What is OTP? Understanding Two-Factor Authentication

In the era of digitalization, protecting personal and financial information is a top priority. One of the silent but extremely effective "bodyguards" is the OTP code. Many Vietnamese users are familiar with receiving OTP codes via SMS every time they perform online banking transactions, log in to social media accounts, or confirm online purchases. But exactly what isWhat is an OTP codeand why is it so important in a 2-factor authentication system?

This article will thoroughly explain OTP codes, how they work, common types of OTP codes in Vietnam, and how to use them most safely.

What is an OTP code?

OTP stands for "One-Time Password." As the name suggests, this is a randomly generated string of characters or numbers that is valid for only one use within a limited timeframe (usually from 30 seconds to a few minutes). After being used or expiring, that OTP will no longer be valid.

The main purpose of an OTP (One-Time Password) is to add a second layer of security to online transactions. Instead of solely relying on the static password (Username/Password) you have set up, an OTP requires you to provide an additional "key," usually sent to your personal device (phone, token device). This helps protect your account from information theft, even if a malicious actor obtains your static password.

Why is the OTP code so important?

Traditional security often relies solely on Username and Password. However, static passwords carry many risks:

• Vulnerable to exposure:Due to phishing attacks, computer viruses, or simply users using weak, easily guessed passwords, or using the same password for multiple accounts.
• Infrequent changes:Many people have a habit of using one password for a long time.

OTP codes resolve these limitations by generating a completely new password for each transaction. Attackers might know your login password, but without the OTP code sent to your phone, they will not be able to complete the transaction.

For example, when you transfer 5 million VND through a banking app from Vietcombank, Techcombank, or BIDV, after entering the account number, amount, and login password, the system will send an OTP code to your registered phone number. You must accurately enter this OTP code for the transaction to be completed. This ensures that only the owner of the phone number can confirm the transaction.

Common OTP types in Vietnam

In Vietnam, there are several methods for providing OTP codes, each with its own advantages and disadvantages:

1. SMS OTP (OTP code via SMS message)

This is the most common and widely used type of OTP by banks, e-wallets (MoMo, ZaloPay), and online services. The OTP will be sent directly to the mobile phone number you registered with the service.

• Advantages:Simple, easy to use, no internet connection required on the phone to receive codes. Most users have mobile phones.
• Disadvantages:

SIM Swap Risk:Bad actors can seize your phone number by stealing your SIM or tricking network providers into issuing a new SIM. This is a concerning issue that has affected several victims in Vietnam, leading to them losing money from their bank accounts.Phone signal dependent:If the area has no signal or weak signal, you may not receive OTP messages.Expenses:* Some banks may charge a fee for each SMS OTP (e.g., VND 8,000/month for SMS Banking service at some banks).

2. Token Key (Physical OTP generator device)

A Token Key is a compact electronic device with a screen displaying OTP codes. When you need a code, you simply press a button on the device, and a sequence of numbers will appear.

• Advantages:Operates independently, no phone signal or internet needed. Very secure because the OTP is generated on a separate device.
• Cons:

Inconvenience:The user must carry the device with them.Costs:Users must purchase this device from the bank (typically costing 200,000 - 400,000 VND depending on the bank).Easy to get lost:* If you lose your token, you need to contact the bank to block and re-issue it.

3. Smart OTP (OTP code on mobile application)

Smart OTP is a method of generating OTP codes directly on the banking application or a third-party authentication application (such as Google Authenticator, Microsoft Authenticator). Once activated, you can generate OTP codes without an internet connection.

• Advantages:

Convenience:No need to bring your own device, no reliance on phone signal or SMS messages.High safety:The OTP code is generated and used directly within the encrypted application. For example, many large banks such as MBBank, Techcombank, and VPBank encourage customers to use Smart OTP due to its high security and convenience.Free:* No SMS fees or device purchase fees.

• Disadvantages:Smartphone required and app installation. If you change phones, you need to set up Smart OTP again.

4. Voice OTP (OTP code via voice call)

This method is less common in Vietnam. When an OTP is needed, the system will call your phone number and read out the OTP.

• Advantages:May be useful in cases where SMS is not received.
• Disadvantages:More inconvenient than SMS or Smart OTP, it can be difficult to hear the code clearly in a noisy environment.

How to safely use OTP codes

To best protect your account, please follow these guidelines when using OTP codes:

1. Never share an OTP code:OTP is the final key for criminals to access your account. No one, including bank employees or service providers, has the right to ask you for your OTP. If you receive a call, text message, or email requesting your OTP, it is certainly a scam.
2. Verify the transaction details:Before entering the OTP code, carefully read the message or notification to ensure that the code matches the transaction you are performing (e.g., amount, recipient). If the OTP message contains unusual content or does not match the transaction, absolutely do not enter it.
3. Protect your phone:Your phone is where you receive OTP codes. Set a password or fingerprint/Face ID for your phone. Be careful with unfamiliar apps and suspicious links that could install malware and take control of your phone.
4. Use Smart OTP when possible:If your bank or service supports Smart OTP, prioritize using this method. It is often more secure and convenient than SMS OTP.
5. Be cautious of scamming tricks:Scammers often impersonate bank messages or lottery win notifications to trick you into clicking malicious links or providing OTPs. Always double-check the sender of messages.
6. Contact the bank/service immediately if you have any doubts:If you detect unusual transactions or receive an OTP not initiated by you, lock your account immediately and contact the support hotline. For example, major banks like Agribank and Sacombank both have 24/7 support hotlines.

OTP and 2-factor authentication (2FA)

An OTP (One-Time Password) is an important component of two-factor authentication (2FA) or multi-factor authentication (MFA). Two-factor authentication requires users to provide two independent authentication factors from the following three types:

1. What you know:Password, PIN.
2. What you have:Phone (for OTP), token device, USB security key.
3. What you are:Fingerprints, facial scans (biometrics).

When you log in with a password (factor 1: something you know) and then enter an OTP from your phone (factor 2: something you have), you are using 2-factor security. This significantly enhances the security of your account, making it difficult for malicious actors to access even if they have stolen your password.

Conclusion

An OTP code is an extremely effective security tool in protecting your online accounts and transactions. Understanding this clearlyWhat is an OTP code?, how they work, and common types of OTPs will help you use them smarter and more securely. In the context of increasingly sophisticated scams, actively enhancing the security of personal accounts through OTPs and two-factor authentication is indispensable for every internet user in Vietnam.