Wouldn’t it be great if there was a foolproof technique to verify the identity of the person on the other end of an important business call in today’s world of fraudsters? The more our everyday lives move online, the more important it becomes to have foolproof methods of identity and data verification. As it turns out, OTP messages and 2FAs (two-factor authentication) are efficient ways to secure users all over the world. Additionally, Market Research Future projects that the global 2FA market will expand to nearly $9 billion by 2024, while the OTP market will reach $3.2 billion within the same year.
One Time Passwords (OTPs) are a brilliantly straightforward and affordable method for businesses to verify and safeguard the information of their customers and staff. If you’re interested in learning more about OTP messages and how you can instantly validate your customers from anywhere in the world — and save your organisations time and money in the process — then this article is for you.
What are OTP Messages?
One Time Password, also known as an OTP, is a security code intended to be used for a single login attempt to reduce the possibility of fraudulent login attempts and ensure high security. It is a series of automatically generated letters or numbers that are transmitted to the user’s phone by SMS, voice message, or push message.
When unique conditions arise, such as authenticating a new account or proving a transaction is legitimate, the OTP has evolved into the industry-standard approach used by logins all over the world. It’s also referred to as a One Time PIN, One Time Authorisation Code (OTAC), or dynamic password. Typically, it’s a six-digit number provided through SMS text message to a user’s phone, which they must then enter into the website or app they’re seeking to access.
OTPs can be used as a substitute for static passwords in situations where:
- Customers are provided with a different PIN for each session rather than having to create their username and password.
They can also be used for two-factor authentication (2FA) in combination with user-generated credentials during account creation, log-in, and transaction approval, specifically in the following scenarios:
- An attempt to log in from an unrecognised device belonging to a client
- Once the customer has received their OTP, they can use it to confirm their identity and device.
Why is One Time Password safe?
Every day, millions of OTP messages are sent all over the world, and a sizable number of them are sent over SMS. With good reason: individuals keep their cell phones within reach 24 hours a day, and as a prized personal property, a phone is typically utilised by a single person, making it an ideal means of confirming someone’s identity.
The purpose of a One Time Password is to add a second layer of authentication to stay ahead of cybercriminals and safeguard your business from the disastrous impacts of fraud.
The risk of fraud is greatly decreased if the user is required to enter more than just his username and password (something he knows) to complete the login. This ‘something’ could be the user’s mobile phone. OTPs exist in a variety of forms and sizes, but they always provide an additional degree of verification.
One Time Password examples
1. One Time Password through SMS message
Most OTPs were initially transmitted as SMS messages. After a successful login attempt has been initiated with the correct username and password, an SMS OTP is sent to the user’s registered phone number. The final step in the authentication process is for the user to enter the code that was shown on the phone into the corresponding field on the login screen.
2. One Time Password delivered through voice message
Voice can be used as a One Time Password replacement for SMS. The user’s mobile phone receives a call containing the spoken password while using Voice. Voice enables you to communicate with people who have limited vision and does not save the password on the user’s phone. If your SMS is not delivered, you can also use voice as a fallback.
3. Push notification for One Time Password
The procedure of two-factor authentication through One Time Passwords via Push is identical to OTP messages. An automatically generated code is provided as a push notification to your app on the user’s phone during the login process to your online environment. To confirm his identification, the user must copy that code to the login screen. You will therefore require a specialised app.
How to get OTP Messages?
Obtaining an OTP is simple for the end user, making the experience safe but uncomplicated. Here’s an illustration:
Step 1: A consumer tries to use their phone to sign in to their online banking account.
Step 2: The bank does not recognise their gadget. They offer to send a verification code via SMS, phone call, push notification, or email to protect the user’s data.
Step 3: The customer receives OTP messages instantly after choosing their preferred delivery method.
Step 4: The user completes their login by inputting the key, their ID, and their password, and bingo! They can use all of their online banking features at no cost.
Quite amazing, no? For that One Time Password to be generated and delivered to the customer’s screen, a lot of magic was performed behind the scenes.
How does One Time Password work?
OTPs are used to verify a customer’s identity and provide additional security for transactions that require it. A request for an OTP is made when a known circumstance occurs, such as when a customer needs a password reminder, a bank confirms an out-of-pattern transaction, and many other situations.
The OTP is automatically created as a number or string of characters that is somewhat random. OTPs are often time-limited, valid for a short period of time, and difficult to predict.
An OTP can be sent via a variety of methods. OTPs can also be received by email, but this method is less secure than others. Other carriers allow customers to receive OTPs as voicemails, which announce the PIN when they check their mailbox. But sending OTPs via mobile messaging—typically, sending an SMS text to the customer’s cellphone—is by far the most popular method.
Benefits of One Time Passwords
1. Identity theft is prevented in its tracks
Using One Time Passwords (OTPs) for user authentication is a great way for businesses to protect their customers and employees from potential data breaches. Let’s use the scenario of an unauthorised user trying to access a protected account as an illustration.
- The intended recipient is given a code that was not requested by them. That now seems strange.
- While the organisation can only speculate as to whether the login was valid or not, the user recognises instantly that something is amiss and takes steps to strengthen account security by changing their password.
- Verification messages can also be sent to the user’s registered email address or cellphone number if they attempt to access their account from a device that has not been added. The account holder can quickly and easily flag any odd behaviour with a click if necessary.
- Instead of locking a user’s account at the first sign of suspicious activity, which would be very annoying when it turns out to be the user, the user has full control. Additionally, these warnings help build confidence by informing customers that businesses are actively guarding their sensitive information and monitoring it.
2. Extremely unlikely for others to guess
OTPs are very effective at reducing the risks associated with password security, especially considering how simple the concept is (four to eight random integers). Let’s take a mathematical look at this. An identity thief will have a little window of time to accurately guess each number if you give out a six-digit code that is generated at random.
This implies ten potential outcomes (zero through nine), six of them (10x10x10x10x10x10). In other words, a 0.000001% probability, or one in a million, exists that an identity thief will correctly guess your OTP. That is simply for your typical OTP of 6 digits. If they contain eight digits, the would-be identity thief has a greater chance of winning the jackpot.
3. Gives your IT team a break
Each of us is required to remember dozens of identities and passwords. One has to be forgotten by everyone. Keeping track of all that information, from the streaming service account to the online newspaper subscriptions, is no easy feat.
Humans are prone to forgetfulness. If no other verification solutions are available, IT support or customer service will be required, taking time away from other tasks.
Instead of using hours of labour, OTPs can be used to reset passwords. The result is:
- The IT and customer service teams can now devote more time to valuable initiatives and business-critical challenges.
- The user can reset their password and restore access to their account using a speedier and more practical approach.
4. Easy for organisations to integrate and scale
Organisations may quickly include OTPs in their apps and products by using verification APIs. These programmatic verification integrations can essentially pay for themselves in a short period by:
- Protecting against both internal and external cyber threats
Use cases of OTP Messages
1. Activating bank payment cards
Every year, millions of plastic cards are issued. Each card needs to be “activated” to show that the new card is in the correct owner’s possession. An OTP code, which is frequently sent as an SMS to the customer’s phone, is frequently used to activate this service.
2. Observing out-of-character transactions
Fraud detection software looks for patterns. People tend to act in the same ways over and over, like spending the same amount at the grocery store every week on the same day.
A transaction will be marked as “out of pattern” if it has exceptional characteristics, such as taking place in a foreign location, costing an unusual sum, or just during an odd time of day. Such issues are frequently resolved by an OTP, which verifies the transaction is being made by the authorised party.
3. High-value transactions confirmation
An OTP can be used to verify that a transaction’s sticker price exceeds a predetermined threshold. In theory, this is no different from entering your PIN when your contactless payment exceeds a predetermined threshold. Numerous people appreciate the additional protection that an OTP gives in such situations.
4. Managing lost passwords
Of course, lost passwords are a pretty popular use case for OTPs. Given that email isn’t completely secure, password reminders are becoming less common on the internet today. Instead, customers are typically prompted to change their passwords. The user can create a new password for the website or app they’re viewing by using the One Time Password, which is generated and sent at their request.
5. Utilisation of government services
OTPs can be a unifying feature, easing citizens’ access to various government services because government departments are frequently not well integrated—giving a citizen separate accounts for personal taxes, company taxes, healthcare records, driving licences, passport applications, and so forth.
6. Identifying strange devices
Today’s typical customer owns multiple devices, many of which are connected to mobile networks. This is a challenge for site and app owners because many security procedures verify both the user’s credentials and the credentials of the device, whether they are known or not.
Typical examples include devices connected to public WiFi and streaming services where numerous devices use the same login. An OTP verifies if a new device is genuine or not.
7. Service onboarding
Not all applications for SMS OTPs centre on the internet and money. A growing number of “onboarding” processes—introducing a new user to a service of any kind, from security badges for buildings to festival ticket holders—use OTPs to verify a person’s identity.
8. Restricting access to private data
Some datasets need to be accessible to a variety of users, such as a person’s doctors but contain sensitive information, such as their health records. OTPs meet all of these requirements because they provide access to the appropriate individuals and keep track of who accessed the information and how frequently.
Disadvantages of One Time Passwords
One Time Passwords primary drawback is that some users could find them to be a hassle. Less tech-savvy customers, for instance, can perceive the OTP process as needless or complex and require an explanation of all of its benefits.
Additionally, a user may be unable to access the OTP. Some OTPs that are sent over email could be lost or placed in the spam folder. If a user loses a physical token, access to their OTP is lost.
Even though they understand and appreciate the security advantages of utilising One Time passwords, many users find this annoying or frustrating. For this reason, some users favour using mobile programmes that create One Time Passwords on their smartphones. Users are likely to forget their token or key fob, but they will almost certainly have their smartphones with them.
Conclusion
In the end, One Time Passwords have been demonstrated to increase security and reduce compromised accounts, fraud, and other forms of cybercrime. Despite the additional effort that is frequently necessary to use this method, the vast majority of users think that this is a minor price to pay for the security and peace of mind that comes with utilising One Time Passwords.
FAQs
1. What advantages do OTP Messages offer?
Ans: OTPs are great for fraud control. Even if someone gets access to your debit or credit card information, they are unable to complete a transaction without the OTP. As the OTP is transmitted only to your registered mobile number, you will be notified if someone attempts to make a purchase using your card. Then, you can report the event and block your card immediately.
2. Why should OTP not be shared with others?
Ans: The verification of an OTP is the final step in every online transaction. Therefore, if someone gains access to your card or internet banking information, they will be able to conduct transactions using the OTP you provide. Therefore, you must keep the OTP issued to your email or registered mobile number to yourself.
3. Can I use a similar OTP for multiple transactions?
Ans: OTP verifies the account owner and thwarts stealing attempts. It is far safer than static passwords. Since it may only be used once, the same OTP cannot be entered twice.
