One-Time Password (OTP)

A One-Time Password (OTP) is a unique code generated for a single transaction or login session, used as a form of authentication to verify a user's identity. OTPs are a critical component of a multi-factor authentication system, adding an additional layer of security beyond traditional username and password credentials.

When a transaction or access attempt is initiated, the OTP is generated and sent to the user’s registered mobile device or email address. The user must then enter this code to proceed with the transaction or access, effectively confirming their identity. The temporary nature of an OTP, which usually expires after a short period or once it is used, helps protect against unauthorized access and transaction fraud.

OTPs are commonly used in various scenarios, including but not limited to:

The use of OTPs is widely regarded as an effective security measure because it is based on something the user has access to (their phone or email), which is harder for potential intruders to obtain compared to static passwords. This method significantly reduces the risk of unauthorized access, making it a preferred choice in industries where security is paramount, such as banking and online services.