Rising Use of Two-factor Authentication Driving Demand for A2P SMS and API Services

A2P SMS services are used by a diverse range of applications to provide application-related information to their customers. Owing to the rising demand for smartphones and other mobile devices, players in several industries have started to focus on developing a telecommunications network to remain in touch with their customers. A2P SMS is also a crucial aspect of retaining consumer loyalty, as new schemes may not be noticed by the consumer on their own. 

The commercial importance of maintaining a strong A2P SMS network is likely to encourage more companies to make use of the same in the coming years. According to Transparency Market Research, the global A2P SMS API market is expected to exhibit a steady 4.10% CAGR from 2016 to 2024. The market’s valuation is expected to rise from US$171.9 mn in 2015 to US$245.9 mn. The A2P SMS market, valued at US$37.8 bn in 2015, is expected to exhibit a 4.90% CAGR from 2016 to 2024, with its valuation likely to increase to US$58 bn.

What are the prime drivers for the global A2P SMS and API market?

One of the most important drivers for the A2P SMS market is the rising adoption of two-factor authentication. The growing use of online payment portals and card payments has made conventional security protocols redundant, leading to the demand for two-step verification. Most urban customers using online or card payment portals have a smartphone, which allows for an authentication process based on the user’s online credentials as well as the user’s mobile number.

The increased security provided by two-factor authentication has driven the demand for A2P SMS services, as SMS services are overwhelmingly preferred in two-factor authentication over OTT messaging applications such as WhatsApp, Hike, and Messenger. 

The intensive, round-the-clock use of smartphones by most urban consumers has also led to significant prospects for mobile marketing. Due to the saturation of information in most other media channels, personalized A2P SMS have now emerged as the perfect medium for marketing endeavors. Location-based and event-based marketing messages can also be conveniently sent over A2P SMS networks. This has become a key driver for the global A2P SMS and API market over the last few years.

What are the widely pursued competitive strategies in the A2P SMS and API industry?

Inorganic growth through mergers and acquisitions is a popular strategy in the global A2P SMS and API market. Due to the high number of players offering A2P SMS services, players focusing on a particular region or type of service are abundant in the global market. This has made M&As a lucrative strategy for companies to expand the product catalogs and global coverage. 

In July 2016, Route Mobile, a leading messaging and voice services provider, announced its acquisition of Cellent Technologies, a longtime rival. Route Mobile has notable prospects in India, where the market for A2P SMS stands to grow rapidly due to the rampant rise in the number of smartphone users. Such acquisitions are likely to become more common in developing economies, where the newly minted middle class presents lucrative opportunities for A2P SMS service providers. 


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