What is a One-Time Password (OTP)

Get all the information on OTPs and how they work.
What is a One-Time Password (OTP)
3 mins read
04 Jan 2023

A One-Time Password (OTP) is a temporary and unique code used to authenticate users during online transactions, logins, or other secure processes. Unlike traditional passwords, which remain constant and can be reused, an OTP is valid for a single use or a short period, enhancing security by minimising the window of vulnerability to cyber threats.

Why is a One-Time Password safe?

The primary strength of OTP lies in its temporary nature. Traditional static passwords are susceptible to various attacks like phishing, brute force, and credential stuffing. However, OTPs, being time-sensitive and usable only once, significantly reduce the risk of unauthorised access even if intercepted since they expire quickly.

Types of OTPs

There are mainly three types of OTPs:

  1. Time-based One-Time Passwords (TOTP): TOTPs are generated using a shared secret and the current time, often involving a mobile authenticator app like Google Authenticator or Authy. The generated code changes every few seconds.
  2. SMS-based OTP: OTPs are sent via text messages to the user's registered mobile number. The code is typically valid for a short period and consists mostly of 4-6 digits.
  3. Email-based OTP: Similar to SMS, OTPs can be delivered via email. However, this method might be less secure due to email vulnerabilities.

How are One-Time Passwords created?

One-Time Passwords (OTPs) are generated through various methods. It begins with the user entering their registered mobile number/email ID. Time-based OTPs derive from a shared secret key and the current time, producing a unique code that changes at set intervals, often every few seconds. SMS-based OTPs are sent to users via text messages, containing a time-sensitive code for immediate use. Email-based OTPs function similarly, though they are delivered through email channels.

What are the benefits of an OTP?

  • Enhanced security: OTPs offer a higher level of security compared to traditional passwords, reducing the risk of unauthorised access.
  • Reduced vulnerability: Since OTPs expire quickly, even if intercepted, they become useless after a short period, minimising the window for exploitation.
  • Additional layer of authentication: OTPs often complement existing security measures like passwords, adding an extra layer of verification.
  • Versatility: OTPs can be sent via various channels like SMS, email, or generated by authenticator apps, catering to different user preferences and device accessibility.

Why use the Bajaj Finserv website or app to make payments?

Using the Bajaj Finserv website or app for payments offers unparalleled convenience and security. With a user-friendly interface, it allows swift transactions for a range of services like recharges and bill payments using the BBPS platform. The platform ensures encrypted transactions, safeguarding sensitive data and uses authentication methods like OTP and fingerprint scanner.


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Frequently asked questions

What is an OTP SMS service?

An OTP SMS service delivers one-time passwords via text messages to the recipient's mobile number. It is commonly used by businesses and service providers for user authentication, transaction verification, and account security purposes.

How is OTP verified?

Upon receiving an OTP, users input the code into the designated field within the stipulated timeframe. The system verifies the submitted OTP against the expected value. If they match, access is granted. Otherwise, the authentication fails.

Where is OTP sent?

OTP can be sent to various communication channels, primarily SMS, email, or through dedicated authenticator apps. The destination depends on the user's preference and the platform's supported methods.