Growth in the Communications Platform as a Service (CPaaS) market is being jeopardised by growing threats from fraud.
The rapidly rising presence of smishing/phishing and artificial inflation/generation of traffic is damaging consumer trust in traditional communications channels. This is negating CPaaS growth and damaging revenue streams for service providers, with more users turning to platforms they deem more reliable.
Our new report with Mobilesquared, ‘Do We Still Have Trust in Communications?’, revealed that CPaaS providers’ trust in SMS is expected to drop by 24.9% between 2023 and 2025. In contrast, trust in Rich Communication Services (RCS) is predicted to leap to 75.1% and to 41.7% in WhatsApp over the same period.
Although SMS was not impacted in the short-term by increased levels of fraud in 2023, it will significantly impact the channel in the long-term. The ways users interact with communications channels are changing. Securing the future of SMS requires CPaaS players to deploy proactive solutions that enable accurate traffic delivery and eliminate fraud.
Fraud and the Risks to the Telecoms Ecosystem
The biggest fear expressed by the CPaaS industry throughout 2023 was that SMS fraud was closely following in the footsteps of voice fraud. Voice fraud has already resulted in the loss of trust in the channel by brands, prompting the continued decline in spend.
Our research found that:
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Traditional channels accounted for 70% of trust, but by 2025 this will drop to around 50%, with 50% of trust attributable to RCS and WhatsApp.
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Despite this, traditional channels still remain the best way to engage with consumers.
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SMS remains the most engaging and effective messaging channel and most brands use SMS for every use case including alerts, marketing & promotions, reminders, and security.
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CPaaS providers now expect fraud to increase in the coming years, as opposed to decreasing based on the 2022 research.
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They now expect 8.1% of their customer’s CPaaS spending to be lost to fraud, up from 4.75% previously.
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Smishing/phishing is viewed as the fraud that will have the greatest impact, ahead of artificial inflation/generation of traffic, and grey routes.
A disproportionate rise in fraud levels challenges a brand’s trust in that channel. It is therefore crucial that these challenges are tackled pre-emptively to move the industry forward and avoid irreparable damage to traditional channels.
Restoring Trust with Number Intelligence
The findings of the research do not mark the end of A2P SMS, but urgent measures are needed to delay its regression. CPaaS players need to tackle fraud in the short-term and look to offer engagement functionality in the long-term.
Ensuring quality delivery and mitigating the presence of fraud means having comprehensive end-to-end visibility into your communication paths. Deploying our Global Number Range (GNR), Mobile Number Portability (MNP) and Live data enables you to validate a call or message before routing, providing reassurance that you’re only delivering to legitimate requests.
Harnessing our trusted global data enables CPaaS players to seamlessly route calls and messages without delays. Our service enables delivery improvements by allowing CPaaS providers to route directly, rather than through multiple intermediaries. This means that you can gain full transparency into your traffic by managing how it’s being delivered.
Taking proactive steps to authenticate traffic will help CPaaS players not only minimise damaging losses, but also contribute towards rebuilding trust in the industry as a whole. By deploying XConnect’s Number Information services, CPaaS players can regain control of the numbers in their systems and protect the future of traditional communications channels.
How XConnect Can Help
