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Learn Everything About OTP SMS Authentication

by janeausten
Learn Everything About OTP SMS Authentication -MarketFobs.com

How can digital trust be increased among customers? In the age of digitization, this is a strategic requirement for most companies. With OTP SMS enabled, customers first enter their username and password and upon successful entry, the company’s server send an SMS based OTP, often time bound to a few minutes, to their previously registered mobile phone. To achieve your organization’s goals, you need to provide a great user experience, identify acceptable risks, and define the operating model.

It’s not an easy task. But to reach millions of potential customers, you need to find a solution that is affordable, easy to use, and convenient for the business and its users.

Nothing beats two-factor authentication (2FA). It has become the norm and trend for various verification/authorization needs. It is an effective way to prevent fraud and protect customers from misuse/abuse of their information.

Now every platform and app uses 2FA to authenticate mobile devices, adding another layer of security.

What does OTP SMS Authentication Mean?

OTP stands for One Time Password: a temporary authentication code sent via SMS to a user’s registered mobile phone number. The user will receive OTP SMS during online transactions, when creating a new account or when logging in from a new device. The system automatically generates and sends an OTP for the user to use within a specified time interval.

These randomly generated passwords are only valid for a single login period, preventing unauthorized use or fraudulent transactions before they occur.

Where is the Purpose of OTP SMS Authentication?

Initially, the banking and finance sector was associated with OTP services, but today that is no longer the case. All applications and platforms across all industries use OTP SMS for device and user authentication. There are other purposes:

OTP SMS: Signing-up

Limit fake IDs/users through authentication during the registration process.

Resetting Passwords

Reset any user’s password to restrict fraudulent entities.

Account Reactivations

Users can reactivate their inactive accounts by requesting re-authentication via OTP.

Login from New Devices

OTP SMS allows users to request authentication when logging in from a new device, location, or IP address.

Transaction Confirmation

Ecommerce businesses require OTPS for authentication for prepaid deliveries.

What are the Benefits of OTP SMS Authentication?

SMS has proven to be the simplest form of user authentication. According to Statista, the number of mobile phone users will reach 931.3 million by the end of 2022, which means people will be able to receive text messages without any problems. Additionally, around 48% of users prefer SMS as a marketing platform as it has a 20% open rate compared to email. And for companies, it offers many advantages such as:


OTP SMS delivery methods offer significant cost savings as there are no infrastructure and hardware costs to install. A central system connected to the internet does everything for the users. Businesses can add this software to their cloud phone plans, making it easy to find all information in one place.


A company can protect its customers from cyberbullying because OTP SMS are temporary. they are not reusable. The person will receive an OTP to their registered cell phone number, which is unlikely to be intercepted en route. Mobile devices and email also have multiple built-in authentication methods to prevent double attacks.

High-Delivery Rates

OTPs have high delivery rates. Customers will surely receive it and sometimes there may be a delay due to network outages or technical glitches. Organizations now have internal OTP SMS authentication solutions with receipts (DLR) that confirm receipt of SMS delivery.

Low Wait-Time

As mentioned above, OTP SMS verification is almost instantaneous (but unexpected network issues may arise). Most companies send SMS in less than 10 seconds on average. So there are no waiting times for customers.

No Shared Secret to Exploit

Some mobile authentication apps rely on a shared secret that combines the server with the current time to create an OTP. To prevent intruders from discovering the shared secret, on-demand OTP is the best solution. Send random values ​​from the server and don’t leave shared secrets for exploitation.


What are the reasons for recycling user passwords? Because they need to create and manage large amounts of online accounts. According to surveys, people have to remember ten (10) passwords every day. However, OTP SMS authentication simplifies the task by providing users with unique passwords every time.

Also Read: Why Should Businesses Choose Payment Routing Solutions

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