OTP Number

OTP ( One Time Password )

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What is the Full Form of OTP?

OTP stands for a one-time password. It is a string of numeric or alphanumeric characters generated automatically. The OTP number helps to securely log on to a network or service by leveraging a unique password that can only be used once. It is safer than static passwords and can be used as the primary method of authentication or as an additional layer of security. You can request and get the OTP code on your preferred channel- SMS, call, or email. It is usually four to six digits long.

Now that you know the meaning of OTP, let us look at its various uses.

What is the Use of OTP Verification?

OTP verification is used as a security technique to protect against different password-based attacks, such as brute-force attacks where hackers use multiple hit-or-miss passwords to attempt to access sensitive information. As the OTP code is generated randomly at the time of the transaction, there is no way of knowing it from beforehand. It thus provides better protection than static passwords which run the risk of getting stolen. As a result, more and more online services are adopting OTP verification as a preferred mode of ensuring your identity. Whether you are purchasing goods or availing services online, transferring funds from your bank account, modifying your existing account details, credit card bill payment, or creating new accounts on social media platforms, you need to validate your request with an OTP.

How is OTP Helpful in Banking?

As banks and financial institutions deal with extremely sensitive information, it is critical to have a strong customer authentication process in place. Luckily, OTPs help to do just that. To understand this, let’s take the example of fund transfers. Whether you opt for IMPS, NEFT, or RTGS, you have to first login to your account, select your beneficiary and then proceed to transfer the money. At this stage, the bank needs to ensure that it is really you who is initiating the transfer and not a fraudster who has hacked into your account. So, the bank sends a one-time password to your registered mobile number and/ or email so that only you can proceed to complete the transaction. If you enter the correct OTP, the bank transfers the amount, else the transaction fails. Similar types of OTP verifications are required when you apply for a credit card, set up standing instructions, add a beneficiary, pay your utility bills using your debit or credit card, etc.

How is Single-Factor Authentication different from Two-Factor Authentication?

Single-factor authentication, as the name suggests, uses only one level of check to verify your identity. For example, when you log into your account, you are required to only enter a combination of your username and password. As long as you enter the correct details, you can access your account.

Two-factor authentication or 2FA, on the other hand, is a more complex authentication. In this case, there are two levels of check-in before an action is processed. For example, if you are paying the dues on your credit card statement via net banking, you have to first log in to your account using your username and password. Once you are logged in, you would need to do the second level of authentication, by entering the OTP sent to you on your registered mobile and/ or email.

Are OTPs Safe?

OTPs are designed to eliminate the chances of identity theft by ensuring that the passcode cannot be accessed in advance and can be used only once. As a result, they are ideal for transactions that involve sensitive data, such as internet banking, corporate networks, etc., which you cannot risk losing.

How are OTPs Created?

In the case of services that leverage OTP based authentication, the server and the OTP generating app rely on sharing secret codes. These codes are created using a Hashed Message Authentication Code (HMAC) algorithm, which is made up of two components- seed and moving factor. While the seed remains static, the moving factor changes every time a new OTP code is requested. This moving factor may or may not have a time stamp attached to it indicating its validity. As a result, the OTPs are completely random.

One-time passwords can be created through a number of ways, these include:

Grid cards

One of the primary methods of creating one-time passwords are grid cards. These are credit card like documents carrying a grid of figures, which can be used for authenticating online transactions. However, they are difficult to maintain and can be easily replicated.

Security tokens

An OTP token is a PIN-protected, hardware device which can generate one-time passwords. When transacting, you are required to enter the one-time password along with your credentials. If the correct details are entered, the authentication server validates the login process. However, a separate token is required for every network or website you log in to.

Smart cards

Smart cards are microprocessor-based, advanced hardware tokens that generate unique, one-time passwords. These cards have significant data storage capacity, easy portability, increased security, and higher processing power. In some cases, smart cards can sport improved authentication capabilities such as Public Key Infrastructure (PKI) certificates which offer better encryption.

How to get a One Time Password?

When you attempt to transact or access a system, the network/ website authentication manager generates a secret number using the OTP algorithms. The security token on the smart card too uses the same algorithm and number to validate the OTP and authenticate the user.

Several banks these days leverage two-factor authentication, whereby a temporary password is sent to you on your preferred registered channel- SMS, email, and/ or call. This is done after you enter your username and password which serves as the first layer of authentication. You can enter the random combination OTP in the field provided. If the code entered is correct, the transaction will be processed, else the verification will fail.

OTP vs TOTP vs Static Passwords

The differences between OTP, TOTP, and Static passwords are mentioned below-

OTP

TOTP

Static

OTP stands for one-time password

TOTP stands for time-based one-time password (TOTP)

Static refers to passwords that remain the same for multiple login sessions

Temporary

Temporary

Permanent

The moving factor in an OTP may be time-based or event counter-based

It is generated by an algorithm that uses the current time

It is created by the user

If OTP is event counter-based, it will not expire till a new code is requested. If the OTP is time-based, it will expire if not entered within the specified time limit

The passcode expires if not entered within the specified time limit

There is no time frame attached for entering the password.

Security from identity thefts has been a constant priority for the banking sector. With OTPs, one can avoid the common pitfalls associated with weak and static passwords. As they are generated randomly when a request is placed, a hacker cannot access the code in advance. Also, most OTPs today remain valid for only a short period of time, which eliminates the chance of hackers reusing the secret codes and accessing your sensitive financial records or transacting on your behalf.

Frequently Asked Questions

  • ✔️Are OTPs safe?

    Yes, OTPs are safe as they are randomly generated when the user places the request and is shared only over secure channels (registered email, mobile, or call).

  • ✔️Where will I receive an OTP?

    Once you request an OTP, you will either receive the OTP via email, call and/ or SMS.

  • ✔️What are the benefits of OTP?

    OTPs are ideal for fraud control. This is because even if someone has access to your debit or credit card information, they cannot process a transaction unless they have the OTP. As the OTP is sent only to your registered mobile number, you will be alerted that someone is trying to use your card for a transaction. You can then immediately report the incident and block your card.

  • ✔️Will I receive an OTP on applying for a credit card?

    Yes, banks offering credit cards have stringent security measures in place. As a result, you will have to pass multiple levels of authentication, including OTP verification to apply for a credit card.

  • ✔️Why should one not share OTP with anyone?

    OTP verification is the last step of any online transaction. So, if someone has access to your card or internet banking details, then the person will be able to transact using the OTP you share. Therefore, it is critical that you don’t disclose the OTP sent to you on your email or registered mobile number.

  • ✔️Can banking transactions be done without OTP?

    Yes, there are many service providers which offer you the convenience of using your MPIN instead of a system generated OTP to transact. However, in most cases, you are likely to be asked to enter the OTP sent to you on your registered email or mobile number.

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