SMS verification or authentication uses phone messaging to process transactions. This two-factor authentication (2FA) method is meant to reduce fraud risk by verifying buyers’ identities. However, the technology is not fool-proof and does not eliminate fraud.

What is SMS Verification?

SMS verification sends a unique code, or a one-time password (OTP), to a customer’s registered phone number. It is often used as the second step in an authentication.

This is a swift and inexpensive way to verify payments. Yet, the simplicity of the method leaves holes in security.

Who Uses SMS Verification?

SMS verification works for businesses that provide accounts for users and customers. Users sign up with their email and phone number as communication methods. This then allows the business to use SMS verification the next time a user wants to log in or make a purchase.

SMS verification is not just for eCommerce purchases. Platforms like email, social media, or other online websites send texts as a form of allowing users to sign in. You most likely have already used SMS verification for Google, Apple, and Facebook accounts.

Should I Use SMS Verification for My Business?

Using SMS authentication can offer an extra layer of protection for users. However, the method is limited. SMS has been around for a while, and fraudsters have multiple ways of hacking it.

Benefits of Requiring SMS Verification

Passwords alone are not secure. They’re traceable, easy to forget, and reused. Additionally, browsers and devices are able to save passwords for users. This convenient storage can make accounts vulnerable.

SMS cuts through some of the vulnerabilities as a second authorization factor. When you require a password and a one-time code from users, it can block hackers that only have passwords.

Drawbacks of Requiring SMS Verification

2FA methods like SMS are simple and easy, which is why many businesses require them for log-ins and purchases.

The simplicity can make it accessible to malware and fraudsters. Advanced hackers can intercept iMessages, texts, and accounts. They can also mess with SIMs to have access to a phone number.

These interceptions make SMS verification useless. Businesses can incorporate 2FA like SMS in addition to other security measures. Face IDs, fingerprint IDs, and other methods are replacing SMS. However, some companies keep SMS verification as a backup or extra layer for those who do not have access to certain devices.

Need a Hand in Fraud Prevention?

No matter what authentication method you use, you need a way to track fraud. Revitpay offers tools such as chargeback alerts that will notify you of unauthorized transactions. Contact us today to talk about how we can further protect your business and customers.