Explainer: WhatsApp hikes international OTP charges; whom does it affect and why?

This hike been introduced under a new message category titled “authentication-international”, and each message will be now be priced at ₹2.3 per message. This will be applicable for its Indian and Indonesian markets.

So, who does this hike affect and why?

Who will be impacted by this hike?

The new pricing strategy can have a notable impact on global tech giants like Google, Amazon, Microsoft. For they were relying on WhatsApp’s authentication channels, which was offering cheaper rates than having to contend with expensive international SMS fees in India.

What was WhatsApp charging earlier?

WhatsApp was charging a flat fee of ₹0.11 for all businesses to send OTPs. But now, international companies will have to pay nearly 20 times more and contend with a costly ₹2.3 a message for them to send OTPs.

Why is Whatsapp doing this?

This hike is aimed at boosting WhatsApp’s revenue share in the ₹7,600 crore enterprise messaging market, say experts.

What'sApp feels it is losing out on the highly lucrative enterprise messaging market which is growing in India. Earlier, it was offering a competitive price for businesses as compared to what telecom companies in India are charging. For example, telecom companies charge ₹0.12 per SMS for local businesses and a higher rate for international companies at roughly ₹4.13 for overseas companies. So, WhatsApp’s new rates now falls between domestic SMS charges and higher international costs.

How big is OTP messaging?

In the enterprise messaging market, which has various communication channels like SMs, WhatsApp business, Google RCS (a messaging protocol), traditional SMS continues to dominate the market and comprises nearly 90 per cent of this sector. But Over-the-top channels like WhatsApp, Instagram, Facebook messenger, etc., are gaining traction.

In terms of usage, OTP verifications for different purposes such as application logins, financial transactions, and service delivery forms for nearly 80 per cent of all enterprise messaging communication.

Why is OTP messaging a major issue for companies?

Companies had turned to WhatsApp in the first place to send international OTP since it ws cheaper than traditional SMs which are very expensive. SMS pricing has been a long-standing contention for Amazon and Google with Indian telecom operators like Airtel, Jio and Vodophone Idea. According to experts, the problem likes in the definition of what constitutes international traffic. What's worse, there is also no regulatory pricing for this.

Telecom companies classify international messages based on the location of data servers but companies argue that they are companies registered in India, and that the messages are locally generated SMS travelling through domestic networks. Many feel that linking SMS rates to server location is impractical.

What classifies international messages and the rationale behind associated costs have been a problem for a long time, with companies and carriers divided over fair pricing mechanisms.

What's Indian telecom companies say?

Indian Telecom companies feel that international communication charges are sky-high as compared to the ones offered in India. And that India has the lowest calling and messaging rates in the world and said that their pricing is reasonable.

WhatsApp too is using location API and the company corporate structure to decide if the company is based in India or publicly listed in India to term it as an international message.

What WhatsApp price hike implies for India

This pricing change highlights India’s critical role in WhatsApp’s business strategy, underscoring the country’s significance in the booming enterprise messaging field.