Use Case 2

Postpaid Funding for Application 2 Phone (A2P) Messaging (SMS) Traffic

The A2P messaging industry covers automated business-to-consumer communications delivered through SMS, WhatsApp, and RCS for alerts, marketing, one-time passwords, and customer notifications. Growth is driven by e-commerce and banking needs for secure authentication and real-time engagement, with SMS still dominant in spend even as OTT platforms gain volume.

Market dynamics are shaped by security and compliance (2FA, fraud prevention), platform consolidation (CPaaS leaders like Twilio, Sinch, Infobip, Route Mobile), and ongoing regulatory oversight. The market is multi-billion dollar and projected to exceed $90–125B in the early 2030s, with increasing emphasis on AI-driven personalization and channel orchestration.

Least Cost Routing (LCR) is central to A2P SMS economics. Aggregators and carriers use real-time routing to select the cheapest compliant paths, while balancing delivery quality. The industry also contends with grey routes that disguise A2P traffic as P2P to lower costs, which can lead to blocking, lower delivery rates, and fraud exposure.

Arbitrage arises from price gaps between premium “white routes” and lower-cost grey routes. While blended pricing can reduce enterprise costs, it creates revenue leakage for mobile network operators, prompting stronger enforcement and a shift toward verified routes and richer OTT alternatives.

A2P invoicing relies on per-message rating and detailed charging models. CDRs track message metadata (sender IDs, destination networks, delivery status, message type, and charges), enabling accurate billing, 10DLC compliance fees, and pass-through termination charges. Rating, routing, and trading platforms are required to preserve margins across diverse carrier rate decks.

SMS firewalls further shape settlement economics by filtering grey traffic and monetizing legitimate A2P traffic. Operators deploy AI-driven security to detect AIT fraud, enforce sender verification, and ensure only authorized traffic is delivered and billed.