Introduction
WhatsApp has recently announced a significant update to their messaging rates for businesses, particularly focusing on authentication/verification messages (OTP), which marks a pivotal shift in the digital communication landscape, especially in India.
This strategic move introduces a new pricing structure that is not only competitive but aims to revolutionize the way businesses communicate with their customers for authentication purposes. This blog post delves into the implications of WhatsApp's announcement, assessing its impact on the traditional SMS monopoly in India and offering insights on how businesses can adapt to this change for enhanced communication and verification processes.
Overview of WhatsApp's New Authentication Rates Announcement
From June 1, 2024, WhatsApp will update its authentication rate card, introducing a new "authentication-international" rate. This change will take effect in Indonesia and India, with India seeing the implementation on July 1, 2024.
Read the official update/ announcement from WhatsApp here
As per the rate card, the authentication message charges are going to be INR 0.11 (ie, 11 paise). This is lower than what businesses typically pay for sending authentication messages using SMS.
The rationale behind this pricing update is to reflect the valuable features incorporated into WhatsApp's authentication solution and to align the pricing with industry standards.
Noteworthy features include customizable message validity periods and a zero-tap capability on Android devices, both designed to enhance conversion efficiency and manage costs more effectively.
Impact on the monopoly of SMS for authentication in India
Traditionally, SMS has been the go-to solution for authentication and verification in India, largely due to its universal accessibility and zero dependency on internet. We have separately covered why SMS will continue to dominate transactional messaging for years to come in a separate article here.
However, WhatsApp's entry with a competitive rate of 11 paise per authentication message introduces a formidable challenge to this monopoly. Considering WhatsApp's vast user base in India and its higher deliverability and engagement rates, businesses are likely to reconsider their reliance on SMS for verification processes. This shift has the potential to significantly disrupt the current market dynamics, offering a more cost-effective and user-friendly alternative for authentication messages.
The authentication rates of WhatsApp are lower than the current SMS rates in India which offers comparatively low reliability.
The importance of higher deliverability of authentication messages
Authentication messages act as a passkey for validating the user or the transaction initiated by any user. From payment confirmations to 2 factor authentication, these are extremely critical to ensure:
- Unauthorized access or transactions are blocked; and
- Authorized transactions or access request go through seamlessly.
It is important for every business to ensure their authentication messages get 100% delivered to users to ensure there is no failure of transaction or there is no drop off of user while logging in or accessing the service or application.
Example:
- If a person is waiting to receive an OTP from a bank to authenticate a transaction, and the OTP does not get delivered in time, the transaction is bound to fail.
- Similarly, if a person is attempting to log into the application and is does not receive the OTP in time, then he or she will drop-off which could lead to a potential loss of business.
Today businesses strive to achieve a 100% deliverability of authentication messages but almost always fail to achieve this gold standard metric. The SMS delivery rates in India at scale are ~ 85%, which means that 15 out of every 100 authentication messages fail to get delivered.
Even if a logical failover protocol between multiple SMS providers is built in by engineering teams (which is very rare), the delivery rates only increase marginally to 90%. There is still a considerable 10% gap that needs to be addressed.
How can businesses use WhatsApp to achieve 100% deliverability of authentication messages (OTP)
WhatsApp authentication messages can immediately and positively impact the deliverability metric of authentication messages. Even before the release of 'authentication messages', some businesses (including the giants like Amazon), are already using WhatsApp for sending authentication codes.
There were multiple digital businesses in India as well like Fitpass that were consciously using WhatsApp as a backup channel whenever SMS delivery fails for OTP. But until today, such authentication messages were being charged at higher rates by WhatsApp. Even then, businesses like Fitpass which are very particular about user's experience where using WhatsApp as a backup channel to achieve 100% deliverability.
WhatsApp on a standalone basis cannot achieve 100% deliverability due to its dependency on internet for delivery of messages, as well as the lack of universal reach. Penetration of WhatsApp in India is great but still not universal.
Many users in India also have or use different numbers on WhatsApp, often leading to a situation where the mobile number of the user available with businesses is not accessible or available on WhatsApp. As a result, while the reliability of WhatsApp is great, the deliverability of messages on WhatsApp on an average has been 70-75%.
Businesses have to smartly orchestrate cross-channel failover protocol that will allow it to combine SMS and WhatsApp to achieve 100% deliverability of authentication messages. This usually requires some backend engineering effort to asynchronously understand call back information from SMS or WhatsApp and activate a channel failover almost instantly.
The other easy way is to use the routing feature of Fyno, which allows engineers to build these logical protocols on the fly and activate it instantly. Here's how a logical failover protocol between WhatsApp and SMS will look like on Fyno:
You can decide to keep SMS as primary and WhatsApp as back-up or vice-versa. It may make sense to keep WhatsApp as primary as it may be cost-effective and WhatsApp also gives you open status, unlike in case of SMS that only gives delivered status.
What should business do immediately to leverage this opportunity
To leverage WhatsApp's new authentication rates effectively, businesses must take immediate steps to integrate this solution into their communication strategies. This includes conducting a thorough review of existing authentication processes, ensuring technical readiness for API integration, and navigating the legal and compliance aspects related to user data and consent.
Additionally, businesses should strategize on updating their communication channels to include WhatsApp alongside SMS for sending authentication messages.
Advantages of WhatsApp's other authentication features for businesses
WhatsApp's authentication solution offers distinct advantages for businesses, including customizable message validity periods and zero-tap capabilities on Android.
These features not only provide a superior user experience but also enable businesses to manage authentication costs effectively and improve conversion rates.
The comparison with traditional SMS methods highlights the potential for improved efficiency, cost savings, and enhanced user engagement through WhatsApp's platform.
Looking Ahead: The Future of Authentication in India
As WhatsApp continues to innovate and expand its authentication solutions, the digital communication landscape in India is set to evolve. Future enhancements to WhatsApp's authentication services are likely to further disrupt traditional methods, paving the way for more secure, efficient, and user-friendly verification processes.
The broader implications for digital security, user verification, and business operations in India are significant, signaling a shift towards more integrated and advanced communication solutions.
Conclusion
WhatsApp's announcement of new authentication rates represents a transformative moment for business communications in India. By challenging the traditional SMS monopoly and introducing a cost-effective, user-friendly alternative, WhatsApp is poised to redefine authentication processes. Businesses are encouraged to reassess their communication strategies, embracing the potential of WhatsApp's authentication solutions to enhance customer engagement, improve verification processes, and drive business outcomes.
