
24/7 customer support: Plivo offers a range of support plans to meet any organization’s needs, from a free basic plan to a 24/7 premium support option. No matter your plan, you’ll have access to its team of experienced support engineers. Premium support plan users, however, get prioritized responses to their queries within a guaranteed timeframe, depending on the priority of the issue.
‍Global compliance: Non-compliance with regional security protocols increases the risk of hefty fines and puts your reputation at risk. Plivo’s SMS gateway and API adhere to security best practices, including 2FA, to help protect your communications.