“Effective August 1, 2024, we are lowering rates to be competitive with alternative channels and encourage businesses to bring more end-to-end post-purchase customer journeys to WhatsApp,” the company said in a recent blogpost.
The reduced rates are, however, only applicable for one-time authentication (OTPs), order/delivery managements, account updates, payment reminders, or feedback surveys. For marketing and sales messages, WhatsApp has, in fact, increased the rate by 8% to Rs 0.78 per conversation to prevent the platform from becoming a spam channel. The revised pricing will be applicable effective October 1.
Experts said WhatsApp’s sharp price cut is likely to impact both messaging channels, especially RCS which is still emerging in India. Some say it could severely affect traditional SMS services with WhatsApp already capturing a major share of the corporate messaging market. Others believe that banks and government departments will continue to use SMS for universal coverage.
“SMS is directly targeted by this pricing change…RCS could see a more direct competitive impact if businesses choose WhatsApp for its broader reach and lower pricing,” said Shradha Thapa, regional head – OTT India, Infobip.“Regions with a high penetration of WhatsApp users and growing internet access, such as Latin America, parts of Asia, and Africa are likely to see increased volumes,” she said. WhatsApp has nearly 500 million users in India, its single-largest market globally.Aniketh Jain, founder of customer communications startup Fyno, said, “Unlike SMS, which charges for each 160-character message, WhatsApp’s charges cover a 24-hour conversation. This move could further push SMS closer to obsolescence.”
However, Beerud Sheth, CEO of Gupshup, a global leader in conversational platform services, said RCS is a very different ecosystem compared to WhatsApp. “While WhatsApp’s pricing and policies are determined by one company, Meta, RCS pricing and policies are individually decided by hundreds of telecom operators on their respective networks.”
In terms of volumes, SMS still constitutes 90% of India’s enterprise market, growing from 55 billion in January to 60 billion in June, as per some estimates. However, in terms of value, WhatsApp is believed to have about 30% share in the Rs2,500-crore enterprise messaging market. RCS, which has full coverage in 10 countries, has crossed 1 billion messages globally as of December 2023.
“With multiple price revisions over the last 2 years, I won’t be surprised if there is another revision and new business model in the next few months,” said Nitin Singhal, managing director, Sinch India. “Even though these are early days, I do see the deterioration in SMS volume, considering the large volume of active WhatsApp users. At the same time, the reach of SMS cannot be matched by any other channel; hence, I do not expect it to be a big blow.”
Lately, government departments have also started using WhatsApp for new use cases. “We are using the platform for Supreme Court, PMJAY scheme, election queue management, survey, complaint monitoring, but mission-critical services such as UIDAI, EPFO still continue to be on SMS and will remain like that,” a top official at the National Informatics Centre (NIC) told ET.
NIC handles messaging traffic of 800 state and central government departments totalling nearly 2.5 billion messages every month.
“WhatsApp is a great way for people and businesses to get things done – everything from booking a flight to receiving a timely delivery update. We occasionally make adjustments to our offerings to better reflect the ways in which the service is used and the types of information people are choosing to receive,” said a WhatsApp spokesperson, in response to ET’s queries.
Research firm Gartner estimates RCS and Google to reach a combined market of $1.6 billion in India, capturing half of the value share of the commercial messaging market by 2028. While basic messaging channels such as SMS are set to grow at an annual rate of 12% through 2028, advanced channels such as RCS and WhatsApp will grow at 58%, Gartner said. Other channels include Telegram, Truecaller, email, conversational chatbots, voice, IVR., etc.