BAJAJ FINSERV DIRECT LIMITED
Banking Insight

Understanding OTPs in Credit Card Transactions

authour img
Xerxes Bhathena

Table of Content

Overview

Every time you make a payment using your credit card, an extra step helps keep your money safe. This step is called an OTP, or One-Time Password. Many people often ask, what is OTP in credit card transaction and why is it needed. If you’ve ever felt confused by that message on your phone or unsure whether it’s safe to use, you’re not alone. Knowing how OTPs work helps you stop fraud, avoid mistakes, and feel more confident when you shop online. If you skip this, you could miss out on one of the simplest ways to protect your card.

What is OTP in Credit Card Transactions

An OTP, or One-Time Password, is a unique code sent to your registered mobile number or email when you make an online payment using your credit card. This code is generated instantly by your bank or credit card company’s system when a transaction request is received. It usually contains four to six digits and stays valid only for a short time.

The main purpose of an OTP is to confirm that it’s really you who is making the payment. Because each code is used only once and expires quickly, it adds a strong layer of security. Even if someone knows your card details, they cannot complete the payment without the OTP.

So, when you ask what is an OTP or what is OTP in credit card transaction, you’re referring to a simple but powerful tool that protects your money and keeps online credit card transactions safe from fraud.

How Does OTP Work in Credit Card Transactions

The OTP system adds a quick and effective security step to your online credit card payments. It helps confirm that you are the one making the purchase before your bank approves the transaction. Here’s how it works:

  1. You enter your credit card details, such as the card number, expiry date, and CVV, on the payment page

  2. The website or app asks you to verify the transaction by entering an OTP

  3. Your bank or card provider sends a unique four- to six-digit code to your registered mobile number or email

  4. You enter this OTP into the payment screen to confirm your identity

  5. The bank verifies the code and, if it is correct, approves the payment immediately

This code expires quickly and is valid only for that transaction, preventing anyone else from using your card without permission. If you do not receive the OTP, you can usually request it to be resent a couple of times.

For example, when you book movie tickets online, after entering your card details, you will receive an OTP on your phone. Entering this code confirms you are the cardholder and ensures the payment is secure.

OTPs provide a strong layer of protection, reducing the risk of fraud and making your credit card transactions safer.

Use a Credit Card Without an OTP

Yes, you can sometimes use a credit card without an OTP, but this comes with higher risks. The OTP adds an important layer of security, so skipping it should be done cautiously. Here are some cases where an OTP may not be required:

  • When you swipe your credit card at a store and enter your 4-digit PIN, no OTP is needed because the PIN acts as the security check

  • Some online transactions do not require an OTP, especially for smaller amounts or on trusted websites where the payment gateway allows auto-approval

  • International credit card payments often skip OTP because regulations like those from the Reserve Bank of India mainly apply to domestic transactions

If you use your card abroad or on international websites, you may not receive an OTP. Control your card’s international use by disabling transactions or allowing them only when needed. Skipping OTP may speed up payments but removes important protection. Only skip OTP on trusted, secure websites. Using OTP helps keep your credit card transactions safe from fraud.

Tips to Use OTP Safely and Securely

Here are simple but important tips to help you use OTPs wisely and keep your credit card transactions fast and secure:

Keep the OTP Private

Never share your OTP with anyone, including friends, family, or anyone claiming to be from your bank.

Use Official Channels

Only enter your OTP on trusted websites or official apps and avoid clicking links from unknown sources.

Provide OTP Only While Transacting

Your bank will only ask for OTP to confirm payments; never share it for any other reason.

Keep Your Contact Details Updated

Inform your bank immediately if you change your mobile number to keep receiving OTPs without interruption.

Lock Your Device

Secure your phone with a strong password or biometrics to prevent others from accessing your OTP messages.

Avoid Using Public Wi-Fi

Do not enter OTPs when connected to public or unsecured Wi-Fi networks to prevent data theft.

Act Quickly on OTPs

Enter the OTP as soon as you receive it because the code expires quickly and delays can cause transaction failure.

Monitor Your Transactions

Check your bank statements and transaction alerts regularly to spot any unauthorised activity early.

Use Two-Factor Authentication

Enable two-factor authentication on your banking apps and email accounts for extra security beyond OTPs.

Report Suspicious Activity Immediately

If you receive unexpected OTPs or suspect fraud, contact your bank right away to block your card or transaction.

Benefits of OTP in Credit Card Transactions

Here are the key benefits of using OTPs in credit card transactions to keep your payments secure and convenient:

Adds an Extra Layer of Security

OTPs are unique codes that change with every transaction, making them nearly impossible to guess or reuse.

Limits Code Validity

Each OTP expires within minutes, so even if someone steals it, they cannot use it later.

Enables Two-Factor Authentication

OTP adds a second step to verify your identity beyond card details, strengthening protection against unauthorised use.

Sends Instant Transaction Alerts

Receiving an OTP alerts you immediately if someone tries to use your card without permission.

Simple and Quick Verification

Entering the OTP is a fast, easy step that lets you complete your payment securely without extra hassle.

Covers Many Transaction Types

You can use OTPs to safely shop online, pay bills, transfer funds, and settle loans.

View More

How to Use Credit Card OTPs – Dos and Don’ts

Here are essential dos and don’ts to help you use credit card OTPs safely and protect your transactions from fraud and errors:

Dos

Don’ts

Ensure the website uses secure encryption and starts with ‘https://’

Never share your OTP, PIN, CVV, or card details with anyone, even if they claim to be from your bank

Use trusted, secure networks like home Wi-Fi when making payments

Don’t enter OTP on unknown websites or links from emails or SMS

Keep your device protected with updated antivirus and firewall software

Don’t store OTPs or sensitive card information on your phone or notes apps

Verify the OTP sender before entering the code

Don’t ignore OTP messages you did not request; they may signal fraud attempts

Report any suspicious OTP messages or unexpected transaction alerts to your bank immediately

Don’t respond to emails or calls asking for your credit card details or OTP

How to Secure Credit Card Transactions

Securing your credit card involves more than just using OTPs; adopting safe daily habits is key to protecting your money. Here are effective ways to keep your credit card transactions secure:

  • Use strong, unique passwords for your banking and payment apps

  • Enable transaction alerts on your phone to track all card activity instantly

  • Always log out from shared or public devices after making payments

  • Regularly update your phone’s operating system and banking apps for security patches

  • Avoid saving your card details on unknown or untrusted websites and apps

Additionally, be careful with your credit card information:

  • Never share your card details in public or with strangers, including cashiers or store staff

  • Only enter your credit card information on secure websites or official apps, identified by ‘https://’

  • Avoid saving your card details on apps or websites, as they can be hacked and data stolen

  • Monitor your credit card statements and alerts closely to spot any unauthorised transactions quickly

  • Do not respond to emails or texts asking for your card details, as these are often phishing attempts aimed at stealing your information

Author Image
Hi! I’m Xerxes Bhathena
Blogger

Xerxes is a seasoned finance writer with deep expertise in making complex concepts accessible. Focused on accuracy and clarity, he creates content that empowers readers to make informed financial decisions. With a passion for transparency, he delivers reliable insights that resonate with everyone, from beginners to experienced investors.

Academy by Bajaj Markets

alt 11903

All Things Tax

Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.

Seasons 6
Episodes 25
Durations 1.3 Hrs
alt 7499

All Things Credit

Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.

Seasons 12
Episodes 56
Durations 3.0 Hrs
alt 1881

Money Management and Financial Planning

Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...

Seasons 5
Episodes 19
Durations 1.1 Hrs
alt 2468

The Universe of Investments

Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.

Seasons 5
Episodes 23
Durations 1.5 Hrs
alt 216

Insurance Handbook

Discover essential insights on various types of insurance in India.

Seasons 2
Episodes 6
Durations 0.5 Hrs
alt 1362

Tech in Finance

Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...

Seasons 1
Episodes 5
Durations 0.3 Hrs
Home
Home
ONDC_BD_StealDeals
Steal Deals
Credit Score
Credit Score
Accounts
Accounts
Explore
Explore

Our Products