One-Time Password (OTP)

A One-Time Password (OTP) is a short, randomly generated code used for a single authentication session, enhancing security for online transactions.

A One-Time Password (OTP) is a unique code that is valid for only one login session or transaction, providing an additional layer of security beyond traditional static passwords. Unlike regular passwords, OTPs are temporary and expire after a short period, typically within minutes. This makes them highly effective in protecting against phishing attacks, as intercepted OTPs are useless once used.

OTPs are commonly delivered via SMS, email, or generated by an authenticator app. For instance, when logging into an online banking account, the system may send an OTP to the user’s registered mobile number, which must be entered alongside their regular password. This ensures that even if the password is compromised, the account remains secure because the attacker would also need access to the OTP.

There are different types of OTPs, including Time-Based One-Time Passwords (TOTP), which are valid for a specific time period, and HMAC-Based One-Time Passwords (HOTP), which are event-based and change with each authentication attempt. Both methods enhance security by making it difficult for attackers to reuse codes or gain unauthorized access.

OTPs are widely used in two-factor authentication (2FA) systems, where they serve as the second factor, adding a critical layer of security. In industries like banking and e-commerce, where the stakes of security breaches are high, OTPs play a vital role in safeguarding user accounts and transactions.

However, while OTPs significantly enhance security, they are not infallible. Risks such as SIM swapping, where an attacker takes control of a user’s mobile number, can compromise OTP delivery. To mitigate these risks, businesses are increasingly turning to app-based OTPs and biometric verification as more secure alternatives.