eSIM (embedded SIM) technology is transforming the telecommunications industry by embedding SIM functionality directly into devices. Unlike traditional SIM cards, eSIMs allow users to switch mobile carriers seamlessly through software updates, eliminating the need for physical SIM replacements.
This innovation presents exciting opportunities for telecom operators but also introduces new challenges, particularly in revenue assurance and fraud prevention. As eSIM adoption is projected to reach $16.3 billion by 2027, telecom providers must reassess their risk management strategies to stay ahead of evolving threats.
Key Fraud Risks Posed by eSIM Technology and Their Impact on Telecom Industry
The adoption of eSIM technology has introduced significant fraud risks that telecom operators must actively manage. Unlike traditional SIM cards, which require physical handling for activation or replacement, eSIMs enable remote provisioning, making it easier for fraudsters to exploit vulnerabilities in authentication and identity verification processes. Criminals can manipulate mobile accounts, conduct unauthorized SIM swaps, and create fraudulent subscriptions using stolen identities, often bypassing traditional security controls. As eSIM usage continues to grow, telecom providers must implement advanced fraud detection and prevention strategies to safeguard customer accounts and prevent financial losses. Below are a few examples of eSIM fraud types:
Subscription Fraud - With the remote activation capabilities of eSIM, fraudsters can exploit stolen or fake identities to create fraudulent accounts. The traditional process of verifying customers in-store or through physical SIM distribution is eliminated, making it easier for bad actors to bypass security checks.
SIM Swap Fraud - One of the most significant fraud risks with eSIM technology is SIM swap fraud. Attackers use social engineering tactics to convince telecom operators to transfer a victim’s number to a new eSIM profile. Once successful, they can intercept two-factor authentication (2FA) messages, access banking applications, and commit identity theft.
IoT and M2M Exploits - eSIM is a major enabler for the Internet of Things (IoT) and machine-to-machine (M2M) communications, but it also introduces new risks. Fraudsters can exploit IoT devices with weak security protections, hijacking eSIM subscriptions to gain unauthorized access to telecom networks or launch large-scale fraud schemes.
Cloning and Identity Theft Risks - Although eSIMs are designed with strong encryption, concerns around cloning remain. Cybercriminals could potentially intercept eSIM profile data and duplicate it, gaining unauthorized network access and enabling identity fraud on a larger scale.
Revenue Assurance Risks in eSIM Adoption: Challenges and Vulnerabilities
The shift to eSIM technology has added new complexities to revenue assurance, requiring telecom operators to strengthen their controls to prevent revenue leakage. Unlike traditional SIM cards, eSIMs enable seamless digital transactions, increasing the risk of billing inaccuracies, fraudulent activations, and service misuse. The absence of physical SIM distribution also complicates tracking and reconciliation processes, making it harder to detect inconsistencies in customer subscriptions and usage. As telecom providers integrate eSIMs into their operations, they must enhance their revenue assurance frameworks with robust monitoring, data validation, and automated controls to ensure billing accuracy and financial integrity. Below are a few examples of eSIM-related revenue assurance risks:
Billing and Charging Complexities - The digital nature of eSIM transactions adds layers of complexity to billing and revenue assurance. Errors in call detail records (CDRs) and event detail records (EDRs) can result in revenue leakage, where telecom operators may undercharge or overcharge customers due to inconsistencies in transaction data.
Multi-Network Switching Risks - eSIMs allow users to switch between multiple networks effortlessly. While this is an advantage for customers, it poses challenges for telecom operators in tracking usage and ensuring proper billing for inter-carrier agreements. If not managed carefully, this could lead to disputes and lost revenue.
Increased Risk of Prepaid Fraud - Prepaid services are particularly vulnerable in an eSIM environment. Fraudsters can activate and discard prepaid accounts more easily, making it difficult for telecom providers to detect and prevent fraudulent prepaid transactions, such as those involving stolen payment information.
Conclusion
As eSIM adoption accelerates, the need for robust risk management strategies becomes more critical than ever. The complexities of fraud detection, revenue assurance, and compliance require telecom operators to adopt structured risk frameworks tailored to emerging technologies like eSIM.
Mobileum’s RAID 9 introduces a Risk Library, providing a comprehensive set of risks, controls, and assurance mechanisms specifically designed for eSIM-related challenges. With a dedicated eSIM risk library, Communication Service Providers (CSPs) can proactively address subscription fraud, SIM swap fraud, prepaid revenue risks, and regulatory compliance gaps—all within an AI-driven, data-centric risk management platform.
CSPs looking to strengthen their eSIM risk strategy can schedule a call with our team to explore how RAID 9’s eSIM Risk Library can enhance their fraud prevention and revenue assurance efforts. Reach out today to learn more about how to mitigate eSIM risks effectively.