WhatsApp Pricing Drop: Is WhatsApp The Right Channel for Transactional Messaging?

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Meta has announced a change in WhatsApp conversation pricing, reducing the cost of utility messages and increasing the cost of marketing messages starting August 1, 2024, and October 1, 2024, respectively. This change in pricing encourages brands to leverage WhatsApp for critical transactional, service, and utility messages instead of relying on SMS or RCS messaging.

In this article, we’ll explore the changes in WhatsApp API pricing worldwide and describe how product and tech teams can make the most of this update. First, you’ll need to understand the WhatsApp Business platform. If you’re already familiar with it, you can skip ahead to the section about the pricing update.

What Is WhatsApp for Business?

The WhatsApp Business platform enables brands to send promotional and transactional WhatsApp chat messages to customers via an API integration.

Unlike traditional message channels, WhatsApp encourages customers to respond instantly to businesses. The UI is built in a manner that makes it super easy to respond via a number of options or free-form text.

Since WhatsApp is free of cost for consumers to use, the barrier to entry is low, and brands can leverage this to have two-way conversations where customers respond to each message.

To get started with WhatsApp for Business, all you need is a Whatsapp Business account. Learn more about it here.

What Are The Benefits of WhatsApp for Business?

With over 2 Billion MAUs (Monthly Active Users) worldwide, WhatsApp is ranked as the most popular mobile messenger app in the world. It is one of the few messaging apps that is available uniformly over both the Android and iOS ecosystems while also being accessible over desktop interfaces across Windows and Mac.

WhatsApp provides brands with a unique opportunity to reach out to consumers on a platform they use every day. WhatsApp messages routinely have an average open rate of over 58%, with CTRs starting at a baseline of 15%. 

Why Brands Should Use WhatsApp over SMS for Transactional Messaging

Compared to the open and click rates of traditional messaging platforms, WhatsApp provides supremely better engagement and offers brands an opportunity too good to ignore. There are many more benefits apart from this one, listed below:

1. Cost-efficient: While SMS messages are charged based on the number of sends, WhatsApp’s pricing is based on the number of deliveries per conversation. This is highly beneficial to brands because they don’t have to pay for WhatsApp messages that don’t get delivered—charges for non-deliveries can rack up quickly, as they do with SMS. 
2. No character limitations: With SMS, each message should be <160 characters. If you exceed this limit, you will be charged for two (or more) messages, depending on the length. Meanwhile, WhatsApp’s unit message price is the same, irrespective of length, and brands can leverage this to send detailed information, such as ticketing updates, images and attachments, and more.
3. Two-way conversations: WhatsApp gives customers a unique option to initiate support conversations from service messages without any additional cost (as long as this happens within the 24-hour conversation window).  This is simply not possible with SMS. 
4. Easier approval for templates: SMS approvals can get cumbersome when you have to deal with varying regulations across different geographies, while WhatsApp templates are easily approved.
5. Free entry points, as explained below.

What are WhatsApp Free Entry Points?

The WhatsApp for Business platform provides free entry points, meaning a conversation is free for up to 72 hours if it’s initiated through a Facebook CTA (Call-to-Action) or an ad that clicks to WhatsApp.

Apart from free entry points, WhatsApp also provides 1,000 free service conversations each month. This is in addition to the conversation-based pricing provided by WhatsApp, which we’ll cover below.

WhatsApp Business API Cost

The WhatsApp Business API offers different price points for each conversation category. Apart from the conversation category, your location and your customers’ location also play a part in determining your price point per message type.

There are four types of conversations you can conduct with customers using WhatsApp across countries:

1. Utility conversation

2. Authentication conversation

3. Marketing conversation

4. Service conversation

Let’s examine each one in detail.

Types of WhatsApp Business Messages

WhatsApp offers conversation-based pricing, so here’s a quick explanation of each type of conversation category.

Utility Conversations

The utility conversation category includes critical alerts (also known as service messages or transactional messages) such as post-purchase notifications, billing reminders, payment updates, address change notifications, and delivery status alerts.

You can leverage WhatsApp Business to send utility conversations across a wide variety of use cases for different industries, such as:

1. Banking: Send service conversations for financial transaction alerts, card swipe notifications, account expiry alerts, cheque clearance messages, card activation messages, EMI updates, and real-time fraudulent transaction alerts.

2. Retail and E-commerce: Send WhatsApp utility messages for delivery status notifications, address change updates, payment update messages, order confirmation or cancellation messages, store closure messages, and transaction confirmations.

3. Airlines: Initiate WhatsApp utility conversations for flight booking confirmations, payment updates, gate change notifications, flight timing alerts, baggage processing notifications, and real-time flight arrival/departure notifications.

4. Media and Entertainment: Send utility messages with billing reminders, payment renewal messages, plan change updates, and order confirmation or cancellation receipts.

Utility messages are a critical aspect of a customer’s interaction with brands. These messages need to be sent in real-time, through a scalable, reliable infrastructure like MoEngage Inform. 

Ideally, your infrastructure should be able to handle volume, scale as you go, provide comprehensive delivery and failure logs, and give you the ability to add or switch channels without any developer dependencies.

Authentication Conversation

Authentication conversations enable you to verify the legitimacy of a transaction using WhatsApp. You can do so via One Time Passcodes (OTPs) sent at different points of the customer journey.

For example, if you need a customer to verify their phone number during onboarding, you can send an authentication message to confirm their phone number over WhatsApp. Meanwhile, for an existing customer who wants to conduct a financial transaction, you can send OTPs over WhatsApp to verify if they’re the ones making the transaction.

You can also extend authentication conversations to cover OTPs for account recovery, security verification, or integrity challenges.

Marketing Conversation

Marketing conversations include any kind of promotional messages like special sale announcements, seasonal promos, discounts, abandoned cart messages, card upgrade offers, event announcements, and exclusive rewards.

Service Conversation

Service conversations are support and service conversations initiated by customers. WhatsApp provides a 24-hour window within which businesses are encouraged to respond. The 24-hour window also extends to a timing-based pricing structure.

Within this category, a conversation counts as a 24-hour message thread between you and your customer. Businesses are charged per 24-hour message thread (a.k.a conversation), and not based on each message exchanged between the customer and business.

The WhatsApp Conversation-Based Pricing Drop

Meta’s new model drastically reduces the cost of utility conversations across countries while increasing the cost of marketing conversations for certain countries. This move aims to make WhatsApp less spammy and more beneficial to customers.

Here’s a quick glance at how the cost of each WhatsApp conversation has changed:

This pricing update positions WhatsApp as a viable, possibly cheaper alternative for transactional messaging, compared to traditional channels such as SMS and upcoming channels like RCS (Rich Communication Services).

Here’s a handy table with the latest pricing for WhatsApp conversations, sourced from the official Meta website:

Capitalize On the WhatsApp Conversation Pricing Update

If you’re not sending messages over WhatsApp yet, you should do so immediately! It is now cheaper than ever to send a utility conversation via WhatsApp. In certain markets, like India, a WhatsApp utility message is even cheaper than an SMS message. In markets like the Middle East, brands are actively encouraged to send more utility, service, or authentication messages instead of marketing conversations.

Brands should seize this opportunity and set up a WhatsApp conversation for each utility or authentication message they send.

Depending on the vertical, a utility conversation can include a message about any of the following: transaction update alerts, delivery status updates, ticket and flight change alerts, billing reminder conversation, and order confirmation or a cancellation update conversation. Meanwhile, an authentication conversation covers the other end of transactional or service conversations with OTPs.

To set up a utility conversation with your customers, you need a WhatsApp business account and API integration.

We recommend that you leverage MoEngage Inform, a unified transactional messaging infrastructure, to set up and send utility and authentication conversations across WhatsApp.

Leverage MoEngage Inform To Send WhatsApp Utility Messages

MoEngage Inform is a unified transactional messaging infrastructure that lets you set up and send critical alerts across channels and vendors through a single API. You can send WhatsApp, Email, SMS, and Push alerts through a unified interface in real-time, with <3 second send time and automatic failover mechanisms. MoEngage Inform also lets you add a new vendor or channel in just a few clicks, saving weeks of effort and critical developer bandwidth.

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