Many businesses send one-time passcodes to customers’ phones to facilitate login processes, whether to help users set up an account, use two-factor authentication, or reset a password.
These services are useful and necessary. However, according to Andrew Konovalskyi, founder of SaaS company LoopMessage, most companies spend far too much on SMS messages due to their sheer volume and the likelihood of fraudulent traffic associated with this user authentication method.
Since SMS messages are unencrypted, there are also security concerns, leading Konovalskyi to recommend that businesses shift from A2P SMS systems to P2A messaging to reduce costs and security risks.
You’ve mentioned that SMS messages can cost businesses substantial revenue despite each message’s low individual fees. How do those costs stack up over time, if at all?  
Konovalskyi: In 2024, businesses spent billions of dollars sending one‑time passcodes to customers’ phones. Each short message can cost anywhere from 0.8 cents to 75 cents, depending on destination and carrier, and some companies send tens of thousands of them daily.
Volume clearly contributes a lot to the cost of SMS messaging for companies, in that case. Are there any other contributing factors that drive up the price of using SMS?  
Konovalskyi: SMS messages are unencrypted and pass through multiple networks, leaving them open to interception and SIM‑swapping attacks. Regulators recently fined the four largest US mobile carriers nearly $200 million for illegally selling customer location data.
When we started building our own authentication pipelines, the economics were shocking. Verifying even 5,000 new daily sign-ups could easily run $5,000 in SMS fees. More alarming was the growing wave of “SMS pumping” scams in which attackers trigger OTP requests to random numbers, forcing businesses to pay for messages nobody requested.
These costs and risks seem surprising given how many businesses rely on SMS messaging to power their user authentication systems. If that’s the case, is there a reason this method is so popular?  
Konovalskyi: Most tech companies treat SMS verification as a cost of doing business because it’s ubiquitous. The model, known as application‑to‑peer (A2P), involves your server sending a one‑time code to the recipient’s number over cell carriers. The code passes through a chain of aggregators and carriers, all of whom take a cut.
[The problem is], cost aside, A2P is inherently insecure. SMS traffic isn’t encrypted; attackers can intercept messages by spoofing or bribing telecom employees. SIM‑swapping, in which a criminal convinces a carrier to reassign your number to their SIM, is now a well‑documented attack vector. SMS pumping scams artificially inflate your traffic, forcing you to pay for messages sent to random recipients.
It would seem, then, that the inefficiency stems from an unwillingness to deviate from industry standards. Are there alternative messaging methods that cost businesses less while providing better security?  
Konovalskyi: There is a better way that doesn’t require inventing a new protocol. Peer‑to‑application (P2A) messaging reverses the flow: instead of your system texting a code to the user, the user sends the code to you through a secure messenger app.
Your application generates a short code and a “deep link.” When the user clicks the link, their preferred messenger opens with the pre‑filled code; they hit Send, and you validate the response. Because the message travels over end‑to‑end‑encrypted channels, intermediaries cannot read or alter it.
For most businesses, adopting P2A requires two components: the ability to generate deep links and the ability to receive inbound messages. The WhatsApp Cloud API, launched in 2022 and revised in late 2024, lets businesses receive unlimited inbound messages for free, even on the starter plan. Apple doesn’t yet offer a public iMessage API, but third‑party providers such as LoopMessage host numbers within the iMessage ecosystem and forward inbound messages to your application.
P2A sounds nice in theory, but if it’s less popular than the A2P system, doesn’t that make it less accessible?  
Konovalskyi: At first glance, this might seem like a niche workaround, but the numbers tell a different story. WhatsApp now boasts over 3 billion monthly active users across 180 countries and 60 languages. It accounts for around 38% of the world’s population and 69% of internet users outside China. Over 200 million companies use WhatsApp Business to communicate with customers.
Meanwhile, 1.56 billion people worldwide use iPhones, giving iOS a 27.93% share of the global smartphone market and more than 61% of the market in the United States. That means most of your customers already have the apps needed to adopt P2A without downloading anything.
How do costs compare between A2P and P2A systems?  
Konovalskyi: Unlike SMS, inbound messages on platforms like WhatsApp and iMessage are typically free or nearly free. Twilio’s pricing for a WhatsApp “authentication conversation” ranges from $0.0014 to $0.0768 per session, less than a tenth of the cost of sending a single SMS.
But if you receive an inbound WhatsApp message from any contact, it will be counted as a free user-initiated conversation. In our own tests, moving to P2A reduced per‑user verification costs by more than 90%.
Excellent synopsis. As an expert in SaaS, do you have any advice for businesses looking to reduce messaging costs?  
Konovalskyi: Moving from A2P SMS to P2A messaging isn’t just a technical upgrade; it’s a strategic shift that can increase security, improve customer experience, and free up cash for growth.
As someone who has seen both sides of the equation, my advice is simple: audit your authentication or verification spend, run a pilot with messaging‑based codes, and measure the results. In a business climate where efficiency and trust are priceless, P2A is an investment that pays for itself many times over.
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