Online banking and credit cards have made everything much better and more efficient in paying for purchases such as food, clothes or any other expense. Now that many people use credit cards for various transactions, they are now prone to theft and credit card fraud which can harm millions of Indians who rely on credit cards when shopping Something.
Luckily, OTPs have made sure that it is not easy for thieves to steal your money. With OTPs, many Indian consumers can already buy items with peace of mind, either 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. This is a unique, temporary code consisting of four to six digits randomly generated by the bank to authenticate credit card transactions. This means that the credit card transaction will not succeed without it.
This provides an extra 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’ll use your credit card to buy that expensive bag from a French brand with two interlocking Cs on the logo. While shopping online, there is no one to check on the store side whether your card is legit or not. This is where OTP comes in to verify your identity and the legitimacy of your credit card.
The process begins when you enter your credit card details on the store’s website. Once you have provided all the necessary information on the order form, the store merchant will send an OTP request to your registered mobile number or email address.
After receiving the OTP, you will need to enter 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 enter it in the spaces provided, your transaction will be completed.
This system is not reserved for online shops. OTPs are also used for in-person credit card transactions that require a higher amount, such as buying new appliances or paying for your round-trip tickets to New York.
Why do we need an OTP in credit card transactions
We need the OTP for our credit card transactions to be successful. This prevents cases of fraud in which someone uses your credit card without your permission. It adds an extra layer of extra security for the credit card user and the store.
It can be difficult for some people to enter their OTP every time they make a transaction using their credit card. Still, they have to make a small sacrifice to ensure they are safe.
OTP is a security measure used by banks to determine if you, the person registered to use the credit card, are the person currently using the card.
Most OTP messages include the ability to alert the bank if an unauthorized OTP request is detected, so they can immediately block the transaction before it is completed.
Benefits of Using OTP in Credit Card Transactions in India
India is a country that is slowly becoming dependent on credit cards for various transactions. However, this also means that cases of credit card fraud are also on the rise. In 2017, there was a report of around US$724,000 of credit card fraud in India. That’s a huge amount, and it shows how rampant credit card fraud is in the country.
OTPs act as a deterrent to thieves as they will need your credit card and registered mobile number or email address in order to generate the OTP. This makes it harder for them to commit fraud. With OTPs in place for credit card transactions, this will hopefully reduce the number of fraud cases.
In addition to deterring thieves, OTPs also provide a sense of security to credit card users. As mentioned earlier, OTPs are a way for banks to determine if the person using the credit card is the real cardholder. With this OTP system in place, you can ensure that your hard-earned money is safe.
Additionally, OTPs give the credit card user a sense of control. Whenever you make a credit card transaction, you will be the one entering the OTP. This means that even if someone has your credit card details, they won’t be able to use them without your permission. They have to ask you personally for the OTP because the bank will send it to your email address or personal phone number.
Disadvantages of Using OTP in Credit Card Transactions in India
While there are indeed practical benefits to using OTPs for credit card transactions in India, there are some drawbacks that need to be considered.
One of the main disadvantages is the inconvenience caused. As mentioned earlier, most OTP messages include the ability to alert the bank if an unauthorized OTP request is detected. However, this also means that you will have to enter your OTP each time you buy, even if it is only a small one. It can be quite complicated, especially if you are in a hurry.
Another disadvantage of OTPs is that they can sometimes be unreliable. There have been instances where the OTP system failed and transactions did not go through even after entering the correct OTP. This usually happens when there is a problem with the server or bad weather.
Additionally, customers may not be able to receive their OTPs due to poor internet connection, poor cellular signal, or both. This can be a big problem, especially if you’re in an area with poor reception. This is happening in rural India, where there is no electricity or even internet access for customers who need their OTPs for purchases.
It can also be a problem for people using their credit cards for transactions if they don’t have their phone with them. Some people bring their wallet when they go out for quick errands, and the OTP on their phone can prevent them from completing their tasks quickly.
OTPs can be costly for banks to maintain. They must have a system in place to generate and send OTPs to their credit card users. It costs money and time, so some banks may charge their customers for using the OTP system.
Tips for securing your credit card transactions
Here are some additional tips you can follow to keep your credit card transactions secure:
- Do not save your credit card details on websites or apps. It may seem convenient to speed up your transactions, but it is very risky. If a website or app is hacked, thieves and hackers can steal your credit card details.
- Also, don’t recite your credit card details in public. If asked by a cashier or store clerk, you have the right to refuse because anyone can use your credit card information once they hear about it.
- Be careful when providing your credit card details online. Make sure you’re on a secure website or app before entering your information. A secure website will have “HTTPS” instead of just “HTTP” in the address bar.
- Do not respond to emails or text messages asking for your credit card details. These are usually scams known as “phishing”, in which scammers trick you into entering your credit card information on a fake website.
- Regularly monitor your credit card statements and notices. This way, you can immediately spot any unauthorized transactions. It would be helpful if you were also on the lookout for any strange or suspicious activity on your account.
- Do not give OTPs to anyone, even your friends and family. Only you should know what OTPs are to avoid problems when people try to use your credit cards without your permission.
- Update your phone number and email address to ensure you receive your OTPs without delay. Updating your contact information can also help banks contact you as soon as possible if there are any concerns about people or other entities using your credit card behind your back.
- Do not open messages containing your OTPs in public, especially in crowded places. Thieves may be waiting somewhere behind you for your OTP to arrive on your phone or computer, so always check messages with OTPs privately for added security.
- Do not use your credit cards in places with weak cellular signals or weak internet connections, as you will not be able to receive your OTPs as soon as possible.
OTPs are a great way to deter thieves and secure your credit card transactions. However, you should also be aware of the disadvantages of using OTPs to avoid any inconveniences or issues. Following the tips above will help you use your credit card safely.
Credit cards are a convenient way to spend money for essential and non-essential purposes, and OTPs have made them even safer. Although OTPs can have some drawbacks, they are still a great way to protect credit card holders against fraud and theft.