Is OTP Enough to Stop Account Takeover? The Best Alternatives

Key Takeaways

• An OTP is a short, single-use code that proves you have access to a specific device at login. 
• With OTP bots, widespread data breaches, phishing, and social engineering, OTP is no longer effective at deterring fraud. 
• SNA, passkeys, and biometric authentication provide more secure alternatives to OTP authentication. 
• Silent Network Authentication passively verifies users through their mobile network, providing a frictionless experience that is more secure than OTP. 

With the uptick in data breaches, account takeover (ATO) attacks are occurring more frequently as bad actors gain access to account credentials and PII. OTP (one-time passcode) authentication has been used for years as a second layer of verification. It’s familiar, cheap, and easy to implement. Unfortunately, OTPs are no longer strong enough. In many cases, they have become the primary enabler of ATO fraud at scale. 

In this guide, we’ll explain how OTP works, why OTPs aren’t strong enough, and what to use instead. 

Request A Demo

AI Fraud Detection in Banking

What Is OTP?

OTP stands for “one-time passcode” (or “one-time password”). It’s a short, single-use code between 4 and 8 digits that proves you have access to a device or channel when logging in. The “one-time” part is important. The code expires after it’s used or after a short window (typically 30 seconds to 2 minutes). A stolen code from yesterday is useless today. 

OTP is the most common form of two-factor authentication (2FA). It adds a second layer beyond just a password. In theory, an attacker would need both the password and access to the phone to get in. However, AI has enabled hackers to intercept OTPs and take over more accounts in the process. 

How Does OTP Work?

OTP authentication typically follows these steps: 

1. The user initiates an action: logging in, resetting a password, or making a transaction. 
2. The server generates a short-lived numeric or alphanumeric code and sends it via SMS or email. Alternatively, the user generates one using an authenticator app. 
3. The user enters the code on the website or app within a short window. 
4. The server validates the code against the one it generated. If it matches, the user is authenticated. 

OTPs are usually generated in one of two ways: 

• Time-based (TOTP): The server generates an OTP based on a shared secret key and the timestamp. Both the server and authenticator app compute the same code independently. The passcode typically expires after 30 to 90 seconds. 
• Hash-based (HOTP): The server generates an OTP with a counter. Each successful use advances the counter. The code expires after it’s used. 

Is OTP Secure Enough to Stop Account Takeover?

OTPs were a significant improvement over passwords alone a decade ago, but as fraud scales with AI, OTP authentication is no longer enough to keep accounts secure. In fact, NIST’s Digital Identity Guidelines now restrict the use of OTP for high-assurance authentication because they’re so vulnerable. These are the most common ways an OTP can be hacked: 

• Phishing: Attackers set up a real-time proxy site that looks like the legitimate website. When the user enters their login, password, and OTP, the site captures the credentials and uses them to log into the real website before the OTP expires. 
• SIM swapping: The attacker harvests PII and uses it to convince a mobile carrier employee to port the victim’s phone number to a SIM the attacker controls. All SMS OTPs now go to the attacker’s device. With carrier verification processes remaining weak, this attack has grown dramatically. 
• SS7 protocol exploits: Older telecom signaling protocols used on 2G and 3G networks can be abused to intercept SMS messages directly without touching the victim’s phone at all.  
• Social engineering: Attackers call the victim posing as “bank security,” claim suspicious activity, and ask the victim to “confirm” by reading back the OTP that was just texted to them. 

While OTP stops casual attackers, it offers almost no resistance against motivated fraud rings. 

Why Using OTP Is Enabling Fraud to Scale

Every time you deploy OTP as your primary authentication, you’re building infrastructure that fraudsters love. Here’s why:

• OTPs are interceptable: SMS was designed in the 90s for person-to-person messaging. It has no built-in encryption, no sender verification, and no delivery guarantee. When you route authentication through SMS, you’re trusting a chain of telecom carriers, which can be compromised at any time. 
• OTPs only verify device possession: Possessing a SIM card or receiving an email is not the same as verifying your identity. A stolen phone or compromised email inbox can pass the OTP check without identity verification.
• OTPs train users to expect friction: Users are conditioned to enter codes constantly, which creates OTP fatigue. It also means users are primed to enter codes into any page that looks legitimate. Phishing campaigns that mimic the OTP flow have extremely high success rates because the behavior is so familiar. 

What Are OTP Bots?

OTP bots are automated scripts or tools that intercept, generate, or replay one-time passwords in real time to bypass 2FA. Instead of a human fraudster manually phishing for codes, a bot handles the entire chain: credential harvesting, OTP capture, and session takeover. 

In 2026, OTP bots have become a commodity on criminal forums. This has enabled a massive increase in ATO attempts. Fraudsters can bypass OTP checks and access legitimate user accounts at scale. Bots can test thousands of stolen credential pairs at a time. For any that trigger an OTP challenge, they queue the target for a real-time phishing follow-up. As a result, OTP-based 2FA is no longer a real barrier to ATO attempts. 

What Are the Main Types of OTP Authentication?

There are four primary OTP delivery methods, including:

• SMS: A code is sent via text message to the user’s mobile number. While SMS OTPs are the most common, they are the least secure. OTPs can be intercepted via SIM swap, SS7, or phishing. 
• Email: A code is sent to the user’s email address. Because email is often unencrypted in transit, inboxes can easily be compromised. 
• Authenticator app: A code is generated locally on the user’s device using a shared secret key plus a time window. These offer more security than SMS or email-based OTPs, but they’re still perishable in real time. 
• Hardware token: A physical device generates codes based on a counter. These are harder to phish remotely, but still replayable if the code is captured in time. 

OTPs that are generated locally are harder to intercept, but all OTPs share the fundamental weakness of being replayable in real time by a proxy attack.  

Digital Customer Onboarding in Banking

Top OTP Alternatives

With the risks of OTP, companies today are moving towards authentication methods that cannot be phished, replayed, or intercepted. So what are the top alternatives?

Silent Network Authentication

This is the most direct OTP replacement for phone-number verification. SNA verifies a user’s mobile number by communicating directly with the mobile carrier’s network. No SMS codes are sent, and the user doesn’t have to do anything. 

How it works: 

1. The user enters their phone number on a website or app. 
2. The app sends a network-level request through the carrier’s API.
3. The carrier confirms whether the SIM in the user’s device matches the number they entered in 1 to 4 seconds. 
4. The result returns as a match or non-match. No OTP ever travels over SMS.

SNA eliminates the entire OTP attack surface. There’s no code to phish, no SMS to intercept, and no SIM swap to exploit. The check is cryptographic and tied to the SIM itself. Because it happens in the background, SNA also dramatically improves conversion rates. Users don’t have to leave the app, wait for a text, or type a code. 

Passkeys

Passkeys are device-bound cryptographic keys that authenticate directly with the service. They replace passwords completely. Instead, users log in by unlocking the phone or providing biometric verification. Passkeys use a combination of public keys (registered with the app or web service) and private keys, which never leave the device. The user never sees the passkey, which makes it resistant to phishing. 

Push Notification Authentication

When someone tries to log into the account, the service sends a notification to the user’s phone with a “Yes/No” prompt and details about the login, such as time and location. Push notification authentication is stronger than OTP because the user has to have the device unlocked and the app installed. 

Biometric Authentication

When logging in, the user scans their fingerprint, Face ID, or iris. Biometrics never leave the device. Instead, the service receives a cryptographic attestation that the user was verified. Biometric authentication is difficult for fraudsters to falsify while providing a seamless experience to users. 

Active Liveness Detection

Active liveness detection takes biometric authentication to a new level. Fraudsters may be able to use a mask, deepfake, or photo of the victim to get past biometric scanners. However, active liveness detection detects both that the person is the right person and that they are a real, live human. 

OTP vs Active Liveness Detection

OTP authentication verifies that someone has access to the device, but it’s not enough to stop fraud today. If the phone is stolen, the SIM is swapped, or the SMS is hacked, criminals can still access the account. 

Active liveness detection verifies both that a real, live human is present and that it is the right person. Users typically have to perform an action, such as blinking, turning their head, or saying a phrase. It adds a stronger protective layer that hackers cannot easily fake. 

OTP vs Silent Network Authentication

Both OTP and Silent Network Authentication verify possession of a specific phone number. But as previously discussed, OTPs are highly susceptible to a number of attack vectors. Fraudsters can gain access through phishing, social engineering, SS7 vulnerabilities, and SIM swaps. 

SNA, on the other hand, is faster and safer. Instead of requiring users to wait for a code and input the OTP, SNA passively verifies the phone number. There is no code to capture or replay. Instead, the carrier cryptographically verifies the SIM to make sure the right person is in possession of the number. SNA provides less friction to customers, costs less at scale, and eliminates the most exploited attack vector in ATO today. 

Conclusion

While OTP used to be a reasonable stopgap, fraud has evolved beyond its capabilities. Fraud rings today are organized, well-funded, and equipped with tools that bypass OTP in seconds. So what can organizations do? Identity-first authentication is the way forward. T

That’s exactly what Zumigo offers: real-time user verification without the friction and vulnerability of OTP. We analyze hundreds of authoritative signals that cannot be phished or SIM-swapped, stopping fraud before it happens.

Ready to prevent ATOs without increasing friction? Request a demo or talk to one of our fraud experts today. 

Build Your Identity Verification Workflow

Ecommerce Fraud Detection and Prevention

FAQs

Is OTP still secure?

OTP was once a meaningful security improvement, but OTPs are routinely being bypassed by real-time phishing proxies, SIM swap attacks, SS7 protocol interception, and social engineering.

What is an OTP bot?

An OTP bot is an automated tool that intercepts, generates, or replays one-time passwords in real time to bypass 2FA. They usually run a phishing proxy that sits between the user and the real service. OTP bots are widely available for sale on criminal forms, often sold as turnkey software for as little as a few hundred dollars. 

What are the best alternatives to OTP?

The strongest alternatives to OTP are Silent Network Authentication (SNA), passkeys, push notification authentication, biometric verification, and active liveness detection. 

What is the difference between OTP and SNA?

An OTP is a code sent to the user to verify possession of the device. The user enters the code when prompted and is granted access to the account. Silent Network Authentication occurs in the background within a matter of seconds using the mobile network to verify the device. It’s faster, more secure, and cheaper at scale. 

Can OTP be completely replaced? 

Yes. SNA, passkeys, push notifications, biometric verification, and active liveness detection can completely replace OTP use. The only remaining use case for OTP is as a fallback for users who don’t have a smartphone, but that population is shrinking every year.