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    EDITORIAL Surge in CPaaS as messaging and payments boom

    With Telemedia8.1 LIVE in Barcelona just around the corner, it comes as good news that messaging and payments are already shaping up to be key growth markets in 2023. Already there is a predicted surge in use of digital payments set to see the sector grow 13% this year alone, while the use of OTT business messaging will also rise by some 172%.

    According to a Statista survey last year, the global digital payments industry has seen $8.38trn worth of transactions, 11% more than the year before. In 2023, the market is set to witness even bigger growth of 13% year-over-year, with digital payments reaching nearly $9.5trn in transaction value.

    Digital commerce, the market’s largest segment, will make up 63% of that value, or $5.99trn, growing by 11% year-over-year. Although much smaller in transaction value, mobile POS payments will continue growing faster. Last year, mobile POS payments hit $2.86trn in transaction value. This figure is expected to grow by 17% YoY and hit $3.35trn in 2023.

    By 2025, the entire digital payments market is forecast to reach an $11.95trn value. The transaction value in the mobile POS segment will grow by another 32% to $4.43trn in this period.

    OTT business messaging, meanwhile, is set to see a 172% increase over the next five years, driven by stable pricing and the growing use of CPaaS by businesses.

    It is  predicted that OTT business messaging will rise from 93 billion in 2023, to 254 billion by 2027. This growth of 172% will be driven by increased availability of open OTT messaging APIs and competitive pricing models; creating a viable rich media alternative to established operator-led channels, such as SMS.

    These two growth spurts – in payments and messaging – are, of course, connected. The growing use of OTT messaging to engage consumers is at the forefront of driving greater digital engagement and from that engagement comes sales. These sales are then taken in electronic form as the tie up between message and purchase becomes ever more friction free.

    No wonder, then, that more businesses than ever are investing in CPaaS platforms to add this level of engagement to their comms strategy. SMEs in particular are driving a rise in use of CPaaS as they look to add these OTT – and SMS – channels to their businesses to compete with the big boys, as we predicted at the start of the year.

    The surge in SME use of CPaaS means that CPaaS and messaging providers have a huge opportunity on their hands – with the global CPaaS market growing to more than $29bn by 2025 from around $16bn in 2022 – but only if they concentrate their efforts on helping these smaller players get on board. While there is a huge SME opportunity here, these companies lack the dedicated IT resources and staff to manage the process themselves and so CPaaS providers need to create service packages that are taoliered not only to the use SMEs will put it to, but also to how to integrate it and train them to use it. Quite a challenge.

    There is another fly in the ointment: many business CPaaS users are still yet to see the full advantage of two-way interaction using their CPaaS systems. A recent study finds that in 2022 80.1% of total CPaaS spend globally by brands was on one-way channels (SMS, MMS, email, in-app push notifications, and video) that will not drive interaction with the consumer. Just 19.9% of CPaaS spend was on two-way engagement channels (voice, social media, rich messaging channels, and WebRTC), creating a potential engagement opportunity with the consumer. Mobilesquared projects this will increase to 31.2% of total spend by 2026. There is still much work to do and way more growth to come once users see its full potential.

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