Jun 20, 2024

Third party verification (via OTP or 2FA) for your apps: What it is + Why you need it

Do modern apps still need third-party verification , whether via OTPs or 2FA mechanisms? Yes, and here's why.

You’re probably used to getting OTPs on your phone as I am. It’s often the easiest way to log in or verify your number. Depending on where you live, OTPs are also often used to verify and validate financial transactions, data transfers, user consent and so on.

If you’re an app or website builder, you’re probably at least considering using OTP-based verification for user signups and other necessary actions.

In this article, I’ll break down the nature and necessity of third-party verification for your apps. If you’re a developer, you’ll also find some information about an SDK and API that’ll help you implement OTP verification into your app quickly and effortlessly.

Note: OTP is not the only mode of third-party verification, but the most popular one.

First of all, what is third-party verification (TPV)?

Third party verification refers to an extra layer of user authentication for online actions and transactions. This is best explained with examples.

  • You want to sign up for a dating app. You download it, and the first thing the app requests in your phone number. You enter it, and get an OTP via SMS (or some other messaging platform) that you enter into the app and that’s it…you’re signed in with a new user account.

  • You already have an account on an e-Commerce site (like Amazon and Etsy) but you can’t remember your password at the moment. Instead of having to remember it or look it up (if you’ve written it somewhere), you can simple choose the “Send an OTP” option. Enter your number, get an OTP and feed it into the system. You logged in, and you didn’t need a password.

In both these scenarios, third-party verification is used to check that it is indeed a real person (and the right person) who is trying to access the app or website.

In more formal terms, third-party verification or TPV provides a second wall of user authentication for online transactions. It is normal for online merchants to use TPV for user access and fraud protection. It ensures that the people logging in and/or approving transactions have the legal right to do so (by actually being who they claim to be online).

OTPs and other third-party verification mechanisms are essential to protect user data and systems from phishing, password sniffing, man-in-the-middle as well as replay attacks. They are best used in combination with static password system, facilitating multiple-factor authentication for the app in question.

Why is third-party verification a necessity for modern-day apps?

Simply put, security and convenience — the two magic words of modern commerce, whether analog or digital.

  • Improved security: Third party verification keeps user identites safe. By putting an extra layer of verification between the user's first action and final transaction, it gives the user the ability to protect their identities from being used against them. Someone may know your username and password, but they won't get your OTP unless they have your phone.

  • Assurance for users: Modern users expect any app they use to have some kind of third-party verification layer. If they don't get an OTP to approve transactions, they will very likely worry about digital safety and uninstall the app.

  • Regulatory compliance: Many countries, regions and industries have specific requirements for data protection and privacy, Laws like GDPR in Europe and CCPA in California are common examples. Third-party verification helps to meet the standards for legality in such demographics.

  • Better user experience: The average business user has about 191 passwords they must remember. Also, 81% of confirmed data breaches are due to passwords. We don’t think that’s a coincidence.

It's much easier to get an OTP than remember a million passwords. Most users don't want the burden of typing in a password every time they want to log in to a site. Third-party verification systems make life easier for the actual end-users, without compromising data security.

Why is third party verification better than static passwords?

To start with, over 80 percent of hacking-related breaches are caused by stolen or weak passwords. Given how often people download and sign up for new apps and sites, it is unrealistic to expect that they will remember every password.

OTPs take away the need to remember passwords, or they can act as an added layer of security along with static passwords. The former approach is best for non-essential logins, like e-Commerce sites. The latter is a requirement for industries with sensitive information like banking, investment and healthcare.

OTPs also guarantee better security because:

  • They are generated at random, automatically and instantly. Hackers can't get them unless they are actually holding your device.

  • They are valid for a few seconds or minutes, which reduces the likelihood of them being used against users.

OTPs vs. Two Factor Authentication (2FA)

How to implement third-party verification (OTP or otherwise) into the app you’re building right now

It is entirely possible to code a third-party verification system into your application. It is also possible to grow our own wheat and make bread, but both scenarios are tedious, time confusing and sub-optimal for the software’s overall development timelines.

Still, if you’re feeling confident about it, this is a good place to start — A Developer’s Guide to One-Time Passwords (OTPs).

However, most developers use an API or SDK designed for this specific purpose. I’ve written an article about what features to look for in an OTP service vendor, as well as three vendors you can choose from. I won’t be going too deep into those pointers here, but it’s all explained in The Best OTP Service Providers.

Instead, allow me to talk to you about a third-party verification SDK you might actually like, if you’re a developer.

Enter Prelude. We’re focused on better SMS verification–so you don’t have to be.

Prelude is a powerful and easy-to-use API that lets you send OTP codes worldwide using the most appropriate channel, depending on your user’s context. Businesses typically see a 20-30% increase in conversion compared with their previous provider, while saving 30-40% monthly. Prelude also detects and prevents fraud using algorithms trained on tens of millions of data points.

Behind its minimalist API, Prelude acts as a real-time broker and selects the optimal route based on your user’s context and history. It also prevents fraud transparently without requiring any additional configuration.

Learn more about the Prelude API here.

Or, you could explore how to integrate the Prelude API from any language.

We’re very proud to have created much better SMS verification–for less.

You’re probably used to getting OTPs on your phone as I am. It’s often the easiest way to log in or verify your number. Depending on where you live, OTPs are also often used to verify and validate financial transactions, data transfers, user consent and so on.

If you’re an app or website builder, you’re probably at least considering using OTP-based verification for user signups and other necessary actions.

In this article, I’ll break down the nature and necessity of third-party verification for your apps. If you’re a developer, you’ll also find some information about an SDK and API that’ll help you implement OTP verification into your app quickly and effortlessly.

Note: OTP is not the only mode of third-party verification, but the most popular one.

First of all, what is third-party verification (TPV)?

Third party verification refers to an extra layer of user authentication for online actions and transactions. This is best explained with examples.

  • You want to sign up for a dating app. You download it, and the first thing the app requests in your phone number. You enter it, and get an OTP via SMS (or some other messaging platform) that you enter into the app and that’s it…you’re signed in with a new user account.

  • You already have an account on an e-Commerce site (like Amazon and Etsy) but you can’t remember your password at the moment. Instead of having to remember it or look it up (if you’ve written it somewhere), you can simple choose the “Send an OTP” option. Enter your number, get an OTP and feed it into the system. You logged in, and you didn’t need a password.

In both these scenarios, third-party verification is used to check that it is indeed a real person (and the right person) who is trying to access the app or website.

In more formal terms, third-party verification or TPV provides a second wall of user authentication for online transactions. It is normal for online merchants to use TPV for user access and fraud protection. It ensures that the people logging in and/or approving transactions have the legal right to do so (by actually being who they claim to be online).

OTPs and other third-party verification mechanisms are essential to protect user data and systems from phishing, password sniffing, man-in-the-middle as well as replay attacks. They are best used in combination with static password system, facilitating multiple-factor authentication for the app in question.

Why is third-party verification a necessity for modern-day apps?

Simply put, security and convenience — the two magic words of modern commerce, whether analog or digital.

  • Improved security: Third party verification keeps user identites safe. By putting an extra layer of verification between the user's first action and final transaction, it gives the user the ability to protect their identities from being used against them. Someone may know your username and password, but they won't get your OTP unless they have your phone.

  • Assurance for users: Modern users expect any app they use to have some kind of third-party verification layer. If they don't get an OTP to approve transactions, they will very likely worry about digital safety and uninstall the app.

  • Regulatory compliance: Many countries, regions and industries have specific requirements for data protection and privacy, Laws like GDPR in Europe and CCPA in California are common examples. Third-party verification helps to meet the standards for legality in such demographics.

  • Better user experience: The average business user has about 191 passwords they must remember. Also, 81% of confirmed data breaches are due to passwords. We don’t think that’s a coincidence.

It's much easier to get an OTP than remember a million passwords. Most users don't want the burden of typing in a password every time they want to log in to a site. Third-party verification systems make life easier for the actual end-users, without compromising data security.

Why is third party verification better than static passwords?

To start with, over 80 percent of hacking-related breaches are caused by stolen or weak passwords. Given how often people download and sign up for new apps and sites, it is unrealistic to expect that they will remember every password.

OTPs take away the need to remember passwords, or they can act as an added layer of security along with static passwords. The former approach is best for non-essential logins, like e-Commerce sites. The latter is a requirement for industries with sensitive information like banking, investment and healthcare.

OTPs also guarantee better security because:

  • They are generated at random, automatically and instantly. Hackers can't get them unless they are actually holding your device.

  • They are valid for a few seconds or minutes, which reduces the likelihood of them being used against users.

OTPs vs. Two Factor Authentication (2FA)

How to implement third-party verification (OTP or otherwise) into the app you’re building right now

It is entirely possible to code a third-party verification system into your application. It is also possible to grow our own wheat and make bread, but both scenarios are tedious, time confusing and sub-optimal for the software’s overall development timelines.

Still, if you’re feeling confident about it, this is a good place to start — A Developer’s Guide to One-Time Passwords (OTPs).

However, most developers use an API or SDK designed for this specific purpose. I’ve written an article about what features to look for in an OTP service vendor, as well as three vendors you can choose from. I won’t be going too deep into those pointers here, but it’s all explained in The Best OTP Service Providers.

Instead, allow me to talk to you about a third-party verification SDK you might actually like, if you’re a developer.

Enter Prelude. We’re focused on better SMS verification–so you don’t have to be.

Prelude is a powerful and easy-to-use API that lets you send OTP codes worldwide using the most appropriate channel, depending on your user’s context. Businesses typically see a 20-30% increase in conversion compared with their previous provider, while saving 30-40% monthly. Prelude also detects and prevents fraud using algorithms trained on tens of millions of data points.

Behind its minimalist API, Prelude acts as a real-time broker and selects the optimal route based on your user’s context and history. It also prevents fraud transparently without requiring any additional configuration.

Learn more about the Prelude API here.

Or, you could explore how to integrate the Prelude API from any language.

We’re very proud to have created much better SMS verification–for less.

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