What Is OTP In A Credit Card Transaction? – Forbes Advisor INDIA | #cybersecurity | #cyberattack


Online banking and credit cards have made everything much better and more efficient in paying for purchases such as food, clothing, or any other expenses. Now that many people use credit cards for various transactions, they are now prone to credit card theft and fraud, which can harm millions of Indians relying on credit cards when they buy something.

Thankfully, OTPs have ensured that it won’t be easy for thieves to steal money from you. With OTPs, many Indian consumers can already buy items in peace, whether in person or through online stores. However, what is an OTP?

This article will easily guide you on everything you need to know about OTPs in credit card transactions.

What is an OTP?

OTP stands for one-time password. It is a unique, temporary code composed of four to six numbers randomly generated by the bank to authenticate credit card transactions. This means that the credit card transaction will not push through successfully without it.

This serves as an added layer of security for credit card users and serves as a type of alert for them when someone tries to use their credit cards without their permission.

How OTP Works

Let’s say you will use your credit card to buy that expensive bag from a French brand with two interlocking C’s on the logo. When buying online, there is no one to check on the store’s end if your card is legitimate or not. This is where OTP comes in to verify your identity and the legitimacy of your credit card.

The process starts when you enter your credit card details on the store’s website. Once you have given all the necessary information on the order form, the store merchant will send a request for an OTP to either your registered mobile number or email address.

After you have received the OTP, you will need to input it on the website to complete the purchase. The OTP will come from your bank’s official messaging line, and once you receive the OTP and input it into the spaces provided, your transaction will push through.

This system is not just for online stores. OTPs are also used when making credit card transactions in person that require a higher amount, such as buying some new home appliances or paying for your round-trip tickets to New York.

Why We Need an OTP in Credit Card Transactions

We need the OTP for our credit card transactions to push through successfully. This prevents fraud cases wherein someone uses your credit card without your permission. It adds an extra layer of added security for both the credit card user and the store.

It might be a hassle for some people to input their OTP every time they make a transaction using their credit card. Still, they have to make a small sacrifice to ensure that they are safe.

The OTP is a security measure used by banks to determine if you, the actual person registered to use the credit card, are the actual one using the card right now.

Most OTP messages include the option of alerting the bank if an unauthorized request for an OTP is detected, so they can immediately block the transaction before it goes through.

Advantages of Using OTP in Credit Card Transactions in India

India is a country that is slowly becoming reliant on credit cards for various transactions. However, this also means that the cases of credit card fraud are also on the rise. In 2017, there was a report of around US$724,000 worth of credit card fraud in India. This is a huge amount, and it just goes to show how rampant credit card fraud is in the country.

OTPs act as a deterrent for thieves since they will need to have your credit card and your registered mobile number or email address to be able to generate the OTP. This makes it more difficult for them to commit fraud. With OTPs in place for credit card transactions, this will hopefully minimize the number of fraud cases.

Aside from deterring thieves, OTPs also offer a sense of security for credit card users. As mentioned earlier, OTPs are a way for banks to determine if the person using the credit card is the actual cardholder. With this OTP system in place, you can ensure that your hard-earned money is safe and secure.

In addition, OTPs provide the credit card user with a sense of control. Whenever you make a credit card transaction, you will be the one to input the OTP. This means that even if someone does have your credit card details, they will not be able to use them without your permission. They have to ask you personally for the OTP since the bank will send it on your personal email or phone number.

Disadvantages of Using OTP in Credit Card Transactions in India

While there are indeed practical advantages to using OTPs for credit card transactions in India, some disadvantages need to be considered.

One of the main disadvantages is the inconvenience that it causes. As mentioned earlier, most OTP messages include the option of alerting the bank if an unauthorized request for an OTP is detected. However, this also means that you will need to input your OTP every time you purchase, even if it is just a small one. This can be quite a hassle, especially if you are in a hurry.

Another disadvantage of OTPs is that they can be unreliable at times. There have been cases wherein the OTP system failed, and transactions did not go through even after inputting the correct OTP. This usually happens when there is a problem with the server or bad weather.

Also, customers might not be able to receive their OTPs due to bad Internet connection, poor cell signal, or both. This can be a big problem, especially if you are in an area with bad reception. This happens in rural India, where there is no electricity or even Internet access available to customers who need their OTPs for purchases.

It can also be a hassle for people using their credit cards for transactions if they do not have their phones with them. Some people bring their wallets when they go out for quick errands, and the OTP on their phones might hold them up from finishing their tasks quickly.

OTPs can be costly for banks to maintain. They need to have a system in place to generate and send OTPs to their credit card users. This costs money and time, so some banks might charge their customers for using the OTP system.

Tips To Secure Your Credit Card Transactions

Here are some additional tips that you can follow to ensure the safety of your credit card transactions:

  • Do not save your credit card details on websites or apps. This might seem convenient to speed up your transactions, but it is very risky. If a website or app is hacked, thieves and hackers might steal your credit card details.
  • Do not also recite your credit card details in public. If a cashier or a store clerk asks you to do so, you have the right to refuse because anyone can use your credit card information once they hear that.
  • Be careful when providing your credit card details online. Ensure that you are on a secure website or app before inputting your information. A secure website will have “HTTPS” instead of just “HTTP” in the address bar.
  • Do not respond to email or text messages that ask for your credit card details. These are usually scams known as “phishing,” wherein scammers trick you into inputting your credit card information on a fake website.
  • Monitor your credit card statements and notices regularly. This way, you can immediately spot any unauthorized transactions. It would help if you also were on the lookout for any strange or suspicious activity on your account.
  • Do not give out OTPs to anyone, even your friends and family. Only you should be able to know what the OTPs are to avoid any issues when people try to use your credit cards without your permission.
  • Update your phone number and email address to be sure that you will receive your OTPs without any delays. Updating your contact information can also help the banks reach out to you as soon as possible should there be issues about people or other entities using your credit card behind your back.
  • Do not open the messages containing your OTPs in public, especially in crowded places. Thieves might be waiting somewhere behind you for your OTP to arrive on your phone or computer, so always check the messages with OTPs in private for added security.
  • Do not use your credit cards in places with poor cell signals or weak Internet connections because you won’t be able to receive your OTPs as soon as possible.

OTPs are a great way to deter thieves and keep your credit card transactions safe and secure. However, you should also be aware of the disadvantages of using OTPs to avoid any inconvenience or problems. Following the tips above will help you use your credit card safely and securely.

Bottom Line 

Credit cards are a convenient way of spending money for essential and non-essential purposes, and OTPs have made them even more secure. While OTPs might have some downsides, it is still a great way to protect credit card holders from fraud and theft.



Original Source link

Leave a Reply

Your email address will not be published.

13 − = four