PayPal has already been using two-factor authentication with a physical device (the PayPal Security Key), but using SMS and mobile leverages hardware consumers already have. Consumers would have to use the codes in addition to their regular username/password combos.
PayPal To Use Cellphones To Authenticate Payments
PayPal has come up with yet another payment-related use of a cellphone: to authenticate a non-mobile E-Commerce transaction. Customers of the payment giant "can now choose to receive a unique six-digit security code via text message to their mobile phones prior to logging in to their accounts," PayPal said in a Nov. 24 statement.