The importance of SMS OTP verification in banking | D7 Networks (2024)

FAQs

The importance of SMS OTP verification in banking | D7 Networks? ›

Transaction Authorization: OTP is often required to authorize high-value transactions or certain types of financial transactions, such as fund transfers, bill payments, or setting up new beneficiaries. This additional layer of authentication helps prevent unauthorized transactions and reduces the risk of fraud.

In conclusion, implementing one-time passwords (OTPs) is crucial to fortifying your business's security infrastructure. The benefits of enhanced security, protection against phishing, regulatory compliance, user-friendly authentication, and cost-effectiveness make OTPs a compelling choice.

SMS text verification lets websites, apps, banks, and social networks double-check a user's identity. After entering your username and password, you'll receive a text message with an SMS verification number on your smartphone. Use that number to complete your login. That's SMS verification.

​​​​​​​OTP also is known as a One Time Password is unsystematically generated and sent to your registered mobile number to validate the specific transaction. It offers an enhanced layer of security for the card and online transactions.

The platform sends the OTP to the user's registered mobile phone number via SMS. The user enters the received OTP into the application or website where they are attempting to authenticate. By doing so, the user confirms their identity.

Transaction Authorization: OTP is often required to authorize high-value transactions or certain types of financial transactions, such as fund transfers, bill payments, or setting up new beneficiaries. This additional layer of authentication helps prevent unauthorized transactions and reduces the risk of fraud.

SMS is widely used for personal and business communication, providing a quick and convenient way to send concise messages to individuals or groups of people. It has become an essential part of mobile communication and is supported by virtually all mobile devices.

Verification is intended to check that a product, service, or system meets a set of design specifications.

Verification codes also help reduce the possibility of errors in transactions. This is because the verification code appears when the user is about to make a transaction. The verification code saves the user from making errors when entering data in transactions.

What are the benefits of OTP? ›

OTPs are a proven technology with many benefits, including enhanced security, reduced risk, and data protection. There are two main types of OTPs, HOTPs and TOTPs, which use different methods to randomly generate the codes sent to users.

The OTP feature prevents some forms of identity theft by making sure that a captured username/password pair cannot be used a second time. Typically the user's login name stays the same, and the one-time password changes with each login.

A One Time Password or OTP is a security code designed to be used for a single login attempt or transaction, to minimize the risk of fraudulent attempts and maintain high security.

Because mobile numbers are universally unique, it provides a way for site owners to confirm that the person accessing their services is the same person who signed up for them. SMS OTP has become common when logging into banks or any financial services account.

A transaction SMS is something such as “Dear Jane Doe, your order has already been dispatched, and will reach you within three days.” While an OTP message is something like “Dear John Doe, your OTP code is 12345, use it to verify the impending transaction”.

You should use an authenticator app over SMS authentication because it is more secure and less likely to be intercepted by cybercriminals. Authenticator apps generate 2FA codes locally on a device, rather than sending them unencrypted over text message.

Why is a one-time password safe? The OTP feature prevents some forms of identity theft by making sure that a captured username/password pair cannot be used a second time. Typically the user's login name stays the same, and the one-time password changes with each login.

SMS OTPs are not designed with forward secrecy in mind. If an attacker manages to obtain an OTP, they can potentially use it to access an account even after the user has changed their password.

In an OTP fraud, scammers fool people into sharing their One Time Passwords, which are sent to them for authentication of online transactions or logins. Fraudsters pose as bank officials, customer service agents, and make up stories, like updating bank details to trick victims into revealing their OTPs.

Benefits of short codes

Short codes deliver messages up to 10 times faster than toll-free numbers, long codes, and branded sender IDs. To put this into perspective, when it might take other number types up to 50 minutes to deliver a campaign, a short code can do it in 5 minutes.