What is OTP in Credit Card Transaction

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OTP in Credit Card Transaction

A credit card is a convenient way to make purchases and comes with multiple layers of security. To make purchases at a retail outlet or pay for dining purposes, you must enter your 4-digit pin. When you use your credit card to make online purchases like booking a flight or shopping, you mention your 3-digit credit card CVV number. However, your CVV number is not the only level of security as banks are constantly upgrading their security features to avert instances of fraud. There is now something known as the One-Time Password (OTP) in credit card transactions.

What are OTPs?

So what is an OTP in credit card transactions? OTP is a unique, temporary code of four to six digits randomly generated by the bank to authenticate a credit card transaction. In other words, the credit card transaction cannot be completed without it. It is sent on the registered mobile number and email ID and is usually valid for only 10 minutes. It is advisable to enter the correct OTP or the bank can block your credit card if a wrong OTP is entered more than three times.

Use of OTP in Credit Card Transactions

OTP is a 6-digit number that adds an extra level of security to all your online and banking transactions. Any transaction done without the use of OTP can prove to be risky as it removed the added layer of security provided to the customer. Now that you have an idea of what is OTP in credit card transactions, here is some information on various types of transactions where OTP is required. 

1. Online Transactions

These days, we all love to shop online and use our credit cards to make payments. CVV is one security measure provided by the bank to help reduce any risks but it may be worrisome if someone has access to all your card details. Hence, OTP can prevent such mishaps from taking place as the bank shares it only on the registered mobile number or email address of the customer making it a safe and secure online transaction. 

2. Loan Repayments

You may be required to repay your loans at some point in time that could be a student loan, home loan, or even a vehicle loan. Using your credit card could be a quick way to repay the loans and the use of OTP on a credit card could be the best way to track your loan payments as well as ensure that the payment is authorized by the individual itself and not a third party. 

3. Utility Bill Payments

Making payments on your utilities with your credit card is an easy way to handle your expenses and pay your bills on time. Setting up an automatic bill payment facility can ensure regular payments of utility bills using a credit card. However, it is essential to note that no payments go through the credit card without using an OTP for dual authorization of the transaction.

Benefits of Credit Card OTP

Credit cards are a popular tool for making payments and offer enormous benefits in terms of ease in payments along with an additional level of security by way of using OTP in all credit card transactions. Some of the benefits of credit card OTP are as follows:

  1. You can do away with multiple passwords to validate an online transaction or an online payment

  2. In case you lose your card or it falls into the wrong hands, no one can use your card even though they have access to your card number and CVV. The transaction will not go through unless the user enters the OTP shared on the registered number. Thus your card is secure from any fraudulent transactions

  3. If you happen to receive an OTP without requesting it, you can know that your card is being misused and can, therefore, alert the bank immediately

  4.  Online transactions are a quick and hassle-free way to shop and conduct business but they do have some disadvantages. Using a credit card OTP is the best way to overcome the drawbacks of online shopping and validate your transactions

Can We Make Credit Card Payments Without OTP?

It is always advisable to use an OTP to maintain that added level of security of all your transactions. However, there are some ways by which one can conduct a credit card transaction without OTP:

  1. While conducting an offline transaction, all one may need to do is swipe their credit card and enter the 4-digit credit card PIN. This will be the only security for authorizing the transactions

  2.  While conducting an online transaction on payment gateways, an OTP is not used as second-level security for completing a transaction

Dos and Don’ts of Using Credit Card OTPs

Dos

  • You must ensure that the website on which you are entering the OTP uses safe and secure encryption technology. It is best to check whether the website starts with HTTPS:// or not.

  • While using a credit card OTP, it is crucial to use updated anti-virus and firewall software. 

Don’ts

  • It's never a good idea to reply to emails that ask for personal information, including your credit card or bank account number.

  • The details of your credit card, such as the CVV number, PIN, expiration date, OTP, etc., should never be disclosed to anyone.

FAQs about OTP in Credit Card Transaction

  • ✔️How many times can I use the same OTP?

    You cannot use the same OTP again as it is valid for only one transaction at a time for a span of 10 minutes only

  • ✔️Does the bank providing credit cards apply any charges for OTP?

    To request an OTP for authorizing payments, the bank does not levy any charges on the credit cardholder

  • ✔️In what different ways can I request an OTP?

    An OTP can be requested in various ways – one way is by making a phone call to the concerning bank and another way could be by sending an SMS request to the bank for the OTP to be generated

  • ✔️Can credit card OTPs be misused?

    There are various instances where a credit card OTP can be misused – if the cardholder shares the OTP with a person, who is already in possession of the card details like card number, expiry date, and CVV number, it can be misused. Another way by which a credit card OTP can be misused is by not updating your phone number with the bank. That way your OTP will not be sent to the old number

  • ✔️Does applying for an SBI credit card require an OTP?

    You do not need an OTP to apply for an SBI credit card. It may be required only to authorize any payments made through the credit card.

  • ✔️Is OTP required for credit card transactions?

    Most online credit card transactions require an OTP for the payment to go through unless it is conducted via a payment gateway, an OTP is not used as second-level security for completing the transaction. Additionally, for offline transactions, an OTP will not be required as all one may need to do is swipe their credit card and enter the 4-digit PIN.