SMS for Two-Factor Authentication (OTP): Why Businesses Still Choose This Channel

A user signs up for a service, confirms a payment, or logs in from a new device. At that point, the business needs to verify that the action is being performed by someone who has access to the registered phone number. One common approach is to send a short one-time code via an SMS API.

SMS OTP is widely used in banking, financial services, e-commerce, and other digital services, even as the market gradually shifts toward authenticator apps and passkeys. The reason is practical: SMS does not require a separate app, prior authenticator setup, or a smartphone running a specific operating system.

What Is an OTP and Why Is It Used in 2FA?

An OTP, or One-Time Password, is a single-use code with a limited validity period. The system generates it for a specific transaction or login attempt, after which the code expires.

In a two-factor authentication scenario, an SMS OTP serves as an additional verification step after the first factor, such as a password. The user enters their login credentials, receives a code on their registered phone number, and enters it to confirm the login.

OTPs can also be used separately for phone number verification, account registration, account recovery, or transaction confirmation. This means SMS OTP and SMS 2FA are not always the same thing: a one-time code becomes a second authentication factor only when it supplements another authentication method.

Why SMS Is Still Used Alongside Push Notifications and Email

Push authentication is convenient for regular users of a mobile app: instead of manually entering a code, they can simply approve the request. However, the user first needs to install the app, enable notifications, and have access to the internet.

Email OTP removes the dependency on a mobile network but introduces another one: the user needs access to their email account. If both the service password and the email account are compromised, the value of this additional verification step is reduced.

Voice OTP delivers the code through a voice call. It can be used as a backup when an SMS does not arrive, but receiving a call takes more time and depends on voice connectivity.

SMS sits somewhere in between. A customer's phone number is often already stored in their profile, and receiving a message does not require installing additional software. This low barrier for the user helps explain why SMS remains common in large-scale verification scenarios, from registering a new account to confirming a one-time payment.

Coverage: SMS Works Without Mobile Internet

Push notifications and app-generated codes depend on a smartphone and a properly configured digital environment. SMS is delivered over the mobile network, so receiving a message does not require Wi-Fi or mobile data. Microsoft, for example, continues to support SMS as a backup channel for situations where users do not have connectivity for other notification methods.

This matters for services with diverse user bases. Some customers use the latest smartphones, while others have older devices. Some disable push notifications or simply do not want to install another app just to verify an account. For businesses serving customers across multiple countries, differences in devices and user habits become even more noticeable than in a single local market.

For businesses, this compatibility reduces the number of situations in which a customer cannot complete registration or verification simply because they do not have the required app.

SMS OTP Risks and How to Address Them

SMS should not be considered the strongest MFA method. CISA specifically points to risks such as SIM swapping and vulnerabilities in telecommunications protocols. For scenarios with high security requirements, the industry increasingly recommends moving toward phishing-resistant authentication methods, including passkeys.

There is also an operational risk: SMS messages travel through a chain of telecom operators, so delivery times can vary depending on the country, route, and local network.

“Delivery behaves differently across destinations, so we monitor delivery speed by route and can identify where SMS messages are starting to experience delays before the customer notices the issue. Throttling is another important layer: if too many code requests are sent to the same number within a short period, it is more likely to indicate abuse than a genuine login attempt. The system should stop that activity before the message is sent rather than after.”

— DID Global Support Team

SMS OTP should therefore be integrated into a broader security system. A service can limit repeated code requests, set a short expiration period, evaluate risky attempts before sending a message, and provide an alternative verification method.

The reliability of the delivery channel itself is also important for OTP. DID Global reports 99.9% uptime for its telecom infrastructure, which should be taken into account when building flows where a delayed message could interrupt account registration or authentication.

How Businesses Set Up SMS Verification with DID Global

A typical flow starts within the business's own system. A user requests a code when logging in, registering an account, or confirming a transaction. The backend generates the OTP and sends the message to the customer's phone number through an SMS API.

With DID Global, businesses can integrate an SMS channel into their products via API and use it for automated transactional messages. The OTP logic itself should be implemented on the service side, including code generation rules, expiration time, the number of permitted attempts, and the response to suspicious activity.

SMS remains useful when a business needs a channel with broad reach and minimal requirements for the user's device. For high-security accounts, it should be combined with stronger authentication methods. For large-scale verification, however, SMS continues to cover scenarios where push notifications, email, or a dedicated authenticator app may not be available to every customer.