What is OTP? What are the benefits of OTP?

OTP- One Time Password, four to six digit code will pop up on your screen every time you use Debit or Credit Card for online transaction or NetBanking transaction. Have you ever wondered what these numbers exactly are and why they play such an important role in securing your bank account? Through this article, let's find out what OTP is and all you need to know about it.

1. What is OTP?

OTP là gì?
What is OTP?

OTP also known as One Time Password is generated systemlessly and sent to your registered mobile number to authenticate a particular transaction. OTP provides an enhanced layer of security for cards and online transactions. It is sent to your mobile number within seconds after you enter your transaction details and only stays on your phone for 2 minutes. It is automatically generated with a numeric or alphanumeric string to authenticate the user for a single transaction made with a Credit Card, Debit Card or login session. This OTP is a secret token that is not shared with anyone.

An example of an OTP is when a system administrator, for example, HDFC Bank sends you an OTP to complete your online purchase. This alphanumeric code used to authenticate access to the system will change every 30-60 seconds depending on how the back end system was created. Most banks offer a period from 2 minutes to 10 minutes for the OTP to expire. However, for example mobile apps like Google Authenticator banking on the device token and PIN to generate OTP and provide two-step verification. It will not be like static password which expires every 30 to 60 days, OTP is only used per transaction or login session.

2. What are the benefits of OTP?

Now that you know what OTPs are, let's learn how they keep your business secure.

Lợi ích của OTP là gì?

What are the benefits of OTP?

Resistance to replay attacks: OTP authentication offers distinct advantages over just using a static password. OTP will not be like a traditional password, OTP is not vulnerable to replay attacks - where hackers intercept data transmission (like users submit their passwords), record and use OTP to gain access to the system or their own account. Once a user gains access to their account using OTP, the code becomes invalid and thus cannot be reused by attackers.
OTPs will be hard to guess: OTPs are often generated using algorithms that use randomness. This will make it difficult for attackers to guess and use them successfully. OTP codes are only valid for a short time, require the user to have prior OTP knowledge, or provide the user with a challenge (e.g. “please enter second and fifth numbers”) . These measures further reduce the attack surface of the environment when compared to password-only authentication.
Helps reduce the risk of passwords being compromised: Users who don't adopt strong security practices tend to recycle the same login information across different accounts. If these credentials leak or fall into the wrong hands, data theft and fraud pose significant threats to users across all fronts. OTP security will help you prevent access breaches, even if an attacker already has a valid set of credentials.
OTP will be easy to adopt: OTP is also easy for organizations to integrate into their authentication strategies. While the cryptic nature of these codes will make it difficult for anyone to remember, phones, tokens, and other technologies are widely accessible for use and distribution by security teams. surname.
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3. How does OTP work?

OTP hoạt động như thế nào?
How does OTP work?

Through the OTP code-based authentication mode, the user's OTP and the authentication server are based on shared secrets. Numeric or alphanumeric values for OTPs generated using the Hash Message Validation Code-HMAC algorithm, such as time-based information or an event counter. Each OTP will have a timestamp for added security. Once created, the OTP will be delivered to the user through a variety of channels such as SMS text messages, registered email addresses or other specialized applications selected by the bank.

4. What types of OTPs are there?

OTP can be authenticated by token. There are several different styles you will encounter.

Có những loại OTP nào?

What types of OTPs are there?

Hard Token
A hard token (as in hardware) is a physical device that transmits an OTP, giving users access to accounts and other resources. Hard tokens include:

Connected tokens: The user connects these tokens to the system or device they are trying to access. The smart card and the USB drive are inserted into the smart card reader and the USB drive, respectively

device's USB drive.

Disconnected Token: The most frequently used token for multi-factor authentication (MFA). Although the user does not have to physically insert these tokens, the disconnected tokens usually generate an OTP for the user to enter. Pocket sized bank security devices, keyless entry systems, mobile phones and bank security devices are some examples of this.

Contactless tokens: These tokens transmit authentication data to a system, which analyzes the information and determines if the user has access. A Bluetooth token is an example of a contactless transmission that requires no physical connection or manual entry.

Soft Tokens
Soft tokens (as in software) are not physical items that we own. Instead, they exist as software on a device such as a laptop or mobile phone. Soft token authentication usually takes the form of an app that sends push notifications or SMS messages for users to respond and verify their identity.

All of these methods follow the same basic process: the user submits authentication data to the system, the system verifies if the information is correct, and if so, grants the user permission access. It's the same idea as using a password, but with OTP, authentication data doesn't move or leak beyond the user and the target system.

This article has explained in detail the meaning of OTP, how it is generated. So the next time you do any online transaction, you will know exactly what those six digits mean on your SMS read as OTP.

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