President Obama's reelection campaign has been using Square's mobile POS system for some time as a part of its fundraising efforts, and now it's adding an additional mobile payment tool: SMS text messages.
According to a report by Time Magazine, the campaign sent a text message to supporters soliciting donations. Recipients of the message could simply text the dollar amount they wished to donate. But what makes this campaign different from other fundraising appeals using text messages is that it charges donors' credit cards, not their phone bills. That's a first for political campaigns.
For advocacy or emergency relief groups raising funds via text messaging, wireless carriers normally place the donated amount on a subscriber's bill for payment later. They also reduce their normal fee for that type of direct carrier billing in order to increase the amount of aid available. However, in the case of political campaigns, the carriers have not been willing to reduce their cut.
The Obama campaign is working around the billing fee by linking mobile numbers to credit card numbers already stored in its donor database. Donors are asked if they would like to keep their credit card numbers on file. The text messaging campaign uses those saved credit card numbers to collect future donations, saving the high direct-carrier-billing fees and making it easier for donors who no longer have to enter credit card information on their phones.
According to the Time report, the donor text campaign is working; the response rate was 20 times great than previous text message appeals.
The Obama campaign said the hope is that text messages can be sent to donors during "moments of emotional excitement to trigger the campaign finance equivalent of an impulse buy." So donors can expect messages during debates and after the president accepts his party's nomination.
For more on this topic, visit the bill payment research center.