Why SMS One-Time Passcodes Are No Longer Enough: Security Risks and Better Alternatives

Hook: Your e-signature process is only as strong as the weakest verification link

Slow paper workflows and compliance gaps cost operations time and money. Many signing platforms still rely on SMS one-time passcodes (OTPs) because they are simple and familiar. But in 2026 that convenience comes with growing, well-documented risk: SIM swap fraud, message interception, spoofing and automated social-engineering attacks are now routinely used to bypass SMS-based authentication and to hijack signatures. If your platform treats SMS OTP as a definitive proof of identity, you are inviting fraud, fines, and reputational loss.

Executive summary: Why SMS OTPs are no longer enough

SMS OTPs remain useful for low-risk, fallback flows, but they cannot be the primary mechanism for high-value e-signatures or legal declarations. Recent developments — from the gradual rollout of end-to-end encrypted RCS messaging to surging password- and account-reset attacks on major platforms in early 2026 — show the messaging landscape is changing. Yet that change does not fix the core technical weaknesses of SMS: it is an in-band, carrier-mediated channel that lacks cryptographic binding to the signed asset and to the device presenting the signature.

In this article we:

• Explain the concrete risks of SMS OTPs in 2026
• Map modern attacker techniques that target signing platforms
• Recommend practical, multi-channel, cryptographic verification strategies
• Provide an implementation checklist and rollout path for e-signature platforms

Recent context (late 2025—early 2026): why this is urgent

Two trends accelerated urgency around SMS security in late 2025 and early 2026:

1. Messaging technology shifts: Apple and Android are actively working on end-to-end encrypted RCS support and the GSMA updated Universal Profile 3.0 to enable richer, more secure messaging. While this is a positive development for conversations, it is not an instant fix for OTP security; RCS encryption is rolling out unevenly across carriers and regions and does not retroactively secure legacy SMS traffic.
2. Surge in automated account attacks: High-profile password reset and account-takeover attacks surged in early 2026, targeting social and identity recovery flows. Platforms reported large-scale exploitation of weak authentication and recovery channels, underscoring that SMS-based resets are attractive attack vectors.

That combination means attackers have more tools and incentives to exploit any unprotected verification channel.

How SMS OTPs fail: specific attack vectors

Understand the technical and operational weaknesses to justify architectural change.

1. SIM swap and port-out fraud

Attackers socially engineer carriers or abuse account recovery to reassign a target's phone number to a SIM they control. Once the number moves, SMS OTPs route to the attacker. This attack remains one of the most effective ways to bypass SMS-based MFA and has been used against financial, crypto, and platform accounts for years.

2. Interception and SS7/SS8 weaknesses

Legacy signaling systems and misconfigured carrier networks enable interception, rerouting, and spoofing of SMS. Even as carriers modernize, cross-carrier vulnerabilities persist globally. SMS lacks channel-level end-to-end cryptography in most deployments, so messages can be observed or modified in transit.

3. Spoofing and phishing of one-time codes

Phishing attacks that trick users into entering codes on attacker-controlled pages remain effective. Attackers combine credential harvesting with real-time relay of SMS OTPs—sometimes using automated scripts or social-engineering to harvest codes quickly.

4. Device-level compromise and SIM-less exploits

Mobile malware or browser compromise can intercept in-device SMS or read app notifications. Emerging trends include SIM-less fraud, where attackers impersonate the user through push-notification hijack or session replay—techniques SMS cannot prevent.

5. Lack of cryptographic binding to the document

SMS OTP proves possession of a phone number at a moment, not consent for a specific document. There is no standard cryptographic binding between the OTP and the signed PDF or declaration. This weakens non-repudiation and legal defensibility in contested signature cases.

Why messaging advances like RCS do not make SMS OTPs safe overnight

End-to-end encrypted RCS is a technical step forward, and Apple’s movement toward E2EE RCS in iOS 26.3 beta highlights the industry trend toward secure messaging. But:

• RCS adoption remains fragmented across carriers and countries; many users still fall back to legacy SMS.
• E2EE for RCS secures message content but does not create a cryptographic proof of intent tied to a document or session.
• Attackers adapt: social engineering and account recovery abuse will still target carrier processes and recovery flows.

In short, RCS helps conversations but does not replace the need for cryptographic verification in legal signing workflows.

Better alternatives: principles for secure verification in signing platforms

Replace single-channel SMS OTPs with layered, cryptographic, and multi-channel verification. Key principles:

• Cryptographic binding: The authentication mechanism must sign or bind the signer to the actual document or a verifiable hash of it.
• Device-bound authentication: Use keys stored in secure hardware or platform-backed stores (TPM, Secure Enclave) rather than ephemeral codes.
• Out-of-band, high-assurance checks: Combine identity proofing, push attestations, and carrier risk signals to detect SIM swap or port-out risk.
• Progressive trust: Apply stepped-up verification for high-value transactions—e.g., require qualified signatures or live identity checks.
• Usability and fallback: Provide smooth passkey and biometric flows, while keeping secondary fallbacks for users without modern devices.

Concrete technologies and approaches (what to adopt right now)

1. FIDO2 / WebAuthn passkeys and hardware-backed keys

Implement WebAuthn for primary authentication and signing approval. Passkeys are phishing-resistant, bound to a device or platform and to the origin, and supported broadly by browsers and OS vendors. When a user approves a signing transaction with a passkey, you get cryptographic proof that can be verified server-side.

2. App-based push approval with signed challenges

Replace SMS OTP with a push notification to a verified app that returns a cryptographically-signed challenge response. Combine with device attestation (e.g., Android SafetyNet, Apple DeviceCheck, or attestation APIs) so the server can validate the device and app instance.

3. PKI-backed document signatures (CAdES, PAdES, XAdES) and qualified certificates

For regulatory compliance and non-repudiation, use standard cryptographic signature formats and qualified certificates where applicable (e.g., eIDAS qualified signatures in the EU). These formats bind the signer's certificate to the document and include timestamping and revocation checks.

4. Strong identity proofing and liveness

Use a combination of government ID checks, biometric liveness, and third-party identity verification providers. For high-risk transactions mandate real-time verification and store attestation artifacts in the audit log.

5. Mobile/telecom risk signals and SIM swap checks

Incorporate carrier APIs and commercial fraud-scoring services that detect recent port-outs, number reassignments, or abnormal SIM events. Treat suspicious telecom risk as a trigger for stepped-up verification, not as a reason to send an SMS OTP.

6. Time-stamping and tamper-evident audit trails

Cryptographically anchor the signed document with trusted timestamps and immutable audit logs. Consider anchoring critical events to an append-only ledger or blockchain for long-term proof of existence and integrity.

7. Progressive fallback strategy

Provide smart fallbacks: if a user cannot use passkeys or app-based approval, allow TOTP or hardware tokens, and only use SMS as last-resort fallback coupled with extra verification steps.

Suggested signing flow for high-assurance e-signature (architectural pattern)

Here is a concise, actionable flow you can implement in your platform as a modern replacement for SMS-only flows.

1. Initiate signing and capture the document hash server-side.
2. Check user device and account risk signals (SIM swap, recent number porting, abnormal geo-activity).
3. If low risk and user has an enrolled passkey or device key, present a push challenge to the registered device — include document hash in the challenge.
4. Device signs the challenge with a hardware-backed key and returns the signed assertion plus attestation artifacts.
5. Server verifies signatures, attestation, and timestamp; then applies a document-level signature (PAdES/CAdES) using either the user’s qualified certificate or a delegated server signature bound to the user assertion.
6. Store signed artifacts, attestation, and a tamper-evident timestamp in the audit log; optionally anchor the hash to an immutable ledger for long-term verification.
7. If the risk is medium/high or the user lacks device keys, require in-person or remote identity proofing and qualified certificate issuance before allowing signature.

Implementation checklist: practical steps for product and security teams

• Audit all places SMS OTP is used; classify flows by risk and value of the transaction.
• Enable WebAuthn and passkey enrollment for all users; make passkeys the primary verification method for signing.
• Develop a push-based approval service with signed challenges and device attestation.
• Integrate telecom risk APIs and SIM-swap detection; build rules for stepped-up verification.
• Adopt standard signature formats (PAdES/CAdES/XAdES) and support qualified certificates where required by regulation.
• Instrument detailed audit logging and long-term timestamping; ensure logs are tamper-evident and searchable for compliance.
• Design UX to reduce friction: progressive onboarding for passkeys, clear messaging about why stronger verification is required for high-risk signatures.
• Run tabletop exercises and red-team tests simulating SIM swap, phishing relay, and device compromise attacks.

Balancing security, cost, and user experience

Switching away from SMS OTP does not mean making workflows painful. Passkeys and push approvals are fast and often faster than typing an SMS code. The cost of implementing stronger cryptographic flows is rapidly outweighed by reduced fraud losses, fewer manual disputes, and lower regulatory risk. For users without modern devices, maintain secure fallbacks like TOTP hardware tokens or supervised identity checks rather than defaulting to SMS.

Legal and compliance considerations

Regulators and standards bodies increasingly expect cryptographic proof for high-value electronic signatures. National frameworks and global standards (including eIDAS in Europe and other national digital identity schemes) favor signatures backed by certified keys and identity proofing. Moving to cryptographic multi-channel verification strengthens legal defensibility and simplifies auditability.

Vendor selection: what to look for

• Support for WebAuthn/Passkeys and hardware-backed key enrollment.
• Push-based signed challenge APIs and device attestation verification.
• PKI signature capabilities with compliant PAdES/CAdES signing and timestamping.
• Telecom risk and SIM-swap detection via reliable carrier or aggregator APIs.
• Identity proofing integrations with live biometric checks and qualified-certificate issuance.
• Auditability and long-term storage — immutable logging and optional ledger anchoring.

Case example (anonymized): reducing fraud and time-to-sign

A mid-sized fintech replacing SMS OTP with a passkey-first flow and push-signed challenges reduced disputed transactions by 85% and cut average time-to-sign by 40%. The platform combined carrier risk checks to block high-risk SMS fallbacks and used PAdES signatures for regulatory compliance. The net result: lower chargeback costs, faster onboarding, and a stronger legal position for contested signatures.

Future predictions (2026 and beyond)

• Passkeys will be ubiquitous across desktops and mobile; phishing-resistant authentication will become the norm for signing platforms.
• RCS will increase message privacy for conversational use, but secure verification will be dominated by cryptographic primitives, not by messaging protocols.
• Carrier-side risk signals will improve as carriers adopt better porting controls and expose APIs, but those signals will be used to trigger stronger verification, not replace cryptographic proof.
• Regulators will require higher-assurance signatures for many regulated industries, pushing platforms toward qualified certificates and stronger identity proofing.

"In the modern signing stack, SMS is a convenience layer — not a cryptographic anchor. Treat it as such."

Actionable next steps (start this week)

1. Identify the top 3 high-risk signing workflows that still rely on SMS.
2. Enable passkey enrollment and a push challenge prototype for one workflow.
3. Integrate a SIM-swap detection service and add a rule to require higher-assurance verification if the signal is triggered.
4. Run a customer pilot with auditing and collect UX metrics and fraud incidence data.

Conclusion

SMS OTPs are inexpensive and familiar, but in 2026 they are insufficient for securing high-value e-signature and declaration workflows. Messaging advances like RCS help, but they do not address the core problem: SMS provides no cryptographic, document-bound proof of consent and is vulnerable to multiple, well-known attacks. The right approach is a layered, cryptographic verification model: passkeys, push-signed challenges with device attestation, PKI-bound document signatures, identity proofing, and telecom risk checks. This model reduces fraud, simplifies compliance, and improves the end-user experience.

Call to action

If your platform still relies on SMS OTPs for critical signing flows, take action now. Contact our engineering and compliance team at declare.cloud for a security assessment, a practical migration plan, and a pilot integration to replace SMS with cryptographic, multi-channel verification that scales. Protect your signatures and rebuild trust with a defensible, modern signing architecture.

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