When a user signs up for your platform, the last thing you want is friction. Whether it’s entering a code or clicking a link, that first interaction sets the tone. OTPs (One-Time Passwords) and Magic Links are two of the most widely used methods for authentication but they each come with trade-offs. Which one is faster? Which one is more secure? And most importantly, which one is best for your users? Let’s break it down.

What are OTPs and Magic Links?

User authentication comes in many forms, but OTPs and Magic Links have emerged as two of the most common passwordless solutions. While both aim to simplify the login process, they function in very different ways.

1. OTP (One-Time Password)

An OTP is a temporary code sent via SMS, email, or an authenticator app. Enter the code, and you're in, simple as that. Since OTPs expire quickly and can’t be reused, they add an extra layer of security against credential theft.

You’ve probably seen them everywhere: logging into your bank account, verifying a payment, or resetting a password. That’s because OTPs are the go-to for industries like fintech, banking, and e-commerce, where security is non-negotiable.

Businesses love OTPs because they’re familiar to users and easy to integrate. No password headaches, no complex setup, just a quick code and you’re verified. But they aren’t perfect. SMS delays can leave users stuck waiting, and security risks like SIM swapping or SMS pumping mean choosing the right OTP provider is crucial.

So, are OTPs the best choice? It depends on your needs. They’re reliable but come with trade-offs.

2. Magic Links

Magic links ditch the whole password game. Instead of entering a code, users receive a unique link via email, click it, and you’re in. No memorizing, no resetting, no hassle.

They’re a favorite for SaaS platforms, subscription services, and apps where users log in occasionally rather than daily. The biggest selling point? Simplicity. Magic links remove friction and speed up onboarding, making them a dream for user experience teams.

But here’s the catch: if your email is inaccessible or the link lands in spam, you’re stuck. And for mobile-first apps, constantly switching between email and an app can feel clunky.

Magic links are great when speed isn’t the top priority, but if instant access is a must, they might not always be the best fit.

What are the strengths and weaknesses of OTPs and Magic Links?

Choosing the right authentication method isn’t just about security, it’s about finding the right balance between usability, reliability, and cost. Both OTPs and magic links have their advantages and drawbacks, depending on your platform’s needs.

Why choose OTPs?

OTPs remain one of the most widely used authentication methods. But what makes them so effective?

• Familiar for users: most people have encountered OTPs for banking, e-commerce, or account recovery, making the process intuitive,

• Great for mobile-first businesses: since many users sign up with their phone numbers, SMS OTPs offer a seamless way to verify accounts,

• Supports multi-factor authentication (MFA): OTPs add an extra security layer when combined with passwords, reducing the risk of unauthorized access.

However, OTPs aren’t without their challenges: 

• Susceptible to SMS fraud: SIM swapping, SMS pumping, and interception attacks can compromise account security if the wrong provider is chosen,

• Costly for businesses: sending OTPs via SMS incurs recurring costs, which can quickly add up for platforms with large user bases, 

• Delivery issues can frustrate users: delayed or failed SMS messages can prevent users from logging in, leading to drop-offs and increased support requests.

💡 If you're already using Prelude to send OTPs to your users, rest assured that our solution already meets these challenges. Thanks to our intelligent routing system and SMS pumping prevention algorithm, Prelude Verify ensures a 99% delivery rate worldwide, while keeping costs low for our customers.

OTPs offer a strong balance between security and convenience, but they require a reliable infrastructure to avoid security risks and delivery failures.

Are Magic Links the best solution for seamless authentication?

Magic links remove the hassle of passwords and provide a frictionless login experience. But are they always the best choice?

• Seamless and secure: no need to remember or reset passwords, reducing user frustration and account lockouts,

• Eliminates password fatigue: users simply click a link to log in, making authentication effortless,

• Ideal for web-based platforms: works well for SaaS products, subscription services, and apps where users log in less frequently.

But magic links also have some limitations.

• Requires email access: if a user isn’t logged into their email, retrieving the link adds unnecessary friction, especially on mobile,

• Email reliability issues: magic links can be delayed, end up in spam, or get blocked, leading to a poor user experience,

• Less familiar for some users: not everyone understands how magic links work, which can cause confusion and increase drop-off rates,

• Security risks if email is compromised: if an attacker gains access to a user’s email, they can use magic links to take over accounts.

Magic links simplify authentication, but they rely on email accessibility and user habits. They work best for web platforms where security risks are lower and users value convenience.

Which method is best for you?

There’s no universal answer when it comes to user verification. The best method depends on your audience, security requirements, and the type of platform you operate. OTPs and magic links both have their strengths, but choosing the right one means understanding how your users interact with your service.

Key factors to consider

• User base preferences: are your users more comfortable receiving a text message or clicking an email link?

• Security needs: does your platform handle sensitive data that requires stronger authentication?

• Device usage: are your users primarily on mobile, where switching between apps can create friction, or on desktop, where email-based authentication is more seamless?

Which method works best for different use cases?

• High-risk accounts (banking, fintech, healthcare,...): OTP is the safer choice due to its ability to act as a second authentication factor. Security-sensitive platforms need a method that protects against unauthorized access,

• Mobile-first apps: OTP works best for apps that use phone numbers as the primary identifier. SMS-based authentication is familiar, fast, and easy to use on mobile devices,

• Web-based platforms: Magic links are a great option for SaaS applications, subscription services, and platforms where users log in less frequently. However, OTPs can still be a viable choice if security is a concern,

• Multi-factor authentication (MFA): OTP is often used as a second authentication factor, adding an extra layer of security beyond just a password or a magic link.

Ultimately, the best approach might not be choosing just one method but offering users the flexibility to choose between OTPs and magic links based on their preferences. Some businesses combine both options, using OTPs for high-risk actions and magic links for general logins to optimize both security and user experience.

The right authentication method isn’t just about security, it’s about ensuring a smooth, user-friendly experience that meets the needs of your audience while keeping your platform protected.

Choosing between OTPs and magic links isn’t just a technical decision, it directly impacts your user experience, security, and business scalability. OTPs provide familiarity and strong security, making them ideal for mobile-first apps and high-risk accounts. On the other hand, magic links remove password friction, offering a seamless experience for web-based platforms where convenience matters most.

Ultimately, the best approach depends on your users and your platform’s needs. Some businesses may benefit from offering both options, allowing users to choose the method that works best for them.

Ready to streamline user authentication? Try Prelude for free or contact our sales team to find the best solution for you.