Why SMS Authentication costs too much for Enterprises

More and more companies are moving away from SMS-based one-time passwords (OTPs) (often there are called SMS passcodes) as part of their two-factor authentication (2FA) strategy. As security threats grow more sophisticated, relying on SMS authentication, vulnerable to phishing, SIM-swapping and interception, it has become increasingly risky and outdated, but this is not the main reasons companies decide to change out their authentication. High SMS costs are!

A recent example of this shift comes from Google: Gmail is beginning to replace SMS OTPs because of bad security, high costs and improvements in operational efficiency (which translates to SMS cost savings). In February 2025, the company announced this change so that instead of receiving a SMS code via text, users will scan a QR code with their smartphone to authenticate in the future. In general Google wants to move away from SMS OTPs in all their services while still providing phishing resistant MFA (i.e. as a member of the FIDO Alliance Google quickly realised the potential of passkey authentication and decided to use it for the google account login, which has the most users across their services)

It is important to understand why and how big companies like Google are moving away from SMS OTPs. That’s why we will answer the following questions in this blog:

• Why is SMS traffic so costly for enterprise companies who use SMS OTP authentication?
• How do prices of SMS OTPs vary between countries?
• How do SMS costs vary across different providers?

SMS authentication, commonly referred to as SMS verification or SMS Passcodes, remains popular but increasingly expensive. It’s a method of verifying user identity through text messages. Typically, you differentiate between two types:

• Single-factor process (SMS OTP only): the user enters his phone number/mail, the system sends one-time code via SMS, the user inputs code to verify identity

• Two-factor process: the user enters username/password first, the System sends verification code via SMS, the user enters code as second factor. In this case SMS is a possession-based factor because the user needs to have access to his mobile device in order to use it

It is important to understand how SMS authentication works in order to decide for the right process and determine wheter this authentication method is suitable for your enterprise. Typical use cases for these proccesses include:

• Account login verification
• Password resets
• Transaction confirmations
• Account changes verification
• New device authorization

SMS are not only sent for authentication. In fact, they were created for messaging between two people. However, over time, different models and types of SMS usage have evolved:

This is the classic form of texting where two people send messages from their devices to each other. It’s informal, direct and usually low-volume. P2P SMS uses standard phone numbers and is handled by mobile carriers.

This is when a company, service or system sends a message to a user. It’s often automated and typically used at scale. Businesses use A2P SMS for customer support, marketing, alerts, and authentication. Since these are not one-on-one texts, they often go through short codes, toll-free numbers, or dedicated long codes. This is the category SMS OTPs count to (example messages include: payment confirmations, OTPs, promotion messages etc.)

This is when the person is reaching out to a business or system. P2A SMS lets users text a keyword or command to a short code or number to trigger an action (example messages include support conversations, attendance confirmation).

Depending on the type of message the cost can also vary between for different use cases:

Transactional SMS are sent automatically triggered as part of a pre-defined process when certain conditions are met. Example costs include the following:

• SMS authentication/verification costs: Costs for sending one-time passcodes (OTPs) or verification codes for secure logins.
• SMS order conformation costs: Charges incurred for confirming customer orders and providing shipping updates.
• SMS downtime alert costs: Fees related to notifying customers of service outages or disruptions.
• SMS appointment reminder costs: Expenses associated with automated reminders for appointments, reducing no-shows.

In general, promotional messages are primarily used for marketing (announcements about sales, special offers, or new product launches etc). Example costs include the following:

• SMS marketing cost: Fees associated with general advertising campaigns to a broad customer base.
• SMS discount costs: Costs incurred by sending promotional offers, discounts, and exclusive deals.
• SMS photo costs: Charges related to multimedia messaging (MMS), typically higher due to larger data payloads.
• SMS event promotion costs: Expenses for sending notifications or invitations related to events or product launches.

Promotional SMS messages typically have higher costs compared to transactional ones, which deliver essential information (order confirmations, one-time passwords (OTPs), payment notifications etc.).

Transactional SMS messages are generally more affordable because they’re classified as critical communications and are less likely to be filtered or blocked by carriers or regulatory bodies. In contrast, promotional messages often come with stricter guidelines and higher fees, particularly in regions with tight advertising regulations.

Another cost influencing factor is the size of the payload sent which is different for SMS and MMS (Multimedia Messaging Service), which we will discuss in the next section.

Let’s briefly understand the difference between SMS (Short Message Service) and MMS (Multimedia Messaging Service).

The concept of SMS was born out of discussions within the GSM (Global System for Mobile Communications) standards group in Europe in the early 1980s. It was proposed that 160 characters were sufficient for most text messages, which became the SMS character limit. The following characteristics apply:

• Text-only
• No media
• Character limit of 160
• Send over cellular networks
• Supported by any mobile phone, smart or not

MMS were then eveloped as an extension of SMS in the 1990s to support multimedia content like images, audio, and video. It was standardized in the early 2000s by 3GPP (Third Generation Partnership Project). These two services have different features for their use cases. MMS have the following characteristics:

• Supports media like images, video, GIFs and audio
• No character limit
• Requires mobile data connection or Wi-Fi
• Not supported by older devices

Apart from the messaging services SMS and MMS which are sent over the cellular network, there is another service called RCS (Rich Communication Services) gaining popularity recently, especially since its support in iOS 18.

• RCS is a messaging protocol developed by the GSMA (the global mobile network industry group) that enhances messaging between mobile devices.
• RCS is used via mobile data or Wi-Fi
• RCS is supported natively in Google Messages and by some OEM apps (e.g., Samsung Messages).
• RCS messages can be end-to-end encrypted, but this depends on the app and the contact you’re chatting with (for example, Google Messages offers encryption for 1-on-1 chats if both parties are using RCS).

For authentication there is support for business messaging and authentication, often through verified business chats. Messages can include interactive buttons (e.g., “Confirm Login”).

WhatsApp messages are sent through the WhatsApp app using Wi-Fi or mobile data, not through your mobile carrier. They work globally and don’t rely on your phone number’s carrier, only that both parties have WhatsApp installed.

• Whatsapp messages are fully encrypet
• WhatsApp is universal so if someone has the app, you can message them no matter their carrier or phone type

Authentication with whatsapp messages looks similar to standart SMS OTPs but the messages are accessed through the app.

When assessing SMS authentication costs, companies often overlook hidden expenses like recovery, support overhead and infrastructure. The otp sms price can rapidly escalate in high-volume environments, making scalability challenging. The rising costs of SMS OTP charges are driven by several factors reshaping the telecommunications landscape.

Telecom providers are heavily investing in infrastructure upgrades to maintain the reliability and security of SMS-based authentication.

The global increase in SMS usage for various functions puts pressure on network capacity, requiring continuous maintenance and expansion since there is an average of 23-27 billion text messages sent globally each day.

Compatibility with various telecom networks and adherence to differing regional regulations is costly but necessary to reliably deliverable across international borders. Also network maintenance and upgrades typically account for 15-20% od the operations budget

Costly features of SMS OTPs (rate limiting requests, transmission security, anti-fraud measurements etc.) lead to an increase in security but also in price

Understanding SMS pricing across different countries and operators is crucial for businesses planning international SMS traffic. Costs can vary significantly depending on local carrier fees, regulations, and the volume of messages sent. Below is a comparison of the typical cost per SMS in EUR for various countries:

In the U.S., the average sms cost per message varies significantly among providers, ranging from €0.00500 to €0.01429.

As of 2025, the U.S. telecom industry is led by T-Mobile US, Verizon Communications, AT&T, Comcast, and Charter Communications. T-Mobile offers the fastest 5G download speeds and broad national coverage, having grown rapidly after its merger with Sprint. Verizon holds the largest wireless market share at 37%, making it the top mobile service provider. Comcast remains important in cable and broadband, while Charter plays a key role in providing regional telecom and internet services.

In Canada, the cost per text message varies notably, with prices between €0.00857 and €0.07800, with most major providers charging around €0.01429 to €0.02029

Canada’s telecom sector is led by Rogers, Bell, and Telus who collectively control over 85% of the wireless market. Rogers holds the largest mobile share at 31.9% and expanded its presence in Western Canada through its acquisition of Shaw. Bell accounts for around 30% of wireless subscriptions and is known for launching North America’s fastest internet speeds. Telus holds roughly 28% of the market and combines strong wireless services with its growing healthcare division. Shaw, before merging with Rogers, focused on Western Canada, while Quebecor’s Videotron dominates Quebec’s media and telecom landscape with widespread regional reach.

In Australia, the sms cost per message across providers is relatively consistent, typically around €0.01571, though Lycamobile offers slightly lower rates at €0.01375

Australia’s telecom market is led by Telstra, Optus, and TPG Telecom. Telstra holds the largest share at 43% and operates the most extensive mobile network, covering over 99.5% of the population. Optus follows with about 30% market share and a strong presence in regional areas through its wide 4G network, while pushing forward with 5G and digital transformation. TPG Telecom offers nationwide mobile and internet services with a focus on competitive pricing. Vodafone (operating under Vodafone Hutchison) controls around 17% of mobile subscriptions and focuses on affordable, prepaid options. Macquarie Telecom serves business and government clients with specialized enterprise, cloud, and data center solutions.

The cost per SMS in the UK is among the highest in Europe, typically around €0.03971 per message, though Gamma Telecom and Vectone Mobile offer lower rates at €0.02313 and €0.03000 respectively.

The UK telecom market is led by Vodafone, BT Group, Sky UK, O2 (Telefonica UK), and Virgin Media. Vodafone is a major player in mobile and broadband, prioritizing 5G expansion and digital transformation. BT Group dominates broadband, fixed-line, and mobile services, with a strong push toward fiber broadband and enhanced digital infrastructure. Sky UK, best known for its television services, has expanded into telecom by bundling TV with broadband and improving customer service. O2 remains a key mobile provider with a strong focus on 5G rollout and digital solutions. Virgin Media offers high-speed broadband, mobile, and TV services, using bundled offerings to compete effectively.

In Germany, the cost per SMS ranges from €0.06988 to €0.09000, with most major providers charging around €0.07714 to €0.08571 per message.

Germany’s telecom sector is led by a mix of major global and local providers, including Deutsche Telekom, Vodafone, Telefónica (O2), Freenet, and United Internet. Deutsche Telekom is the largest, serving nearly 67 million mobile users and aiming for 5G coverage across 90% of the country and 99% of the population by the end of 2025. Vodafone leads in mobile connections with over 78.5 million and reaches two-thirds of households with gigabit internet. Telefónica Germany (O2) serves over 45 million mobile users and 2.4 million broadband subscribers, with a focus on expanding its 5G network and improving customer experience. Freenet specializes in mobile and digital services, including its TV streaming platform waipu.tv. United Internet is strong in broadband services, offering high-speed internet across the country.

In France, sms message costs vary across providers, typically between €0.03950 and €0.05143, with major providers like Orange and Free Mobile charging around €0.04571 to €0.04643.

France’s telecom market is one of the most advanced in Europe, driven by strong competition, widespread 5G deployment, and heavy investment in fiber infrastructure. Orange remains the country’s largest operator, offering extensive mobile, broadband, and fixed-line services, with over 3,000 active 5G sites focused on urban areas. SFR is a key player with broad mobile and broadband services and nearly 5,000 5G sites, emphasizing unlimited data plans and customer experience. Bouygues Telecom operates over 6,700 5G sites and focuses on competitive pricing and digital innovation through strategic partnerships. Free Mobile, owned by Iliad, leads 5G deployment with over 13,000 active sites and is known for affordable, consumer-friendly pricing. Alcatel-Lucent plays a behind-the-scenes role, enhancing national telecom infrastructure through equipment and R&D.

In India, the average cost per sms is consistent across most operators, typically around €0.06000 per message, with slight variation for Tata Docomo at €0.05750.

India’s telecom market is among the largest and fastest growing in the world, fueled by widespread smartphone adoption, low-cost data, and rapid 5G rollout. Reliance Jio leads with a 41.5% market share and over 450 million wireless subscribers, dominating mobile, broadband (JioFiber), and digital services while spearheading 5G innovation. Bharti Airtel follows with a 25.25% market share, offering mobile, broadband, and financial services, and focusing on 5G expansion in both rural and urban areas. BSNL holds a 16.14% share and emphasizes affordable connectivity, especially in rural regions, as it rolls out indigenous 4G and VoWiFi networks. Vodafone Idea, with around 210 million subscribers, continues to improve its 4G services and gradually introduces 5G. MTNL operates mainly in metro cities like Delhi and Mumbai, focusing on landline, broadband, and enterprise services.

The cost per SMS in Japan varies among providers, typically ranging from €0.03286 (Rakuten) to €0.05000 (KDDI), with major carriers like NTT Docomo charging around €0.04214 per message

Japan’s telecom industry is among the most advanced globally, driven by strong infrastructure, rapid 5G adoption, and innovative digital services. NTT, through its mobile arm NTT Docomo, leads the market with over 70 million subscribers, providing the widest coverage and fastest speeds while advancing in 5G and IoT solutions. KDDI (au) is the second-largest provider with around 60 million users, offering strong urban coverage and focusing on cloud services, IoT, and customer experience. SoftBank ranks third and concentrates on data-heavy mobile plans in urban centers, with a focus on digital transformation and tech investments. Rakuten Mobile, a newer disruptor, continues to grow rapidly with affordable pricing and an innovative open RAN-based 5G network. Internet Initiative Japan (IIJ) caters mainly to enterprise clients, offering internet, cloud, and cybersecurity services.

SMS costs per message in Indonesia are among the highest, generally ranging from €0.30000 (Telkomsel) to €0.34571 (Smartfren), with most operators charging close to €0.32929.

Indonesia’s telecom industry is one of the most vibrant in Southeast Asia, driven by rapid 5G expansion, digital adoption, and recent market consolidation. Telkomsel leads with 45% market share and over 170 million mobile subscribers, offering mobile, broadband, and digital services through platforms like IndiHome. Indosat Ooredoo Hutchison follows with 28% share and around 102 million subscribers, focusing on 5G innovation and enterprise services. XL Smart, a newly merged entity from XL Axiata and Smartfren, commands 25% of the market and serves over 94 million users, emphasizing AI, entertainment, and network efficiency. Tri Indonesia remains a smaller but competitive player, targeting younger demographics with affordable data plans.

In the United Arab Emirates, sms message costs are among the highest globally, with rates typically around €0.12300 to €0.12600 per message across the major carriers Etisalat and Du.

The UAE telecom market is dominated by and du (Emirates Integrated Telecommunications Company). Etisalat is the market leader, offering comprehensive mobile, broadband, and digital services, with a strong emphasis on 5G deployment, smart city initiatives, and digital transformation. Du competes closely, focusing on mobile and home services, and expanding its fiber network and enterprise solutions. Both operators are central to the UAE’s vision of becoming a global digital hub, investing in AI, IoT, and advanced network infrastructure. The market is highly regulated and innovation-driven, reflecting the country’s broader tech-forward ambitions.

Not all SMS costs are created equal as different cloud providers charge different rates based on regions, traffic volumes, and even use cases. Here’s a breakdown of four commonly used platforms:

The cost of sending SMS messages using AWS, typically through Amazon SNS (Simple Notification Service) depends on the amount of messages since it is charged per message, with rates depending on the destination country and message type. While affordable for low-volume use, costs can quickly add up at scale, especially for global apps with users across high-cost regions.

• Example pricing: $0.0075 per message in the US, higher in other regions.
• Additional costs for sender IDs, delivery reports, and dedicated short codes.

Firebase provides a seamless SMS-based phone authentication system. However, only a limited number of messages are free. Beyond that, SMS costs are charged to your Google Cloud project, again varying by destination.

• Primarily intended for authentication use cases, not general messaging.
• Not transparent on pricing, actual costs depend on country and usage.

Twilio is one of the most widely used messaging APIs for developers. It offers global coverage, developer-friendly APIs, and detailed reporting. However, Twilio’s pricing tends to be on the higher side compared to others, especially when factoring in features like delivery confirmation and dedicated numbers.

• Example: $0.0075 per message in the US (plus carrier fees).
• Higher costs for international messages and short code use.
• Volume discounts available but not always competitive at scale.

MessageBird is a European-based CPaaS provider that offers global SMS delivery with a focus on EU compliance and high deliverability. It can be more cost-effective than Twilio in some regions.

• Region-specific pricing and localized support.
• Competitive for European companies; pricing varies significantly by country.
• Offers omnichannel messaging bundles (WhatsApp, email, voice) which may offset SMS costs.

Apart from direct costs from the SMS traffic from each region there are also hidden operational costs that don’t come to mind immediately but still play a significant role as they are also high.

When users lose access to their phone numbers or devices, your support team often needs to manually verify their identity before allowing a reset or recovery

Every time a user contacts support because they didn’t receive an SMS OTP or changed their phone number it consumes valuable support team resources.

All these instances do not show up on the balance sheet under the SMS traffic item, but they reduce operational efficiency, increase customer support overhead and lower user satisfaction while exposing people to

Implementing and maintaining an SMS OTP system isn’t just about sending messages, it requires a robust infrastructure to ensure reliability. These infrastructure components often carry ongoing, and sometimes underestimated, costs:

There are recurring costs to ensure uptime, throughput, and reliable delivery across global telecom networks for your SMS gateway.

Integrating SMS OTP into your product or authentication flow involves upfront engineering effort and long-term maintenance (building APIs, handling delivery callbacks, logging, retry logic, error handling, syncing with user account services etc.)

To ensure messages are delivered in a timely and reliable manner, real-time monitoring systems must be implemented. These track delivery rates, latency, failure rates, and region-specific issues.

While SMS one-time passwords (OTPs) were once the go-to for two-factor authentication, a growing number of companies are now moving away from them. The shift is triggert by three key factors: high costs, weak security, and poor user experience. In today’s environment, where both security threats and cost optimization are top of mind, relying on SMS OTPs is increasingly difficult to justify.

Modern authentication strategies are trending toward phishing-resistant options like passkeys or app-based authentication. These approaches offer stronger security, smoother UX, and a more cost-effective path forward, especially when compared to the recurring expenses involved in SMS OTP delivery.

However, if your enterprise still plans to rely on SMS OTPs for the foreseeable future, it’s essential to approach this method with clarity and strategic foresight. Below are some critical questions and considerations to keep in mind:

• How many SMS OTPs will be sent to users weekly or monthly?
• Can I forecast usage to avoid overages or unexpected costs?

Understanding your OTP volume is crucial for managing your SMS campaign cost and negotiating bulk messaging rates. This is especially important if you’re running login verifications alongside marketing SMS traffic, as these campaigns can quickly rack up charges.

• What are the target countries where users will receive SMS traffic?
• Are there regions where SMS delivery is unreliable or particularly costly?

Different countries and carriers apply varying SMS fees, so international OTP delivery can have wildly different cost profiles. Planning regionally and using a reliable SMS cost API can help anticipate expenses and prevent delivery failures.

• What additional security layers are needed to protect against SIM-swapping and phishing?
• Should I combine SMS OTPs with device intelligence or behavioral analytics?

While SMS provides a second factor, it’s not inherently phishing-resistant. Many organizations layer in real-time fraud detection or backup authentication flows to compensate for this weakness.

• What will ongoing system maintenance and monitoring require?
• Do I need a fallback mechanism for OTP delivery failure (e.g., email, app push)?

Beyond just the SMS delivery itself, the infrastructure behind it (API integrations, logging, error handling) can become a long-term maintenance challenge. Using a robust SMS cost API can provide insights not only into delivery success but also into ongoing cost optimization.

In this blog we took a closer look at SMS authentication with OTPs and broke down the costs associated with this authentication method. We discovered that from a business perspective passkeys or other MFA methods are a much cheaper alternative that even brings more security to the user while providing best in class UX. Also, we answered the following questions:

• Why is SMS traffic so costly for enterprise companies who use SMS OTPs? SMS costs are high because they quickly add up at scale even though SMS traffic for single messages might seem cheap. Also, there are plenty of operational costs and infrastructure costs associated with SMS authentication.
• How do prices of SMS OTP vary between countries? The price of SMS traffic can vary greatly depending on the country however it generally is in the range of up to 0.39 USD
• How do SMS costs vary across different providers? Generally, the prices for SMS are very close to each other in the individual countries. Normally the biggest providers offer the best prices whereas the smaller ones might be a bit higher.