A One-Time Password (OTP) is an additional layer of protection that ensures that only authorized users can access digital accounts or perform online transactions. In today’s rapidly evolving digital era, information security and transaction protection are top priorities for both individuals and businesses.
This article explains in more detail what an OTP is and how it is used to protect transactions. You will also learn more about the different types of OTPs in the following sections.
What is an OTP?
An OTP is a one-time code or password designed to increase security in authentication or verification processes. It is often used in systems that require confirmation of user identity and additional protection, e.g. for account logins or financial transactions.
OTPs usually consist of a four- to six-digit character string made up of numbers and/or letters. Users can receive OTPs via various platforms, such as via SMS, email or instant messaging apps such as WhatsApp.
The purpose of an OTP is to verify that the person attempting to access an account or perform a transaction is authorized to do so. OTPs are time-limited and expire after a certain period of time or after they have been used. This makes them more secure than static passwords and reduces the risk of misuse.
An example of the use of OTPs can be found in online payment transactions with a credit card. Usually, after entering the payment details and the card verification value (CVV), you will receive an SMS with an OTP that must be entered on the website to successfully complete the transaction.
Below is an example of an OTP provided by a bank when a customer makes a transaction.
Functions of OTP codes
OTP codes fulfill several main functions to improve security in various digital systems. Here are the most important functions of OTP codes that you should know:
Increased account security
One of the most important functions of an OTP code is to improve the security of user accounts. OTP codes can be used to ensure that only people with access to the registered device or application can log in and access the account. Even if someone knows the user's password, they cannot log in without a valid OTP.
Protection of sensitive data
OTP codes provide an extra layer of security for systems with sensitive data, such as personal details, bank account details and credit card information. With OTP protection, only authorized users can access such sensitive data. This significantly reduces the risk of data theft and unauthorized access.
Verification of transactions and sensitive processes
Another function of OTP codes is the verification of sensitive transactions or actions. These include corporate financial transactions, money transfers and critical changes to account settings. OTP verification ensures that the transactions are truly initiated by the account holder and not misused by third parties.
Minimizing the risk of online fraud
The use of OTP codes helps to minimize the risks of online fraud, such as phishing attacks and account hacking. Since OTPs are only valid for one-time use and have a short validity period, they can effectively reduce the risk of cyber attacks. Even if an attacker steals login credentials or passwords, they can no longer use an expired or already used OTP.
How OTP codes work
As a user of digital technologies, you are probably familiar with OTP codes. But you may also be wondering how OTP codes work behind the scenes. The OTP process is based on two key components: the OTP generator and the authentication server. Here's how they work:
OTP generator
The OTP generator is responsible for generating the OTP code and sending it to the user. When a user requests an OTP, the generator creates a unique code. This OTP is valid for a limited time, usually a few seconds or minutes.
If the user does not enter the OTP within the specified time frame, they must request a new code. The OTP generator then creates a new unique code and sends it to the user.
Authentication server
The authentication server has the task of verifying the OTP entered by the user. Once the user has received and entered the OTP, the server performs a verification process to ensure that the OTP is correct.
Once the OTP has been successfully verified, the user can proceed with their transaction or activity. For example, in an online transaction, the user can complete their payment once the OTP has been verified. The situation is similar for account login: The user gains access to their account after the server has confirmed the OTP.
Types of OTP codes
There are three main types of OTP codes that you should be aware of: On-demand tokens, soft tokens and hard tokens. Below you will find an explanation of each type:
On-demand token
An on-demand token is an OTP that is sent to the user by SMS, email or via an app after a user request. This type of OTP is usually used for account logins or financial transactions.
Since on-demand OTPs are sent via standard communication channels such as SMS, users do not need any additional devices or special applications. They simply request the OTP, which is then sent from the server via the specified platform.
Soft token
A soft token generates OTPs via software installed on the user’s device, such as a smartphone or computer. Applications such as Google Authenticator generate OTPs locally on the user's device.
The user first enters their username and password, whereupon the application generates a unique OTP that is required to complete authentication.
Soft tokens are considered more secure than on-demand tokens as they do not rely on external communication channels. However, users usually need to install an application or perform additional configurations on their devices.
Hard tokens
A hard token generates OTPs using a physical device, such as a key fob, smart card or USB token. This type of OTP provides the highest level of security as it requires the use of a specific physical device in the user's possession.
Hard tokens are often used to access internal systems in organizations where increased security is important.
Secure tips for transactions with OTP codes
While using OTP codes is more secure than using only traditional passwords, there are still security risks that can occur, such as SIM hijacking or a lost device. Follow these tips to protect your accounts and data when using OTP codes:
Never share your OTP code
An OTP code is confidential information that should only be used by you. If you share it with others, you could gain unauthorized access to your account.
Do not give your OTP code to third parties, especially not to anyone claiming to represent a bank or institution. Remember that reputable banks or institutions will never ask you to share an OTP code sent specifically to your device.
Activate two-factor authentication (2FA)
Enabling two-factor authentication (2FA) provides an extra layer of security for your accounts. This ensures that no one can log in without a valid OTP, even if someone has access to your password. Enable 2FA for important accounts such as email, online banking and social media.
Use OTP codes immediately
OTP codes usually have a short expiration time. If they are not used immediately, they become invalid. Enter the OTP code as soon as you receive it and don't wait too long to use it so that it remains valid.
Monitor account activities regularly
Check your account transactions regularly, especially after receiving an OTP code. Regularly check your login history and account activity and secure your account immediately if you detect unauthorized access.
Carry out transactions on trustworthy platforms
Always carry out transactions on reputable platforms, websites or applications. Make sure the website URL uses the HTTPS protocol and has a padlock icon next to the address bar. Never enter OTP codes on suspicious websites or unverified applications as this could be an attempt to steal your personal data.
Secure your transactions and payments with Aspire
Online transactions require robust protection and additional security systems to prevent risks such as fraud or data theft. In addition to using additional security measures such as OTP codes, you should ensure that the platform you use for transactions meets the necessary security standards for digital payments.
For secure digital transactions and business payments, Aspire is the right solution for you. Aspire is an all-in-one financial platform that is regulated to ensure the security of your funds and payment processes. Aspire also requires OTP verification for account access and transaction completion, ensuring an extra layer of security.
In addition, you can offer your customers secure payment options such as virtual accounts, e-wallets and credit cards through Aspire’s Payment Gateway. Aspire’s payment gateway meets advanced security standards, including HTTPS certification and compliance with Payment Card Industry Data Security Standards (PCI DSS).
Discover more best-in-class features from Aspire to help you streamline your company’s financial management. Want to learn more? Contact our team today!
Frequently Asked Questions
How can Aspire support the unique financial needs and challenges of mid-sized businesses?
Aspire offers a comprehensive suite of expense management solutions tailored for mid-market companies. This includes sophisticated corporate cards, advanced budget controls, and streamlined claims and approval policies, all designed to enhance financial efficiency.
How quickly can a mid-market company integrate Aspire's solutions into existing systems and workflows?
Integration with Aspire's expense management solutions is swift and seamless. Mid-market companies can swiftly implement corporate cards with tailored features, set up nuanced budgets, and establish streamlined claims and approval processes, ensuring minimal disruption to existing workflows.
How does Aspire compare to competitors for international money transfers?
Aspire excels in international expense management with FX fees up to 2x cheaper than traditional banks.
Global payments are offered by various providers through business accounts. Read our article to know more about types of business accounts and how to choose the best one for your business. There are many banks and fintech companies offering business accounts to businesses in Singapore. We have covered them all in our blog, you can click the links to view accounts offered by various banks such as DBS, OCBC, Maybank etc.
However, if you are a start-up or a growing business, chances are you may not meet the eligibility criteria for most of these banks or find their charges to be expensive for your liking. You can consider opting for Aspire multi-currency account for global payments which offers you all the benefits, with eligibility criteria which are less stringent. Read our article on bank charges in Singapore for a quick and easy comparison.
What level of customization does Aspire offer to meet the specific financial requirements of mid-market clients?
Aspire understands the diverse financial needs of mid-market clients and provides a high level of customization to tailor solutions accordingly. This includes the ability to customize corporate cards with specific spending limits, rewards, and benefits that align with the unique requirements of each client.
Additionally, Aspire's budgeting features are adaptable to accommodate the distinct financial structures of mid-market enterprises. The platform also allows for fine-tuning approval policies, ensuring they align with the specific workflows and compliance standards of individual mid-market businesses. This commitment to customization empowers mid-market clients to optimize their expense management in a way that best suits their financial goals and operational preferences.
Is there a minimum balance required for Aspire Business Accounts?
No minimum balance is required to keep your SGD, USD, EUR, GBP and IDR Accounts activated.
Can Aspire's corporate cards be customized to cater to the specific needs of consulting teams on the go?
Yes, Aspire's corporate cards are highly customizable. Consulting teams can benefit from tailored spending limits, travel-centric perks, and real-time transaction tracking, ensuring that the cards meet the unique requirements of professionals on the move.
How does Aspire support budget management for consulting projects and travel expenses?
Aspire's platform offers sophisticated budget controls that consulting companies can adapt to project-specific needs. This includes setting project budgets, tracking expenditures, and receiving real-time insights to ensure that expenses align with project goals.
What are Aspire Corporate Card FX rates?
At Aspire, we want you to pay the lowest rates in the market.
- Zero card activation fees
- Zero card transaction fees
- Best FX rates, up to 2x cheaper than banks
How does Aspire help consulting companies enforce expense policies and approvals for travel expenses?
Aspire streamlines the claims and approval process, allowing consulting companies to establish and enforce expense policies seamlessly. Customizable approval workflows ensure compliance with company policies and industry regulations.
Is Aspire's platform scalable for consulting companies of varying sizes?
Yes, Aspire's platform is scalable and caters to consulting companies of all sizes. Whether you're a boutique consultancy or a larger firm, the platform's features can be adapted to meet your specific travel and expense management needs.
How can I open a business account in Singapore?
For a business account in Singapore, Aspire is an excellent choice. With a focus on startup and SME needs, Aspire offers a seamless and transparent banking experience.
Benefit from their user-friendly online platform, no minimum balance or account opening fees, and dedicated support for businesses of all sizes.
Aspire is designed to streamline your financial management, making it an ideal partner for entrepreneurs in Singapore.
How long does it take to open an Aspire business account?
Registration with Aspire takes less than 10 minutes which you can do via our website or mobile app.
Once registered, we will get back to you within 5 business days on whether your account has been activated or if we need further documents from you.
Our account verification process varies according to the nature of your business. In exceptional cases, it can take up to 7 days to process your documents.
How can Aspire's corporate cards benefit my startup?
Aspire's corporate cards offer a range of benefits for your startup. Earn 1% unlimited cashback on qualified spends, simplify expense management, enjoy streamlined transactions, and gain real-time insights into spending. With customizable limits, integration with accounting software, and enhanced security features, Aspire's corporate cards are designed to empower your startup's financial efficiency and provide added convenience for your team.
Is Aspire suitable for both early-stage and established startups?
Absolutely, Aspire caters to the needs of both early-stage and established startups. Whether you're just beginning your entrepreneurial journey or have an established business, Aspire offers tailored financial solutions to help streamline your operations.
From managing expenses and optimizing workflows to providing valuable financial insights, Aspire's platform is designed to adapt and scale with your business as it grows. The flexibility and scalability of Aspire make it a suitable choice for startups at various stages of development.
Is there a minimum balance required for Aspire Business Accounts?
No minimum balance is required to keep your SGD, USD and IDR* Accounts activated.
However, we recommend keeping your subscription plan amount available on your balance to ensure you're up to date with your payment every month.*
To create a recipient or make any transaction on your IDR Account, you'll need to have a minimum balance of IDR 10,000 on your account.
