PayPal Adds SMS Authentication Service

In a bid to add more security, the online payment company will offer the option of having a unique code sent to the user's cell phone prior to logging in.

PayPal wants to use cell phones to makes its customers feel more secure with their online transactions.

The online payment company announced it would be offering users the option of having a unique six-digit code sent via SMS to their cell phones before logging on to their accounts. By using a code along with their user name and password, this two-factor authentication should add to security and help protect consumers from fraud like phishing attacks, PayPal said.

"PayPal was built from the ground up with security in mind, and we've always been committed to using cutting-edge technology to protect our customers' accounts," Michael Barrett, PayPal's chief information security officer, said in a statement. "Now, we're taking the additional protection provided by two-factor authentication and delivering it to something most people don't leave home without -- their mobile phones."

The text messaging service uses the same security infrastructure as the PayPal Security Key, which is part of the VeriSign Identity Protection Network. The SMS security option is now available to customers in Australia, Austria, Canada, Germany, and the United States.

The SMS authentication is PayPal's latest move toward the mobile space. The company has already implemented a service that lets customers transfer funds from their PayPal accounts to another person by using text messages.

The company is also working on a program that lets customers use their phones to buy products. This system would have merchants putting special codes on ads, and the buyer could get the product by text messaging the product code to a number in the advertisement. The product would then be shipped to the buyer's address that's on record with PayPal.

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