The OTP, an acronym that stands for one time password, is a means of guaranteeing a secure way to log in to a network or a service using a unique password that can only be used for the one time it needs to be. Its one-time use translates to its safety in use for financial transactions, like paying credit card bills and other credit card transactions.
About the OTP
While paying a credit card bill or undertaking any other online transaction, the generation of an OTP assures you of security in transactions. You can choose to have it delivered to any preferred channel, such as an SMS on your smartphone or via email. It comes to you in the form of a numeric code, which usually constitutes four to six digits. OTPs are designed to eliminate identity theft by ensuring that the OTP code can be used only a single time by the card user. Furthermore, an OTP cannot be accessed in advance and is generated while the transaction is being carried out.
OTP in a Credit Card Transaction
To understand what OTP is in credit card transactions, you should know that credit card use has risen as a commonplace means of payment in the current digital age. With more usage, there is always the risk of credit card fraud, and to combat this, the OTP comes in handy as a security measure. An OTP is often offered as a second level of security by issuers of credit cards, the first being the CVV on a credit card, to guarantee secure transactions. These transactions have to do with the authorization of payment. The OTP for a credit card is typically a six-digit number sent to you in an email or as an SMS, and you have to share it on any given payment site to authorize a payment to be made against your credit card. You have a time limit to enter this OTP, which is usually 10 minutes. If you repeatedly enter the wrong OTP (for a maximum of three times), your credit card may be blocked for safety purposes.
When you use your credit card to make sure transactions, OTPs give an additional layer of security. The following types of credit card transactions make the use of OTP verification:
- Repayment of a Loan – The credit card OTP assures you that you have control over repayments on loan, and refunds are made towards a specific loan.
- Payment of Utility Bills – A credit card, when used to pay your utility bills like electricity bills, etc., makes the use of an OTP to authenticate the payment.
- Online Purchases – An OTP is essential when you make purchases online, especially when someone else can get their hands on your details, even the CVV number. The OTP makes sure that you are the only one using your credit card to make purchases.
Enhanced security with an OTP is a sure-fire way to ensure the safe use of your credit card. If your card is lost or stolen, payments using it cannot be made without OTP authorization that only you can get. Learn more about credit cards and secure ways to use them at Finserv MARKETS.