Businesses are moving away from SMS-based authentication as rising costs and security vulnerabilities make it a less viable option, according to Mobile Ecosystem Forum (MEF) CEO Dario Betti. Speaking on the latest episode of the ID Talk podcast, Betti explained that while SMS one-time passwords (OTP) remain widely used, companies are increasingly looking for more secure and cost-effective alternatives.
“The SS7 standard was never designed for security,” Betti said, referring to the telecommunications protocol that underpins SMS messaging. “It’s surprising someone found a way to play with it.” While SMS OTPs remain popular due to their universal availability and ease of use, they have long been vulnerable to fraud, including SIM swap attacks and man-in-the-middle exploits.
Now, businesses have another reason to reconsider their reliance on SMS for authentication: cost. Some mobile network operators have significantly increased pricing for SMS OTP traffic, with some regions seeing cost spikes of 300 percent year-over-year.
“It started as a small price increase, but once you start doubling year over year, it becomes a much bigger concern,” Betti noted. The rising costs have led some large enterprises, including banks and fintech platforms, to explore alternatives such as biometric authentication, app-based login approvals, and mobile network intelligence for fraud prevention.
Despite its limitations, SMS OTPs continue to be the most widely used authentication method for many organizations, particularly in sectors that require broad accessibility. “There are still cases where SMS is the only option,” Betti acknowledged, pointing out that many users, especially in emerging markets, do not have access to alternative authentication technologies. However, for companies operating at scale, the combination of security risks and increasing operational costs is driving a shift toward other solutions.
The full ID Talk podcast episode featuring Dario Betti offers deeper insights into how businesses are rethinking their authentication strategies, the latest trends in multi-factor authentication, and the role of AI and biometrics in identity verification.
ID Talk is available wherever you get your podcasts.
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February 13, 2025 – by the ID Tech Editorial Team
