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May 17, 2022

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Multi-Factor Authentication (MFA) for E-Commerce

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How e-commerce businesses and online retailers can benefit from Multi-Factor Authentication (MFA) and Two-Factor Authentication (2FA). 

Cybersecurity concerns are on the rise. Indeed, back in 2020, there were some 4.7 million reported cybercrimes in the United States alone, up over 300% from 2010. Moreover, according to a 2021 report from IBM, the global average cost of a data breach has now surpassed $4.24 million, up from $3.86 million in 2020.

These crimes affect few as seriously as they do online businesses, like e-commerce sites and online retailers. Fortunately, there are ways such organizations can fight back. Security standards and best practices like Multi-Factor Authentication (MFA) and Two-Factor Authentication (2FA) not only prevent revenue loss, but they also instill confidence in shoppers and therefore increase the overall value per customer. 

In this article, we discuss MFA and 2FA and demonstrate how your e-commerce businesses can benefit from them. Here’s what we cover: 

Ready to get started with MFA? Chat with one of our messaging experts! 


What is Multi-Factor Authentication (MFA)?

Multi-factor Authentication (MFA) is a common authentication technique that requires individuals to provide two or more pieces of identificatory evidence to gain access to digital resources, such as online accounts, payment systems, applications, etc. Typically, MFA requires users to verify their identities using one-time passwords (OTP), SMS, secret questions, or biometrics, in addition to their standard log-in credentials.


What’s the Difference Between Multi-Factor Authentication (MFA) and Two-Factor Authentication (2FA)?

The difference between Two-Factor Authentication (2FA) and MFA is one of degree, not of kind. As the name suggests, 2FA systems require two pieces of evidence to verify user identity while MFA systems require at least two, but often three pieces or more. 


Types of Multi-Factor Authentication (MFA)

The most common methods for verifying user identity include… 


Knowledge-Based Factors

Usernames, passwords, and email addresses are the most widely implemented knowledge-based factors. However, PIN codes, secret questions, and OTPs, are used quite often as well. 


Physical Possessions (Smartphones, ID Badges, etc.)

The classic example here are OTPs sent via SMS, but OTPs can also be sent via email, over-the-top (OTT) messengers, and mobile apps. Access badges, software tokens, certificates, and a variety of external devices can also be used to verify users. 



Fingerprint mapping, facial recognition, voice recognition, retina scanning, and other biometric verification techniques are growing in popularity. However, they’re currently found more often on hardware devices (like laptops, smartphones, and smart watches) than on digital platforms. 



This one is a little less common than the others. Location-based MFA techniques leverage geolocations and IP addresses to validate user identity. Usually, this is achieved by cross-referencing user location with a predefined set of whitelisted locations. 


How E-Commerce Companies and Online Retailers Can Benefit from Multi-Factor Authentication (MFA)

For retailers and e-commerce businesses, the primary use case for MFA is to bolster account security. For example, SMS can be deployed as an extra verification layer, beyond the standard email-password combo, to optimize digital safety for online shoppers. 

This helps you…


Reduce Fraud

Global e-commerce sales surpassed 4.9 trillion U.S. dollars in 2021, putting them on pace for nearly 8 trillion dollars by 2025. At the same time, online retail fraud has grown in lockstep. According to Juniper Research, global losses resulting from account takeovers and the use of stolen digital identity data for the creation of synthetic identities have likely surpassed 20 billion U.S. dollars per year. 

By implementing MFA, your e-commerce business can ward off fraudulent activity by making it substantially more difficult for scammers to access user accounts. Not only will this help you reduce the monetary costs associated with fraud, but it will also lessen the administrative burdens associated with making consumers and suppliers whole. In other words, preventing fraud will save you time and money.


Show Customers That You Care About Their Security

Trust is an important thing. If customers don’t feel like you’re taking their privacy seriously, they may be reluctant to shop on your site. As such, by deploying MFA, you will be able to demonstrate in a concrete manner that you’re investing in their security. This will inspire confidence and encourage future purchases.


Create Another Point of Contact With Your Customers

Finally, MFA can also be used to establish additional points of contact with your customers. For instance, if you decide to implement SMS / text messaging for MFA, you can use your customers’ phone numbers for expanded SMS engagement. You can build tailored campaigns based on customer shopping histories and online profiles, enable easy customer support with two-way text messaging, or even send real-time shipment notifications directly to their phones. 


How to Get Started with Multi-Factor Authentication (MFA)

At Pareteum, we offer a variety of messaging solutions that can be integrated into sophisticated MFA and 2FA security environments. This includes voice messaging and two-way, multi-channel application-to-person (A2P) messaging. To learn more, feel free to peruse our messaging product pages or contact our MFA experts. 

If you’d like to read more about how our SMS solution can improve your e-commerce business, we recommend checking out some of our previous blog posts: 


About Pareteum 

Pareteum is an experienced provider of Communications Platform as a Service solutions. We empower enterprises, communications service providers, internet service providers, mobile operators, full MVNOs, light MVNOs, early-stage innovators, developers, IoT (Internet of Things), and telecommunications infrastructure providers with the freedom and control to create, deliver, and scale innovative communications experiences.    

The Pareteum platform connects people and devices around the world using the secure, ubiquitous, and highly scalable solution to deliver data, voice, video, SMS/text messaging, media, and content enablement. 

For more information on Pareteum’s messaging solutions, set up a meeting!