Posted by WhatsApp, a widely used messaging platform owned by Meta, has made a significant change to its pricing for international one-time passwords (OTPs) sent to users in India. Starting June 1, 2024, the cost for each international OTP message will be ₹2.3. This adjustment represents a 20-fold increase from previous rates, albeit still remaining below the cost of traditional SMS services. This development is expected to have a notable impact on how international companies, including tech giants like Amazon, Google, and Microsoft, manage their communications budgets in India.
Understanding the Price Hike
According to a report by ET, this decision introduces a new message category known as “authentication-international.” While the revised pricing is significantly higher than before, it’s still half the price compared to what businesses typically pay for sending conventional SMS messages. This move by WhatsApp aims to generate more revenue from its enterprise services while continuing to offer a comparatively affordable solution for international messaging needs.
The Impact on International Firms
For a long time, multinational companies have used WhatsApp as a cost-effective platform for sending OTPs and other notifications to their customers in India. Before this change, companies were charged ₹0.12 per SMS by local telecom providers, but international SMS costs were much higher, at about $0.05 (approximately ₹4.13) each. WhatsApp had offered a uniform rate of ₹0.11 per OTP message, providing a cheaper alternative for overseas companies. With the new rate of ₹2.3 per message, however, these companies will face increased costs for sending OTPs and other automated messages to their Indian users.
The Broader Market Dynamics
The enterprise messaging market, which includes SMS, WhatsApp Business, Google RCS, and push notifications, is valued at over ₹7600 crores. Research from Juniper Research suggests that the volume of over-the-top (OTT) business messaging traffic in India is expected to grow from 4 billion messages in 2023 to 24.2 billion by 2028. Despite the rise of digital platforms, traditional telecom SMS still dominates nearly 90% of the market share, primarily used for OTP verifications, financial transactions, and various service deliveries.
Additionally, Juniper Research has forecasted that Indian telecom operators could lose approximately $29.2 million (around ₹250 crores) in revenue from business messaging to OTT platforms like WhatsApp over the next five years. This indicates a shifting trend towards digital communication solutions, which offer more cost-effective and efficient alternatives to traditional SMS.