MFA App vs SMS: Which Is Safer for Your Business?

Multi-factor authentication (MFA) is one of the single most effective things you can do to protect your business accounts. But not all MFA is equal. If your business is using SMS-based verification codes, you have a layer of protection — but there is a stronger option worth knowing about.

What Is MFA and Why Does It Matter?

MFA means requiring more than just a password to log in. Even if a cybercriminal steals or guesses your password, they still cannot get in without that second factor. Given that weak or reused passwords are behind a huge proportion of account breaches, MFA is one of the most effective defences available.

The two most common second factors for small businesses are:

• SMS codes — a six-digit code sent to your mobile number
• Authenticator apps — a code generated by an app on your phone, refreshed every 30 seconds

Why SMS MFA Has Weaknesses

SMS verification feels secure — your phone receives a code that expires quickly. But there are two well-documented ways attackers can get around it.

SIM Swapping

A SIM swap attack happens when a criminal contacts your mobile carrier, impersonates you, and convinces them to transfer your phone number to a SIM card the attacker controls. Once they have your number, they receive all your SMS codes. This has been used to drain bank accounts and hijack email addresses.

In Australia, telcos have introduced some safeguards, but SIM swapping still occurs — particularly when attackers have gathered personal details about their target from social media or data breaches.

Interception

SMS messages travel over telephone networks that use ageing protocols. Sophisticated attackers — typically nation-states or organised crime groups — can intercept messages in transit. This is less of a threat for most small businesses but is worth understanding.

Phishing Relay Attacks

A more common threat is a real-time phishing attack. The attacker builds a fake login page that mirrors a real service. When you enter your password and SMS code, the attacker immediately uses both to log in to the real site before the code expires. Authenticator app codes are vulnerable to this too, but SMS codes are more widely targeted.

Why Authenticator Apps Are Better

Authenticator apps like Microsoft Authenticator, Google Authenticator, or Authy generate codes directly on your device using a time-based algorithm. The codes never travel over the phone network, which eliminates SIM swapping as a risk entirely.

The codes are:

• Generated locally on your device — not sent anywhere
• Tied to the specific account they were set up for
• Valid for only 30 seconds

Setting up an authenticator app typically takes less than five minutes per account. Most major services — including Microsoft 365, Google Workspace, Xero, and banking platforms — support them.

Hardware Security Keys: The Gold Standard

For accounts where the stakes are highest — your business banking portal, cloud admin access, or payroll system — a hardware security key (such as a YubiKey) offers the strongest available protection. You plug it in or tap it to your phone to authenticate, and it cannot be phished remotely.

Hardware keys cost between $50 and $100 each and are typically only necessary for your most sensitive accounts. For most small business staff, an authenticator app is the right balance of security and convenience.

Practical Recommendations for Small Businesses

• If you currently use SMS MFA — keep it running, but plan to migrate your most important accounts to an authenticator app
• Start with email and cloud accounts — Microsoft 365 and Google Workspace are priority targets for attackers
• Add financial and payroll platforms — Xero, MYOB, and banking portals are high-value targets
• Train your staff — make sure everyone understands how to use the app and what to do if they lose their phone
• Use Microsoft Authenticator if you are a Microsoft 365 business — it integrates natively and supports passwordless login

The Bottom Line

SMS MFA is meaningfully better than no MFA — do not let perfect be the enemy of good. But if you can switch key accounts to an authenticator app, you will be significantly more protected against the most common attack methods. The switch takes minutes and costs nothing.