The future of online payments: Will behavioural verification replace SMS codes?

The Authentication Dilemma

As digital banking matures, securing online payments has become a complex balancing act between fraud prevention and seamless user experience. While SMS-based codes have long been a standard for authentication, financial institutions are now facing growing pressure from both regulators and fraudsters to adopt smarter, more adaptive methods.

Why SMS Codes Are No Longer Enough

According to UK Finance’s 2023 Fraud Report, 82% of British banks still rely heavily on SMS one-time codes. Yet, this method is increasingly considered vulnerable:

• SIM-swap attacks rose by 31% last year, reports the UK’s National Cyber Security Centre.
• No signal? No access mobile network issues often result in failed logins.
• PSD2 regulations now require dynamic linking between transaction data and authentication, a challenge for static SMS codes.
• The European Banking Authority (EBA) also notes that high friction leads to cart abandonment in up to 28% of online transactions.

Behavioural Verification: A Smarter Approach

Behavioural Verification, a proprietary solution based on behavioural analysis – goes far beyond traditional biometrics. Instead of relying on what users have (phones, codes) or know (passwords), it focuses on how they behave.

This technology creates a unique behavioural profile based on how users:

• type on keyboards
• move their mouse or touchscreen
• navigate between screens

Thanks to continuous session monitoring, Behavioural Verification detects fraud in real time silently and invisibly, without interrupting the customer journey.

Compliant and Frictionless

What sets Behavioural Verification apart is its seamless integration with modern banking systems and its alignment with regulatory demands:

• Recognised by the EBA as a valid “inherence factor” under Strong Customer Authentication (SCA).
• Helps satisfy PSD2’s dynamic linking requirements.
• Offers real-time risk assessment with minimal customer friction.

In 2023, the UK Finance Innovation Lab named behavioural verification one of the top three most impactful technologies in financial security. Moreover, nearly half of major European institutions are already piloting or deploying it.

Not Just an Add-On a New Standard

While some still view behavioural verification as a complement to SMS codes, the direction is clear: adaptive, intelligent security is becoming essential. For financial institutions, it offers:

• A robust, scalable tool for transaction-level risk evaluation.
• A continuous, invisible shield against fraud.
• A way to retain trust and usability without compromising protection.

Final Thought

The future of authentication will not be defined by codes, tokens, or facial scans alone but by intelligent, real-time analysis of behaviour. With solutions like Behavioural Verification, financial institutions can offer security that not only protects but adapts quietly, continuously, and confidently.