Replace SMS OTP with device fingerprinting for secure and frictionless authentication

The European Banking Authority (EBA) provides guidance through the Second Payment Services Directive (PSD2) to enhance security and streamline payments across the European Union and the European Economic Area. PSD2 mandates compliance with Strong Customer Authentication (SCA), requiring at least two authentication factors from the categories of Knowledge, Possession, and Inherence to reduce fraud and unauthorized access to financial data. While many businesses initially adopted SMS One-Time Passwords (OTP) for compliance, this method introduced user friction and potential vulnerabilities like SIM swapping and SMS pumping fraud. Device fingerprinting emerges as a more seamless and secure alternative, allowing businesses to authenticate users without added friction and high costs associated with SMS OTPs. By integrating device fingerprinting with other authentication methods, businesses can maintain a strong security posture while complying with PSD2, ultimately shaping the future of digital payments in the EU.

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