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What is OTP and how secure your business and accounts with OTP?

What is OTP and how secure your business and accounts with OTP?

A One-Time Password is a unique passcode that is used for signing on to a network or service, and it is valid for only one login session or transaction, on a computer system or any other online digital device.


There are always many accidents when you feel like your user ID and password have been conciliated and are no longer secure. The ultimate action would be changing your password, to something you could lastly forget, while the better solution under such situation is using the one-time password or PIN (OTP).

It consists of an automatically generated numeric or alphanumeric string of characters and is used by many online platforms to validate customer transactions and identity. The generated code is sent via SMS, email or voice call to a user, who can enter it to condescend himself/herself.

How is a one-time password generated?

One-time password generation involves the use of randomness and hash functions to receive a value for the code that is complex to make, and hard to reverse by a hacker. This is also to make it impossible to predict future OTPs by observing previous ones. There are three basic formats of generating OTPs:

Only for a short period of time, OTPs valid generation is based on time-synchronization between the authentication server and the client providing the password.


For OTPs that are to be used in a predefined order, a mathematical algorithm is used to generate a new password based on the previous password.

For random OTPs, a mathematical algorithm is used where the new password is based on a challenge. A random number is chosen by the authentication server.

How OTPs work

In order for a user to successfully log into a system that utilizes OTPs, the following sequence of events would occur.

  • The user logs into the system with a user name and password.
  • The system verifies that the password matches.
  • The system then sends the user a request for the OTP on his phone number by SMS, email or voice call.
  • The User types in the OTP.
  • The system verifies OTP matches with the user register phone number.
  • The user is accepted access to the system

If you have an online business and sell products online at one of the online shops. Then the OTP code is very useful for managing for payment data to the bank account that you use. The money from the sale will usually be collected and then disbursed to the bank account that we have. At first see, there is no problem from the transaction path, but when we want to change a bank account at an online store it will usually go through a validation process using an OTP code sent to our cell phone number. If the activity is used by carefree people and asks us for OTP code and give it.

Then the account access will be misused including changing our bank register. If so, the money from the sale will go to the person in the bank account do these evil things. So if in the future you receive a call from an unknown person from the Bank, or another digital platform that you use and ask for a unique code sent to your mobile number, then do not share code is given once in a while.

Verification: Verify the person signing up or begin payment on your website with an automatically sent OTP.

Protected pins: The pin is secure without any 3rd-party involvement and is shared only on the registered number.

Free transaction: Ensure quick/hasty transactions by your customers with an automatically triggered OTP call or SMS.

Security: Verify the identity of the person begin the online transaction and be sure of its security.

Without Spam: OTP feature assures that people sign up on the website with registered and valid phone numbers only.

Fast process: cumulatively thousands of OTPs are generated and sent to respective customers at the same time.

The OTP is a One Time Password whose confidentiality is highly protected, authorities such as banks, and several other platforms have reminded every user not share the code to anyone who calls you and claims from their side. Bank and several related parties such as those who have a digital platform that never asks for the OTP code to their users.