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WhatsApp ends global companies' cheap-OTP run.

Date: 27-03-2024
Subject: WhatsApp ends global companies' cheap-OTP run
Meta’s WhatsApp has started a new category for international OTPs (one-time passwords), and priced such enterprise messages in India at 20 times more than it was charging earlier, in a bid to increase revenue from such services.

Despite the sharp increase, the pricing for India is still half of what enterprises pay for conventional SMSes, as WhatsApp tries to attract more enterprises for this growing segment.

WhatsApp last week introduced a new category called ‘authentication-international’ messages priced at Rs 2.3 per message for India market. The new category is applicable in India and Indonesia starting June 1, an update on its website showed.

The move is likely to significantly impact communication budgets of international businesses like Amazon, Google and Microsoft who had been challenging unfairly high prices of international SMSes in India and had started relying on WhatsApp as an alternative, say experts.

Meta and telecom companies did not respond to ET’s queries till press time.

Telecom companies currently charge Rs 0.12 per SMS for local companies versus $ 0.05 (or Rs 4.13) for overseas ones. This large arbitrage created an opportunity for WhatsApp to peg its OTP delivery charges at Rs 0.11 for all enterprises alike. With the new system, however, WhatsApp will be charging foreign companies at Rs 2.3 per message.

“It was high time that Meta realised they are missing on the opportunity that international messaging offers. The current pricing is strategically placed midway between SMS-domestic and SMS-international which is a great move, I think,” Jain added.

"Plus, the fact that they are starting with new rates in India shows that it is the most important market for them," he said.

Enterprise messaging is one of the fastest growing businesses in India. It is currently valued at over Rs 7600 crore encompassing multiple channels such as SMS, WhatsApp Business, Google RCS, push notifications etc, as per industry estimates. Although over-the-top channels are gaining popularity, nearly 90% of the entire market is still dominated by conventional SMS. In terms of use-case, 80% of all communications cater to OTP verifications for application logins, financial transactions, service ..

Exorbitantly high international SMS charges in India have long been a subject of debate between Amazon, Google and others versus telecom companies Airtel, Jio and Vodafone Idea. This is mostly because there is no clear definition of international traffic and the regulator has kept its pricing under forbearance.

Operators treat the former as such because they have their data servers overseas whereas companies argue that they are India-registered entities whose SMSes are generated locally and travel over domestic networks.

Telecom veterans including Mahesh Uppal have expressed that linking SMS rates to the location of servers is unrealistic because “the actual location of the concerned app and data servers is based on several factors far removed from the routing of SMSs.”

Meanwhile, telcos argue that it is not uncommon for network providers across the globe to charge high prices for international communication. “Even with the current pricing, India is still among the lowest ARPU markets with the cheapest calling/messaging rates in the world. So why is it an issue for these big tech giants to pay for doing business in India?,” a telco executive said.

WhatsApp, in its recent update, also seems to have taken a similar position in classifying foreign enterprises. It uses multiple factors such as location API and the corporate structure of the said enterprise to determine whether its parent is based or publicly listed outside.

 Source Name : Economic Times

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