---
url: 'https://www.corbado.com/faq/why-are-sms-otps-costly-for-enterprises'
title: 'Why are SMS OTPs costly for enterprises?'
description: 'Learn why SMS one-time passcodes (OTPs) lead to high operational costs for enterprises and how passkeys offer a cost-effective alternative.'
lang: 'en'
keywords: 'SMS OTP costs, SMS authentication expenses, SMS OTP enterprise costs, passkeys vs SMS, reducing OTP costs'
---

# Why are SMS OTPs costly for enterprises?

## Why Are SMS OTPs Costly for Enterprises?

SMS one-time passwords / passcodes (OTPs) have been a popular method for multi-factor
authentication (MFA), but they impose significant costs on enterprises. Here's why:

### 1. Per-Message Fees

- Every SMS OTP sent incurs a fee, which can accumulate rapidly for organizations with
  millions of users.
- For businesses with international customer bases, cross-border SMS delivery is even more
  expensive due to higher carrier charges.

### 2. High Volume of SMS OTPs

[Large-scale](https://www.corbado.com/blog/introducing-passkeys-large-scale-overview) consumer deployments
require frequent SMS OTPs for account logins, sign-ups, and recovery, increasing the
volume - and the cost.

### 3. Fraudulent SMS Requests (AIT)

Attackers [exploit](https://www.corbado.com/glossary/exploit) [vulnerabilities](https://www.corbado.com/glossary/vulnerability) like
**artificially inflated traffic (AIT)**, generating fake OTP requests to drive up SMS
costs maliciously.

### 4. Operational Costs

- SMS OTP delivery failures lead to support tickets, requiring customer service
  intervention to resolve issues.
- Addressing these failures adds to operational overhead and frustrates users.

### 5. User Preference Challenges

Many users prefer SMS OTPs for convenience, making it difficult for organizations to
transition to cheaper alternatives like [authenticator](https://www.corbado.com/glossary/authenticator) apps
without compromising UX.

## How Passkeys Help Reduce Costs

Passkeys eliminate the need for SMS OTPs entirely by relying on secure,
[phishing](https://www.corbado.com/glossary/phishing)-resistant authentication mechanisms. By reducing dependency
on SMS, enterprises can save up to **90%** in OTP-related expenses while enhancing user
experience.

## Read the full article