WhatsApp Makes Service Messaging Free for Businesses to Compete with SMS
In a move to enhance AI chatbot conversations and increase its share in the growing enterprise communication market in India, WhatsApp has announced that it will make customer service messaging free for businesses on its platform, effective November 1, 2024.
Prior to this announcement, service messages such as customer queries on order status, flight ticket rescheduling, etc. were charged with an initial fee of Rs 0.25 in India, compared to SMS which costs Rs 0.12-0.15 and Google's RCS at Rs 0.20-0.25.
The move comes as WhatsApp aims to compete with traditional SMS, which still dominates the Indian enterprise messaging market worth around Rs 2,500 crore, accounting for about 90% of the volume share at 55-60 billion texts per month, according to industry estimates. WhatsApp has a 30% value share in this market.
This is not the first rate cut by WhatsApp in six months, but experts say that despite these cuts, the platform has struggled to make significant gains in terms of volume market share due to regulations such as those mandating banks and government departments to use SMS for all transactional messages.
However, with the latest move to make service messaging free, WhatsApp hopes to attract more two-way conversations, allow brands to spend on click-to-WhatsApp ads on other Meta platforms, and generate user stickiness amid AI adoption. Nitin Singhal, managing director at communications company Sinch India, comments that "user-initiated message journeys are still not very prevalent because it's not easy for consumers to identify the brand's channel where they need to send the message".
As much as 90% of conversations are initiated by businesses due to discoverability challenges. With this new move, WhatsApp is looking to change the dynamics and make its platform a more attractive alternative for enterprises to communicate with their customers.
The research firm Gartner has predicted that basic messaging channels in India, such as SMS, will grow at an annual rate of 12%, while advanced channels including RCS and WhatsApp will grow at 58% - faster than in any other region in the world.