OTP Full Form

One-time passwords (OTPs) are often used as part of a multifactor authentication (MFA) or two-factor authentication (2FA) system. In financial services, such precautions are common (especially in light of the PSD2 directive’s requirements). They’re becoming increasingly widespread for various reasons, including securing access to commercial apps or a business network. A one-time password (OTP) is a randomly generated sequence of numbers or alphanumeric characters that authenticate a user for just one login or transaction. It prevents data access as part of the multifactor authentication (MFA) method.

What is an OTP ?

There are two important characteristics to consider regarding one-time passwords: they expire rapidly and can’t be repeated. The acronym OTP and the phrases “OTP key” and “OTP code” widely refer to one-time passwords.

OTPs are generally numeric or alphanumeric (letters and numbers) strings created just once for a single login operation. They are used to authenticate users. This implies that once a user signs in using a one-time password, the password is no longer valid and cannot be used for any other logins in the future.

How does OTP work ?

When a computer system demands a password, a one-time password is generated using an algorithm that creates a unique and random code. However, two components must be examined to fully appreciate how an OTP works: the OTP generator and the authentication server. 

• The generator of one-time passwords. The OTP generator will provide the user with a one-time password based on: something the user is already acquainted with (an authentication token)

• The acronym TOTP stands for Time-based One-Time Password, an OTP whose moving factor is determined by the passage of time.

• A one-time Password Algorithm (HOTP) based on HMAC is employed, an event-based OTP with a counter-based moving factor rather than a time-based moving factor.
• Assume the OTP is created due to a multi-factor authentication system that contains something the user already knows. In such instances, the OTP generator may also include anything that the user is already familiar with (e.g. a PIN code). Consequently, before moving further, you must evaluate if your MFA solution is based on many criteria or just one.
• An authentication server is software that enables users to verify their identity.
• As previously stated, the authentication server must confirm the user’s one-time password once generated by the OTP generator.

Advantages of having an OTP

• Preventing online ID theft is very important.
• One of the main benefits of using one-time passwords to keep people from getting into things is that they become invalid after a short time, making it impossible for programmers to get the codes back and use them again later.
• The IT staff has to help less.
• If you choose a two-factor authentication (MFA) system, you don’t have to enter your login and password. This means that IT support staff are less likely to be called by end-users who want to change their password. End-users aren’t likely to make a mistake when managing a piece of information, like a PIN, that should be kept in mind. A deal that is good for both the clients and the people who help them.
• Take care of the security of your passwords.
• This might be obvious if you use a two-factor authentication method that doesn’t require a password. IT managers and the people in charge of data security (CISOs) can avoid the most common problems that arise when it comes to password security (powerless passwords, sharing certifications, reusing similar passwords across various records and frameworks, and so on)

How to obtain an OTP ?

A network server produces a number or shared secret using one-time password techniques to authenticate an unauthenticated user. The security token on the smart card or device uses the same number and algorithm to verify the one-time password and user.

Many companies use SMS to send a temporary passcode as a second authentication step. The user inputs his login and password on networked information systems and transaction-oriented online apps to acquire the temporary passcode.

The user inputs his user ID, conventional password, and temporary passcode to activate two-factor authentication.

Conclusion

A one-time password or passcode (OTP) is a string of letters or digits that authenticates a user for the duration of a single login attempt or transaction (such as purchasing something online). One-time passwords are created using algorithms that factor in contextual information such as time-based data or past login events to provide a unique value for each login occurrence. A one-time password (OTP) is generally issued by technical support teams to customers who have forgotten their login credentials to a site or account or when the resource in question needs extra security against unauthorized access attempts.