An OTP SMS Guide

Profile Headshot of Satyam Gupta
Satyam Gupta

7
mins read

October 3, 2023

Use Cases of OTP SMS

Key Takeaways

  1. OTP SMS accounted for 88.57% of the total international traffic in 2022. Security has made OTP SMS a preferred channel for user verification
  2. Online frauds and threats continue to grow and has made OTP SMS a significant mode of authentication
  3. OTP SMS has a no. of use cases including 2FA, mobile number validation, payment confirmation etc.
  4. One should select OTP SMS as it has universal accessibility, ease of development and availability of off the shelf solutions
  5. Selecting the right OTP SMS provider like Verify Now by Message Central is very crucial to ensure safety and a seamless customer experience

Security is a top priority for individuals and businesses alike. One method that has gained significant traction for enhancing security is One-Time Password (OTP) SMS.

Mobilesquared research reveals that OTPs accounted for 88.57% of total international traffic in 2022 and will count for between 35% to 40% of total A2P SMS traffic. These traffic levels can be sustained provided more brands look to use OTP for customer security and authentication uses.  

In this comprehensive guide, we will explore the ins and outs of OTP SMS. From its definition and use cases to its validity and security concerns, we will cover everything you need to know about this secure authentication method.

Introduction

What is OTP SMS?

OTP SMS, or One-Time Password SMS, is a secure method of authentication that involves sending a unique alphanumeric or numeric code to a mobile number via text message. The recipient of the SMS then uses this code as an additional layer of security when logging into a service, website, or app. OTP SMS ensures that the person accessing the service is the same individual who signed up for it, as mobile numbers are universally unique.

Importance of OTP SMS in 2024

In 2023, data breaches and online fraud continue to pose significant threats to individuals and businesses. The need for robust security measures has never been more critical.

OTP SMS has become a widely adopted solution, particularly in the banking and financial sectors. In the UK and EU, new laws implemented in March 2022 require all banks to implement Strong Customer Authentication (SCA) for customer logins and transactions.  

Additionally, non-financial organizations are also leveraging OTP SMS to enhance their security measures using the best SMS verification services.

Use Cases of OTP SMS

use-cases-of-otp-sms-by-message-central

OTP SMS serves several use cases, providing an added layer of security and verification. Let's explore some of the most common applications of OTP SMS:

Two-Factor Authentication

Two-Factor Authentication (2FA) is a widely used security measure that requires users to provide two methods of identity verification. OTP SMS is often used as the second factor, where users enter the unique code, they receive via SMS in addition to their password or username.

Mobile Number Validation

In scenarios where the mobile number itself serves as the primary identity, such as parking apps or device setup for future 2FA transactions, OTP SMS is used to validate the mobile number's ownership and authenticity.

Payment Confirmation

To comply with legal requirements and enhance payment security, organizations use OTP SMS to confirm transactions and ensure that the person initiating the payment is authorized to do so.

Account Recovery

When users forget their primary method of authentication or lose access to their accounts, OTP SMS can be used as a recovery method to regain access to websites and apps.

Validity of OTP SMS

An OTP SMS code is typically valid for a specific duration, usually between 2 and 5 minutes. After the expiration period, the code becomes unusable. To accommodate potential delays in SMS delivery, platforms often provide an option for users to generate a new OTP if they were unable to use the initial code within the validity period.

Why Choose SMS for OTP Authentication?

While SMS as a communication channel has some security vulnerabilities, it remains the most popular choice for OTP verification for several reasons:

Universal Accessibility

SMS can be received by every individual with a mobile phone, regardless of the device or operating system they use. Unlike other authentication methods that require specific apps or compatibility, SMS is universally accessible and understood.

Ease of Deployment

Deploying SMS OTP is relatively straightforward. Integration with an SMS API provider or Communication Platform as a Service (CPaaS) allows organizations to implement OTP authentication within a few hours.

Off-the-Shelf Solutions

Numerous off-the-shelf OTP SMS providers offer comprehensive services, saving organizations from the complexities of building their own systems. These providers offer pre-built infrastructure and code, making it easy to incorporate OTP SMS into existing services. We also have a detailed guide on how to select the best OTP SMS provider.  

Security Concerns and Mitigation

While OTP is a widely adopted and pragmatic security solution, certain security concerns should be addressed. Even while implementing OTP verification, businesses should also adhere to guidelines for OTP SMS fraud prevention.

SS7 Routing Protocol Vulnerability

The Signaling System 7 (SS7) routing protocol, used by mobile networks, has a potential security flaw that could allow cybercriminals to intercept and reroute SMS messages. If an SMS containing an OTP code falls into the wrong hands, it could compromise sensitive information, such as bank account credentials. However, it is essential to note that the likelihood of falling victim to such an attack is minimal.

"The greatest benefit of SMS is also its greatest weakness. It works across all apps and platforms and doesn't rely on any specific ecosystem. But, behind the façade, the SMS system over which those codes are being sent is wide open." - Sumesh Menon

Realistic Threat of SMS Hacks

While there have been occasional headlines about SMS hacks and phishing attacks, the actual risk of being a victim is overstated. The chances of being hacked and having funds stolen through SMS OTP are extremely remote. Nonetheless, organizations in the banking sector express concerns about using SMS as a delivery route for OTPs.

Emerging Threat: SMS Pumping

An emerging threat in the realm of OTP SMS is SMS pumping. This tactic involves fraudsters targeting web forms that generate outbound SMS messages, often OTPs used for 2FA. By flooding the system with a large volume of texts sent to specific mobile numbers on a particular network, scammers can generate revenue from the OTP messages through revenue-sharing agreements with the network. Developers must be vigilant in detecting and preventing such attacks to safeguard users' security.

Examples of OTP SMS

When designing OTP SMS, simplicity and clarity are key. Here are a few examples of SMS OTP codes used by various organizations:

  • "Your verification code is: 123456"
  • "Use the following code to verify your account: 789012"
  • "Enter this code to complete your login: 345678"

By keeping the SMS messages concise and easy to understand, organizations can minimize any potential confusion or misinterpretation on the part of the recipient.

Setting Up OTP SMS

When considering implementing SMS OTP, organizations have two options: utilizing an off-the-shelf solution or building a custom system. Off-the-shelf solutions offer quick and easy OTP SMS APIs but may have limited flexibility. On the other hand, developing a custom SMS OTP system provides greater control but requires considerable development and maintenance costs. Organizations should carefully evaluate their requirements and resources to determine the most suitable approach.

Implementing OTP SMS with Verify Now  

With our platform, setting up SMS OTP is a breeze. Upon creating a free text account, you will receive complimentary SMS credits for testing purposes. Our support team is readily available to assist with any queries you may have. We also have flat rates for OTP SMS.  

Conclusion

OTP SMS continues to play a vital role in enhancing security and authentication in 2023. Its versatility, ease of deployment, and wide accessibility make it a popular choice for organizations across various industries. While security concerns exist, pragmatic implementation of SMS OTP, combined with other security measures like 2FA, provides a robust defense against unauthorized access and fraud. By understanding the use cases, validity, security concerns, and implementation options, organizations can leverage OTP SMS effectively to protect their users and sensitive information.

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