The Best OTP Service Providers

If you're developing an app, validating user identities during onboarding or other processes is crucial. With frequent identity theft and online fraud, hackers can gain access to user accounts and misuse funds and information.

In 2023, data breaches in the U.S. hit a record high, impacting 353 million individuals. Online payment fraud is expected to cost businesses $343 billion between 2023-2027!

An easy way to avoid such fraud is to utilize OTP-based verification. However, given that OTP verification is such an essential part of app functionality, it tends to be quite expensive for app builders, especially if they are at the startup stage. Figuring out which OTP providers work best for them is another important (but somewhat tedious) task CTOs and engineering teams must work out for themselves.

To make their lives a little easier, I’ve compiled a list of OTP providers who provide guaranteed state-of-the-art services to match your app’s technical needs, regardless of user volume or industry.

What is an OTP Service Provider?

An OTP (One-Time Password) service provider offers the infrastructure and tools you need to generate, send, and verify one-time passwords for user authentication.

These providers typically offer APIs or SDKs that can be integrated into a business's existing systems, enabling easy and seamless OTP-based authentication. This type of service can be used to protect your users' accounts with two-factor authentication or to add an extra layer of security to a sensitive action such as a payment.

What features should you look for in your SMS OTP provider?

Speed and reliability

The OTP should reach the intended customer’s phone within seconds. If more than a couple of seconds pass between a customer’s input and receiving the OTP, you can chalk that up to a bad user experience.

Adequate security features

In the current age, “adequate” would translate to “high-level,” in all honesty. The SMS OTP service provider should be able to detect fraud when requesting and sending the OTP.

Regulatory compliance

Your service provider should comply with all legal regulations that apply to your chosen industry and region.

Easy setup

If you’re looking for SMS verification that helps you grow, start at the beginning. The SMS API in question should be easy to download, integrate with your system, and activate. The provider should also offer clear documentation and developer-friendly setup pipelines to simplify and speed up the initial processes.

Integrates with other applications

Integrating third-party apps is essential for any modern, customer-facing software to function. Your chosen provider should provide integration with multiple other applications, enabling it to provide OTPs for customers across different apps and software systems.

Solid customer support

You should be able to connect with the service provider whenever you have a roadblock. Choose a vendor with 24/7 support and one ready to put down a quick Average Speed to Answer in their SLAs.

Transparent pricing and service details

The best OTP service provider will give you complete transparency into the details of your pricing and what you’re paying for. Prelude, a French OTP provider, charges less per SMS and includes fraud protection. Prelude also provides a dashboard where customers can see exactly what their money is being used for. Throughout the month, you can view a dashboard and see how your SMS costs are being factored and savings per SMS sent.

Flexible billing

You should be able to adjust your billing based on your usage. Once again, Prelude allows you to pay for more expensive routes to increase conversion. If not, they choose the cheapest and fastest route by examining multiple carriers and choosing one that costs the least without affecting delivery.

The 3 Best OTP Service Providers to secure your customers

🥇 Prelude

Prelude provides SMS verification and onboarding infrastructure through a set of unified APIs developers might actually like. We’re dedicated to more reliable fraud detection, elegant transparency, and increased reliability — all at a better price.

Why Prelude stands out

We’ve noticed here at Prelude that our customers come to us when they face one of the following issues:

• They receive a hefty bill from their OTP provider and don’t understand why it’s so exorbitant. Generally, they are being charged for fraud.

• They’re trying to build an app and need SMS verification services that don’t cost them a small fortune.

• They need a vendor who understands how fast startups need to move and build…and supports them with lightning-fast customer support and assistance.

At Prelude, we try to solve both problems with our pricing model and dashboard.

• In general, businesses cut their SMS verification costs by 30-40% when switching to Prelude while increasing conversion from SMS sent to SMS entered in your app… compared to their previous provider.

• Prelude costs less. We charge less for fraud protection and your carrier fee. Customers can also choose to optimize OTP delivery for cost or conversion. Prelude will examine multiple carriers and find the best route for the lowest price if you choose the former. If we find a better route for less, we switch you to this route and give you the money back.

• Feel free to review what Prelude charges per SMS in every country on the public website. On average, our prices are 60% below market price while offering multi-routing and antispam protection.

• Prelude offers a dashboard where customers can see how their SMS costs are being factored in and the savings they get with every SMS sent. Customers get complete transparency and know exactly what they are paying for.

Additionally :

• Prelude uses cross-signal risk scoring to identify spam with the highest possible accuracy. That means we only send OTP SMS to real users.

• Prelude’s granular approach to fraud detection lets companies connect with real users in countries known for frequent fraudulent traffic (e.g., emerging markets like Vietnam and Brazil).

• The Prelude dashboard provides analytical insight into acquisition numbers by country, platform, and application version. Customers can also view acquisition costs in real-time, as well as conversion rate and time to convert.

🥈 Twilio’s Verify API

Among the many communication APIs it offers, Twilio also provides the Verify API, which is designed to offer OTP services, i.e., two-factor authentication (2FA) via SMS, email, and voice calls at a price.

Why Twilio stands out

It enables customers to customize the content of SMSes, emails, and voice calls, which is important for branding and user experience. It supports multiple channels for verification, such as SMS, email, passkeys, WhatsApp, voice calls, etc.

Twilio allows customers to establish rate limits on verification attempts and set particular expiration dates/times for OTPs and offers cross-platform support, making it usable across web, mobile, and IoT programs.

The language of the OTP can be changed as required. The API comes with multi-language support and provides tools for tracking verification attempts, successes, and errors.

It has built-in features to protect against threats like brute force and unauthorized access. It has a highly scalable infrastructure capable of handling large numbers of verification attempts and is compliant with regulations such as GDPR and CCPA.

Customers pay for Twilio’s Verify API based on:

• The number of times the customer tries to verify a user’s phone number. Each attempt costs a fixed rate, which differs based on factors like geography.

• The number of times a customer checks details about a phone number, such as its carrier or type (landline/mobile).

🥉 Vonage’s Verify API

Yes, Vonage offers a Verify API of its own. Much like the other names on this list, the Vonage Verify API helps brands and businesses authenticate users’ phone numbers via SMS, voice, etc. It provides 2FA authentication built on Vonage’s patented tech and can be used without any telecom or security experience.

Why Vonage stands out

It enables verification of phone numbers via SMS, calls, WhatsApp, email, and Silent Authentication.

Vonage enables 2FA authentication for registration or user login and supports number verification and OTP delivery across the globe.

It allows customizing messages to customers, which is helpful for branding purposes and offers a retry option for OTP delivery: the OTP is automatically resent if the initial verification attempt fails.

Vonage provides detailed reports on delivery and status, helping businesses track success/failure rates and carries in-built security features to protect user data, such as data encryption in transit and at rest. With scalable and equipped with dev-friendly docs, SDKs, and code samples, customers only have to pay for successful verifications.

How to choose the right SMS OTP service provider?

As you can see, there are a lot of different providers, each with their own specific features and advantages. So how can you be sure you're choosing the right one for your business?

1/ List your requirements when it comes to OTP

Before contacting a supplier, make sure you know what your real needs are. Think about the volume of OTP you need now and in the medium term, because you want to choose a supplier who can support you as you grow. Also make a list of your main markets and your current OTP conversion rate to check whether your future supplier is able to compete.

For instance, if you want to send marketing messages and initiate two-way conversations on messaging platforms, Twilio or Vonage are your answer. Choose Prelude if you want flawless, fraud-less, low-price SMS & OTP verification. That’s all we do, and we do it very well. We offer lower prices, better fraud protection, more transparency, fewer outages, and round-the-clock support (for real).

2/ Think about your must-have features

To go beyond volume, you can draw up a list of must-have features and nice-to-have features. For example, if your business suffers from SMS pumping fraud, a must-have feature might be the supplier's ability to mitigate that fraud. Delivery rates, analytics, ability to personnalise OTP messages, responsive support, available channels: think of all the features and services you need!

3/ Evaluate pricing

Once you have shot-listed some providers that meet your needs, be sure to evaluate their pricing models. Be aware of any hidden charges a provider might add and assess how that pricing structure would fit with your volume of OTP messages. Some providers offer volume discounts for companies that reach a certain amount of messages, so it may be worth discussing this directly with their sales teams.

4/ Test the service

Whether you sign up directly for a free trial or the provider offers one, it's always a good idea to test the service before going ahead with a full migration. It's at this stage that you'll be able to determine whether this new provider is right for you, whether the results are in line with your expectations, whether you can derive a positive return on investment from this migration and whether the user interface suits you.

See Prelude in action today

Would you like to find out how Prelude manages user authentication differently? You can test our service directly by creating a trial account which will give you access to your own dashboard. You can also talk to our sales team about your situation and challenges to see how we can help.

Our pricing is detailed here, with no hidden fees. If you need to send a large number of OTPs, you can talk to our team to see if an annual agreement is right for you!