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A storm is brewing in the world of international SMS, putting its future at risk. Two key threats are driving this: skyrocketing costs claimed by enterprises and “fake traffic” fraud used to inflate those costs.

This is leading major brands to abandon SMS for authentication messages, like one-time passwords, and explore alternative channels. Both sides, brands and the messaging ecosystem, are losing money as a result.

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The report urges an immediate collective effort to address these issues, including reviewing costs, tackling fraud, and finding collaborative solutions. If nothing changes, the future of international SMS, especially for critical tasks like authentication, might be bleak.

Key Takeaways

  • Mobilesquared has identified 50 “at-risk” markets where significant increases to international termination rates are attracting excessive levels of fraud.

  • Brands are no longer willing to bear the increased costs associated with the delivery of international authentication messages (such as one-time passwords – OTPs)in these at-risk markets. .

  • The high international termination rates are attracting growth in fraud, and Artificial Inflation of Traffic (AIT) fraud in particular.

  • The combination of high international rates and AIT a secondary factor, is potentially jeopardising the long-term future of international A2P SMS in these at-risk markets, where brands are looking to restrict their spend on SMS business messaging.

  • A number of at-risk markets have now experienced a decline in international traffic up to 50% in the last 4 months; this will extend to more markets unless this risk is tackled.

  • Major brands believe high international rates and AIT fraud has made SMS a damaged channel in selected markets, irreparably so in some brands’ view.

  • Mobile operators believe they lost $4.7 billion in revenues in 2023 (separate from grey route fraud).

  • The availability of new (and cheaper) verification channels is placing additional pressure on A2P SMS in at-risk markets.