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SMS still a winner for authentication – for now
Despite the rise in rich business messaging, SMS still has a big role to play in the messaging market. It may be tainted by AIT and other frauds, but it still underpins authentication traffic.
The latest data from Juniper Research finds that SMS is set to account for 70% of mobile-based authentication spend by 2025, beating all others such as flash calling and APIs – and despite SMS authentication traffic predicted to only rise 4% next year.
The analysts predict that, despite market pressures, including rising SMS fraud and increasing termination charges, SMS will remain enterprises’ most used technology to authenticate and identify their users over the next five years.
The new research, which assessed technologies including SMS, flash calling, verification APIs and mobile identity solutions, forecasts SMS traffic will reach 1.4 trillion messages by 2025; growing from 1.2 trillion in 2023.
However, operators face challenges from thirdparty services, the report says. It has identified
the launch of third-party authentication services over OTT apps as the biggest threat to operators’ authentication SMS revenue. As SMS prices continue to rise, the value of the service amongst enterprises will decline, with some businesses already migrating their authentication traffic to OTT messaging applications.
Over the next five years, the report forecast operators will lose $2.8 billion of authentication revenue to OTT channels, including WhatsApp and Viber. To minimise losses, operators must urgently reassess SMS pricing against competing channels, including OTT messaging apps, or risk losing further authentication revenue.
Flash calling, in which a missed call replaces a monetisable SMS message, has experienced significant traction over the past two years. However, operators now block this through partnerships with third party messaging firewalls with the aim of keeping authentication traffic over established SMS channels, further increasing the reliance on SMS for authentication.
