SMS May Be Going Extinct, But Not For Businesses

By Kenny Orisanaiye, Founder and CEO of HollaTags Limited

If SMS is dying, why do businesses insist on sending SMS?

How often do mobile phone users send text messages via Short Message Service (SMS) these days? 

The answer to the question depends on who is sending it and where they are, but generally, users send fewer SMS nowadays. Peer-to-peer instant messaging has largely moved to instant messaging platforms like WhatsApp, Telegram, and iMessage. Conversations on WhatsApp were already generating nearly three times as much daily traffic as person-to-person (P2P) SMS as of 2017. Juniper Research has predicted that “SMS messaging will fall from $66 billion in 2020 to $61 billion by 2025, owing to declining P2P traffic.”

Interestingly, the Over The Top (OTT) messaging landscape is seeing changes that could further accelerate the death of SMS. The European Union is compelling big tech platforms to allow their users to exchange messages, send files or make video calls across messaging apps. Users will be able to send a message from Whatsapp to friends on Telegram or iMessage. However, there are still concerns about implementing this integration, including its impact on encryption across messaging apps. But if it works out in Europe, one can expect messaging apps to become interoperable globally. 

Nevertheless, application-to-Person (A2P) messaging, also known as Business Messaging, is still primarily via SMS; promotions, alerts, notifications and dynamic passwords mostly go to the SMS inbox. To be clear, A2P refers to messages in which a person is receiving messages from an application rather than another individual. Credit or debit notifications from banks are a common example of A2P messaging. 

Although it may appear inevitable that most businesses will also massively migrate all of their A2P interactions to OTT services, that is not yet happening. While OTT messaging channels such as Whatsapp are increasingly used for business messaging, SMS still reigns supreme for businesses trying to send automated instant messages to their customers. According to Research and Markets, the global A2P messaging market is predicted to continue growing by 3.7% annually to reach $77.1 billion by 2026. 

The biggest reason is the universality of SMS. The operator-provided texting service is ubiquitous and can reach large numbers of users; by default, mobile devices can send and receive SMS once connected to a mobile network and do not require a particular application or internet connectivity. Thus, businesses can hope to reach their customers via SMS without complications. 

On the flip side, there are many platforms available to users for OTT messaging, depending on their choice. As a result, businesses may have to integrate with multiple OTT messaging applications to reach customers. In addition, users with limited internet availability or using basic phones without access to OTT apps are excluded from the messaging. On the African continent, for instance, only about 40% of the population use the internet, and basic phones are the majority–in the fourth quarter of 2021, smartphone shipments amounted to 21.5 million units, while feature phones were more than 27 million.

Besides, OTT messaging has security concerns as they are controlled by third-party providers such as Meta. Users are often worried about these organisations’ collection, processing, storage, and usage of personal data. This factor compels businesses to continue delivering dynamic passwords and such via SMS. In addition, even OTT messaging services often send SMS to register and authenticate their users. 

OTT messaging services already have the lead in terms of the total number of mobile messages sent, and this is predicted to continue–from 182 trillion messages in 2021 to 223 trillion by 2025. Platforms like WhatsApp are also working hard to gain a firm foothold in the A2P market. For example, WhatsApp recently did a global launch of its Cloud API to make it easier and faster for businesses to integrate the platform into their communications.  

However, SMS’s firm grasp on business messaging will endure for the foreseeable future, at least until an OTT platform attains the ubiquity of SMS and gains the unflinching trust of users.

Kenny Orisanaiye is the Founder and CEO of HollaTags Limited, a leading technology platform founded in 2014 that facilitates communication for businesses looking to connect with their audience on mobile.

HollaTags global connectivity reaches mobile devices in over 220 countries. The company operates global SMS delivery to over 1,900 telecom networks, and serves 8,000 customers around the globe, including banks, fintech, and multinational businesses.

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