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March 28, 2024

WhatsApp’s New OTP Pricing Strategy Sparks Concerns for Global Tech Giants Operating in India

In a strategic move to bolster revenue from its enterprise services, WhatsApp has implemented a substantial hike in charges for international one-time passwords (OTPs), stirring concerns among global tech giants like Amazon, Google, and Microsoft operating in India.

According to a report by ET, WhatsApp’s revamped pricing structure in India now sets the cost of international OTP messages at 20 times higher than its previous rates. Despite the significant increase, the new pricing remains comparatively economical, standing at INR 2.3 per message for the Indian and Indonesian markets. This adjustment, labeled as ‘authentication-international’ messages, signifies WhatsApp’s concerted effort to attract more businesses to leverage its services.

Effective from June 1, this pricing revision is poised to impact the communication budgets of multinational corporations relying on WhatsApp as a cost-effective alternative to traditional international SMS charges prevalent in India. Previously, while local businesses incurred charges of INR 0.12 per SMS, overseas entities faced a relatively higher cost of $0.05 (approximately INR 4.13). To bridge this gap, WhatsApp had initially introduced a uniform rate of INR 0.11 per OTP message for all businesses. However, with the latest adjustment, foreign companies will now bear the brunt of the escalated charge of INR 2.3 per message.

This development unfolds against the backdrop of a thriving enterprise messaging market in India, which encompasses various platforms like SMS, WhatsApp Business, Google RCS, and push notifications, collectively valued at over INR 7600 Cr. Despite this, traditional telecom SMS continues to dominate the market, commanding nearly 90% of the market share. Notably, OTP verification remains the primary driver, constituting approximately 80% of all enterprise messaging communications, spanning application logins, financial transactions, and service deliveries.

Moreover, projections from Juniper Research forecast a significant surge in over-the-top (OTT) business messaging traffic in India, estimating a rise from 4 Bn messages in 2023 to 24.2 Bn messages by 2028. In light of this trajectory, India’s telecom operators anticipate a substantial loss of $29.2 million (approximately INR 250 Cr) in business messaging revenue over the next five years to OTT messaging platforms.

WhatsApp’s move to adjust OTP pricing follows its introduction of WhatsApp Channels, announced in September of the previous year. Available in over 150 countries, including India, WhatsApp Channels offer users a private channel to receive updates relevant to their interests on the platform. This initiative underscores WhatsApp’s commitment to enhancing user experience and expanding its reach in the realm of business communication.

As WhatsApp navigates its evolving pricing strategy, the implications reverberate across the landscape of enterprise communication, particularly impacting multinational corporations reliant on its services in India. With the surge in OTT messaging traffic and the dominance of OTP verification, the dynamics of business messaging in the country are poised for further transformation, signaling both challenges and opportunities for stakeholders in the digital communication ecosystem.

Jhumpa Lahiri

Jhumpa Lahiri

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