Half of Telecom Providers Expect SMS Fraud to Rise in 2025: Study

XConnect, a Somos Company, the provider of world-class numbering intelligence solutions has launched a report with Mobilesquared, the leading provider of business messaging intelligence, revealing that over 50% of telecoms service providers expect SMS to experience an increase in fraud in 2025, with less than a third expecting SMS to become a cleaner channel in this period.

The report, ‘How Do We Create a Sustainable Future for A2P SMS?’, found that total SMS traffic is expected to fall by 25.9% between 2024 and 2029. This drop in traffic can also be attributed to the overall health of the SMS marketplace. At the same time, the average cost to send an SMS internationally leapt by 85.2% between 2020 and 2024. The research revealed that exclusivity agreements between an aggregator and mobile operator are one of the main contributing factors for excessively driving up international termination rates (ITR).

“After the meteoric growth and global adoption of SMS over the last decade, the channel has been exposed to a set of dynamics that come with maturity: over-monetisation, price increases, interconnect fraud and artificially inflated traffic (AIT)”, said Tim Ward, at XConnect. “The users of SMS have been responding to these challenges in many different ways. One of the key conclusions from the report is that there are precautions that can be taken by identifying the high-risk destinations and applying simple real-time checks to guarantee the safe passage of traffic. This becomes essential to restoring trust in SMS as the messaging market grows more complex.”

According to Mobilesquared’s findings, markets have the ideal conditions for fraudulent activity where the average failed/invalid Number Information Service Query (NISQ) percentage is over 20%. The majority of these markets are in Africa (16), Asia (7), and the Caribbean (5). Mobilesquared trend analysis highlighted Africa as the next hotbed for AIT fraudulent activities, which are already prevalent in Asia and the Caribbean. The research found that NISQ customers are looking to increase their protection against fraud, while maximising SMS revenues and margins via efficient and accurate routing of SMS traffic.

“Our analysis of market data reveals that the overall state of the SMS market is actually improving, in spite of the harmful traffic and associated activities that have blighted the landscape since 2021 and created the lasting damage that we’re now tackling,” said Nick Lane, Chief Messaging Officer, at Mobilesquared. “Despite this, SMS is still the business messaging channel of choice and continues to be the platform upon which brands are building their rich messaging offerings for the long term. The findings of the report pinpoint where fraudulent traffic levels are expected to increase and the challenges facing the industry. In turn, this will help contribute towards building a more sustainable and trusted future for A2P SMS.”

The ‘good’ markets (NISQ growth below 500% and an international termination rate below $0.10) account for 84.2% of total A2P SMS traffic in 2024. By region, 67% of North America and 60% of West Europe are good markets. The ‘bad’ markets (NISQ growth in excess of 500% and an ITR over $0.10) accounted for 3.58% of total traffic. Almost 80% of total NISQs in 2024 occurred in good markets, 13.5% in bad markets, and 6.94% in indifferent markets. This confirms the research data from XConnect customers that they are using NISQ to ensure safe passage of their SMS traffic.