SMS Verification is a fraud prevention practice used by merchants during the checkout process. It involves sending an SMS (short message service) code to the buyer’s device for purchase verification. Customers enter the 4- to 8-digit code to complete the process.
As part of customer verification, an SMS code is sent, and users may have encountered this when logging in or submitting online forms. It can be used as a first-line verification for new buyers, streamlining the process without manual reviews.
To use SMS verification, conventional fraud detection tools and fraud scoring are used to assess transaction risk. If certain fraud indicators pose a higher risk, an SMS verification code is triggered. The user confirms their phone number by entering the one-time-use numeric code.
Once the user signs in, they receive an SMS authorization code, and entering it authenticates them, allowing normal transaction processing.
This method is considered “ownership-based” as it relies on the user’s physical possession of the device. However, it also requires a second layer of authentication, such as a passcode or biometric scan, which strengthens verification.
Written by Andrii Vovk
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