Why Is the UAE Phasing Out OTPs by 2026, and What Advanced Security Measures Will Replace Them? Key Things To Know

One-time passwords (OTPs) are short codes sent via SMS or email to verify your identity during online transactions. They've been widely used for years because they're quick and easy. But now, they're no longer safe. 

Hackers can steal OTPs through phishing, SIM-swapping, and fake websites. That's why the UAE has decided to phase out OTPs by March 2026. The Central Bank of the UAE is spearheading this initiative to safeguard users and mitigate fraud. 

Complaints about banking scams have risen sharply, showing that OTPs are no longer reliable. Starting July 2025, banks will begin using stronger security tools like biometrics, passkeys, and the UAE Pass system.

These new methods are safer, faster, and more secure. They also make digital banking smoother and more secure. In this article, we'll take a look at why OTPs are being replaced, what's coming next, and how it will affect users across the UAE.

Why OTPs Are No Longer Safe: Rising Risks and User Complaints

One-Time Passwords (OTPs), once considered a crucial security measure, are increasingly proving to be a weak link in the chain of digital security. 

While they were a significant improvement over static passwords, their reliance on SMS and email makes them vulnerable to a new wave of sophisticated cyberattacks.

The Rising Risks: How Fraudsters Bypass OTPs

Cybercriminals have developed a variety of tactics to exploit the vulnerabilities of OTPs, making them less secure than ever. These methods often combine technical exploits with human manipulation.

• SIM Swapping: This is one of the most dangerous and common attacks. Fraudsters trick a mobile service provider into porting a victim's phone number to a new SIM card. Once they have control of the number, they receive all SMS-based OTPs, enabling them to hijack accounts and authorise fraudulent transactions.
• Phishing and Social Engineering: Scammers create fake websites or impersonate trusted entities, such as banks or government agencies. They then trick users into entering their login credentials and OTPs on these fraudulent sites. They also use urgent phone calls or messages to panic users into sharing their OTPs directly.
• Malware and Spyware: Malicious software can be used to intercept OTPs on a user's device silently. For example, some Android malware is specifically designed to read and forward SMS messages to a cybercriminal's server, allowing them to bypass security without the user's knowledge.
• SS7 Network Exploits: The global mobile network signalling system (SS7) is an old and vulnerable technology. Attackers can exploit these flaws to intercept or redirect SMS messages on a large scale, thereby gaining access to OTPs before they reach the intended recipient's phone.

Common User Complaints

Beyond the security risks, the OTP system often leads to a frustrating user experience, which is another reason for its decline.

• Delivery Delays and Failures: Network issues, spam filters, or technical glitches can delay or prevent the delivery of OTPs. This leads to user frustration, transaction timeouts, and a poor overall experience.
• Time-Sensitive Expiration: The short lifespan of an OTP can be a significant inconvenience. Users may miss the window to enter the code, especially if they are multitasking or have poor network connectivity, forcing them to restart the process.
• Security Concerns and Lack of Trust: As OTP fraud becomes more publicised, users are increasingly worried about the security of their accounts. Many are confused about who to trust and are hesitant to provide an OTP, even when prompted by what seems to be a legitimate request.
• Device Reliance: The system relies heavily on the user having their mobile device with them and a working network connection. If a phone is lost, stolen, or has no signal, the user is locked out of their accounts.

The combination of sophisticated, large-scale cybercrime and significant user friction has made it clear that a more secure and seamless solution is needed. 

The shift away from OTPs is a response to these growing threats, paving the way for more robust authentication methods, such as biometrics and cryptographic passkeys.

What Will Replace OTPs: UAE's Shift to Smarter, Safer Authentication

The UAE's decision to eliminate One-Time Passwords (OTPs) by March 2026 is a significant leap forward in digital security. 

Driven by the Central Bank of the UAE (CBUAE), this move addresses the growing vulnerabilities of SMS and email-based OTPs, which are susceptible to sophisticated cyberattacks like phishing and SIM swapping.

In their place, the UAE is mandating a shift to a new generation of "smarter, safer authentication" methods that are tied to a user's unique identity and device. These solutions are designed to be more secure, user-friendly, and resilient against modern cyber threats.

What Will Replace OTPs?

1. Financial institutions are being directed to implement a combination of the following advanced authentication methods:

• • Biometric Authentication: This is the most prominent replacement for OTPs. Biometrics use your unique physical characteristics to verify your identity.
  • Facial Recognition: Using your face to log in or authorise a transaction, a technology already integrated into many smartphones.
  • Fingerprint Scanning: Using your fingerprint to provide access, a method that is fast and widely available on mobile devices.
  • UAE Pass Integration: The national digital identity and signature solution, UAE Pass, will be a key part of this transition. It leverages facial recognition to provide a secure, single digital identity for accessing both government and private sector services, including banking.

2. Cryptographic Passkeys (FIDO Standards): This is a cutting-edge, phishing-resistant technology.

• • How they work: Passkeys are unique cryptographic key pairs. A private key is securely stored on your device (e.g., your phone), while a public key is registered with the bank's server. 
  • To authenticate, you simply use your fingerprint, face scan, or a device PIN. The private key never leaves your device, making it impossible for a scammer to intercept or steal.
  • Phishing-Resistant: Unlike an OTP, which can be entered on a fake website, a passkey is cryptographically bound to the legitimate website or app. This means it will not work on a fraudulent site, instantly thwarting a phishing attempt. The UAE is adopting these passkeys based on global FIDO (Fast Identity Online) standards, which are rapidly becoming the industry norm.

3. In-App Authentication (Push Notifications): Instead of receiving an SMS, you will get a push notification on your bank's mobile app to approve or reject a transaction.

• • Enhanced Security: This method is more secure because the communication happens within the bank's own encrypted app environment, which is much harder to intercept than an SMS.
  • Improved User Experience: It also provides a better user experience by showing full transaction details (e.g., amount, merchant) right on your screen, allowing for a quick and informed decision with a single tap.

Key Details for Residents

• Phased Rollout: The transition is already underway, with a full implementation deadline of March 31, 2026.
• Action Required: Residents will need to update their banking apps and enable new authentication features like biometrics. Banks are expected to provide clear instructions on how to set this up.
• Enhanced Security & Convenience: The new systems offer a dual benefit: they are far more secure against fraud and provide a faster, more seamless banking experience by eliminating the need to wait for and manually enter codes.
• Stay Vigilant: While these new methods are safer, residents must remain cautious of social engineering scams. Fraudsters may still try to trick you into approving a transaction via a push notification, so always read the details carefully before agreeing to anything.