October 2, 2022

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Why We Need An OTP In Credit Card Transactions

The use of credit cards as a means of payment has primarily displaced the use of cash. Credit cards and OTP for credit card transactions are two concepts that must be grasped before using a credit card properly and conveniently.

This predetermined credit limit is determined by the cardholder’s income and ability to repay. When a cardholder makes a purchase, the bank sends a monthly statement for the amount owed to the cardholder.

In the early days of credit cards, verifying the signatures on the back of the card served as the sole means of determining the legitimacy of the cardholder. Every subscriber had to sign the back of the card in front of a bank representative when they received their card. Due to the widespread usage of credit cards and the subsequent discovery of vulnerabilities that may allow them to be fraudulently used, a four-digit PIN was introduced to secure them further.

How does OTP work in the context of a credit card purchase?

The emergence of online transactions necessitated increased security measures to prevent fraud. OTP, or One-time Password, is one example of this increased protection. OTP is secure since the cardholder’s registered cellphone number and email address are the only places the number may be transmitted. When making an online purchase with a credit card, you’ll also need the OTP and the CVV code, which stands for Card Verification Value Code.

In credit card transactions, what exactly is an OTP?

A credit card for online purchases has been made safer thanks to two-factor verification. In addition to the CVV and OTP printed on the back of a credit card, the first degree of protection is provided by the OTP delivered to the user’s mobile phone or email address the cardholder.

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After entering the OTP produced for a transaction, it will not be accepted after the time limit has expired.It is common for banks to stop a customer’s credit after the third unsuccessful attempt to input a legitimate OTP.

Use of a One-Time Password (OTP) for Credit Card Payment

AWe can’t complete a credit card transaction without the OTP. This helps to keep your credit card safe from unauthorized usage. Both the customer using a credit card and the retailer benefit from additional protection.

  • Every time you use your credit card, you’ll have to enter your OTP, which might be a headache for some individuals. There is still a small price to pay for their safety.
  • To verify that you, the person who was registered to use your credit card, are using it, banks employ the OTP.
  • If a bank receives an unlawful OTP request, it may instantly halt the transaction and warn it.

Using OTP for Card Payments in India has several advantages.

Many transactions in India are becoming more dependent on credit cards. There will be a spike in credit card fraud due to this. Nevertheless, An estimated US$724,000 in credit card theft was reported in India in 2017. Considering how prevalent credit card crime is in the United States, this is significant.

  • Fraud on credit cards should be reduced due to the use of OTPs. To create an OTP, a thief would need to know your credit card information and your registered phone number or email address. They will have a more challenging time committing fraud as a result of this.
  • Aside from thwarting criminals, OTPs provide credit card customers with a feeling of security. Banks use OTPs to verify that the individual using a credit card is, in fact, the cardholder. You may rest easy knowing that your hard-earned cash is protected with this OTP mechanism.
  • OTPs provide cardholders with a feeling of control over their data. The OTP must be entered by you each time a credit card transaction is made. Because the bank will send the OTP to your personal email/phone number, they must ask you for it directly. If someone does get your credit card information, they will be unable to use it without your explicit approval.
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A Guide to Credit Card One-Time Passwords

If you’re using a credit card for online purchases, an OTP is necessary. There are a few rules to follow when utilizing OTPs for card transaction authorization.

Dos

  • You need to be sure that you’re completing your transactions online on a secure site.
  • Before making an online purchase with a credit card and utilizing OTP as a security precaution to validate the transaction, ensure your firewall/antivirus software is up to date.

Don’ts

  • Do not react to emails from unfamiliar email addresses requesting your financial information.
  • Your credit card information, expiration date, CVV number, one-time password, and pin should never be shared.

Mbankonline written an amazing Credit card guide on their recent post. You can check it out to find more credit card safeguard solutions.

Safeguard Your Credit Card Transactions With These Pointers

If you’re concerned about the security of your credit card transactions, consider the following suggestions:

  • Never save your credit card information on a website or app. This may be a good option if you’re looking to speed up your payments, but it’s pretty hazardous. Thieves and hackers may obtain your credit card information if a website/app is breached.
  • You should also avoid publicly reciting your credit card information. Suppose a retail clerk or a cashier asks for your credit card information. In that case, you have the right to decline since anybody may use it after hearing that.
  • You should use caution while disclosing your credit card information over the internet. Ensure you’re on a secured website or app when entering personal information. “HTTPS” will appear in the URL bar of a secure website instead of “HTTP.”
  • Never provide your credit card information over email or text message. Scammers use “phishing” to deceive you into providing your credit card details on a bogus website.
  • Keep an eye out for suspicious activity on your credit card bills. You’ll be able to see any transactions that aren’t allowed right away. If you were also on the alert for any odd behavior on your account, that would be helpful.
  • Don’t even think of sharing your OTP with your loved ones. When someone tries to use a credit card without your consent, you should be the only one who knows the OTPs.
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Final Words

OTPs have improved the security of credit cards, which are already a handy method to make small and large purchases. Although OTPs have significant drawbacks, they are an excellent technique to safeguard credit card customers from theft and fraud.

Your OTP must be entered into a website that has been encrypted adequately with the necessary security technologies. When utilizing an OTP authorization function on your credit card to make a payment, ensure your firewall software is up-to-date.