In almost 31% of breaches in the past decade, and 60% in just the past year, exposed credentials have played a role. Despite the effort of many organizations to enforce strict password policies—such as the monthly rotation of 24-character passwords—huge breaches continue happening.
Cyber attacks use credential stuffing, brute force, or abuse by enumeration to exploit weak security points. But there also remains the element of human error. The average person now has 100 passwords, up 25% from 2020. As a result, users typically fall back on poor password practices to make life easier.
Instead of setting up users to fail, companies can help boost account security using one-time passwords. A one-time password (OTP) is one of the more mature options within static-passwordless methods.
In this blog post, we’ll dive into what OTPs are, their benefits, how they work, what to know about PAM, and how to implement them in your business.
What are one-time passwords (OTPs)?
An OTP is a randomly generated, one-time validity code used for a single login session or transaction. Unlike static passwords, which remain the same until the user changes them, OTPs are valid for a very short period or just one use. This makes them a very useful tool in the fight against unauthorized access.
OTPs add an extra layer of protection over transactions and logins for online banking. E-commerce websites, at their end, deploy OTPs during checkout to prevent fraud. Service businesses, on their part, depend on OTPs to guarantee the security of their critical systems.
One-time passcodes also play a big part in two-factor authentication and password recovery. They ensure that only the rightful owner can access an account or reset a password. Ultimately, OTPs are a critical element in mitigating the risk of a cyber-attack or data breach.
5 benefits of using one-time passwords
There are plenty of benefits to using OTPs, but here are some key ones.
1. They enhance security through unique, temporary codes
OTPs align with the zero trust mindset, which assumes there’s no effective defensible perimeter that may protect a customer or an organization. OTPs work on a “never trust, always verify” principle by generating unique, temporary codes for users. Even if someone intercepts the OTP, its short lifespan renders it useless in minutes.
Moreover, when you use solutions like Plivo that offer built-in security measures like Fraud Shield, you gain an added layer of protection. Fraud Shield is specifically designed to mitigate fraud risks such as SMS pumping and account token takeovers.
This ensures your messaging infrastructure remains secure and resilient against fraudulent activities.
2. They protect against password reuse and interception
Reusing passwords across multiple sites is a common but risky practice. OTPs mitigate this risk by using a unique password each time. Additionally, because OTPs are often sent through secure channels like SMS or an authenticator app, they’re less susceptible to interception compared to static passwords.
Plivo offers advanced features that enhance your OTP delivery and performance.
Plivo supports real-time delivery report notifications so you can track how your messages are performing globally. This provides valuable insight into your delivery rates and helps you gauge the effectiveness of your OTP strategy.
Moreover, Plivo offers pre-approved templates optimized for conversions. These ready-made message templates are not only pre-approved for compliance with industry regulations but are also crafted to maximize engagement and drive conversions.
By using these templates, you save time and effort in creating messages from scratch, allowing you to focus on what really matters—connecting with your audience.
3. They’re simple to use
Customers need not only robust protection but also a seamless experience. OTPs are a simple way to make logging in more secure.
On the client side, implementing OTP solutions has never been easier with Plivo. Plivo offers a clear and straightforward API that simplifies OTP setup. Using standard HTTP verbs and status codes, Plivo ensures easy integration with your systems.
Whether you’re using Python, Ruby, Node, PHP, Java, .NET, Go, or even cURL, Plivo keeps the setup process consistent and streamlined. All API requests are secured over HTTPS, keeping your data safe during transmission.
Plivo’s API also authenticates requests with your Auth ID and Auth Token, ensuring secure OTP transactions. It supports JSON input in all POST requests, making data handling simple, and for larger deployments, features like timeouts and proxy settings are easy to configure within the server SDKs.
4. They offer versatility across platforms
OTPs are incredibly adaptable and can be used for different business purposes, such as logging into a bank account, verifying an online purchase, or accessing sensitive work systems. This flexibility makes OTPs an essential tool in many scenarios: no matter the context, your users can authenticate securely.
With Plivo, this versatility is enhanced by a global reach. Plivo’s infrastructure is designed to ensure high deliverability rates and minimal latency across 220 countries and territories, making it a reliable choice for businesses that operate globally.
5. They help meet compliance and regulatory standards
For industries such as finance, healthcare, and media, adhering to strict regulatory standards is not just a requirement—it’s a necessity. OTPs play a critical role in helping businesses meet these rigorous data protection standards by providing a secure and compliant authentication method.
Plivo’s OTP solutions are designed with compliance in mind, supporting standards like GDPR and HIPAA. With built-in security features and detailed reporting, Plivo makes it easier for businesses to demonstrate compliance and protect sensitive user data.
By using Plivo, you ensure that your authentication processes are secure and aligned with the latest regulatory requirements, giving you and your customers peace of mind.
How do one-time passwords work?
OTPs operate on a straightforward yet highly secure principle: generating a unique, time-sensitive code for each authentication attempt.
The process typically begins with an algorithm that factors in variables such as time or a shared secret key between the server and the user’s device. This ensures that each OTP is unique and can be validated only within a specific timeframe.
For instance, a time-based one-time password (TOTP) uses the current time as one of its inputs, generating a new OTP every 3-5 minutes. When a user requests access, the server generates the OTP using the same algorithm and parameters.
The user enters the OTP they receive, and the server checks it against the one it generated. If the two match within the allowable time window, access is granted. This method ensures that even if an OTP is intercepted, it becomes invalid almost immediately, thus significantly enhancing security.
Consider a scenario where an employee logs into a corporate system. After entering their username and password, the system prompts them to enter an OTP. The employee’s mobile authenticator app generates an OTP based on the current time and a shared secret key.
The employee then inputs this OTP, and the server validates it against its own calculation. This dual-factor authentication allows only the legitimate user to gain access, providing a robust layer of security against unauthorized access.
OTPs & privileged access management (PAM): what to know
Privileged access management (PAM) is a cornerstone of enterprise security, safeguarding the most sensitive accounts and systems underpinning an organization’s critical operations.
OTPs integrate seamlessly with PAM solutions, providing a dynamic layer of security that complements existing controls. When a user attempts to access a privileged account, the PAM system can trigger an OTP request, requiring the user to provide a time-sensitive code in addition to their regular credentials.
This integration ensures that even if attackers compromise the primary credentials, they would still be blocked from accessing the system without the corresponding OTP. The result is a more resilient defense against unauthorized access to critical enterprise systems.
One-time passwords versus dynamic secrets
Dynamic secrets are temporary, on-demand credentials that are automatically generated and revoked by a system or service, providing enhanced security and access control.
While both OTPs and dynamic secrets provide a means for strong authentication, they serve different purposes and offer distinct advantages.
Differences between OTPs and dynamic secrets
- Purpose:some text
- OTPs: Primarily used for user authentication as a temporary, one-time code for access.
- Dynamic Secrets: Commonly used in API security to facilitate secure communication between systems or applications through short-lived authentication tokens.
- Use Case:some text
- OTPs: Ideal for scenarios where a user needs to authenticate themselves for a single session or transaction.
- Dynamic Secrets: Better suited for environments requiring continuous, automated authentication between systems.
Benefits of OTPs vs. Dynamic Secrets
- OTPs:some text
- Simple and effective for end-user authentication
- Easy to implement and user-friendly
- Provides a high level of security with minimal friction for the user
- Offers a straightforward solution that ensures secure access without compromising the user experience
- OTPs can be cost-effective in terms of implementation and maintenance, as they are often simple to generate and require less infrastructure,
- Dynamic Secrets:some text
- More complex and suited for scenarios requiring ongoing, automated authentication
- Ideal for securing continuous communication between systems or applications
- Dynamic secrets may have higher upfront costs due to the need for specialized systems to generate and revoke credentials in real time
5 best practices for implementing one-time password solutions
When adding one-time passwords (OTPs) to your security setup, keep these five best practices in mind.
- Prioritize strong algorithm selection: Choose a robust algorithm to generate your OTPs. Look for industry-standard options like HMAC-based one-time passwords (HOTP) or time-based one-time passwords (TOTP). These algorithms ensure that your OTPs are secure and reliable.
- Set appropriate expiry times: Your OTP solution should have a balance between security and usability. Implement short expiry times—typically 3-5 mins—for each OTP. This minimizes the window of opportunity for unauthorized use while still allowing users enough time to complete the authentication process.
- Offer multiple delivery channels: Flexibility is key when it comes to OTP delivery. Whether through SMS, email, or voice, multiple delivery options ensure that users can access their OTPs in the most convenient way. This approach enhances the user experience and provides a backup in case one channel fails.
- Implement comprehensive monitoring and logging: A successful OTP implementation doesn’t stop at setup. It’s crucial to monitor and log OTP generation and validation activities. This data provides valuable insights into authentication patterns and helps identify potential security threats.
- Educate users on security best practices: Lastly, but equally important, is user education. Make sure your users understand the importance of keeping their OTPs secure. Provide clear guidance on not sharing OTPs and recognizing phishing attempts. A well-informed user base is a critical component of any successful security strategy.
By following these best practices, you can ensure that your OTP implementation is both secure and user-friendly, providing customers with strong protection without compromising on ease of use.
Start sending OTPs today with Plivo
When choosing an OTP solution, selecting a provider that offers both security and ease of use is important. Plivo’s OTP solutions deliver on both fronts, providing a reliable and flexible solution that can be tailored to meet your specific needs.
Plivo’s OTP services are designed to provide a seamless, secure, and efficient way to manage user authentication. With features like global SMS delivery, real-time delivery reports, and customizable message templates, Plivo makes implementing OTPs in your systems easy.
Whether securing transactions, verifying a user’s identity, or protecting sensitive data, Plivo’s OTP solutions offer the flexibility and reliability needed to keep your operations secure.
The Plivo advantage delivers five benefits:
- Fraud Shield protection: Automatically identify and prevent SMS pumping attacks with real-time monitoring and alerts, ensuring your communications remain secure.
- No additional costs: Enjoy a transparent pricing model with no authentication fees or extra costs for fraud prevention, only paying for SMS and Voice services.
- Pre-registered numbers: Simplify setup with Plivo's pre-registered phone numbers, eliminating the need for number purchases or rentals and avoiding monthly rental fees.
- Global reach and reliability: Benefit from Plivo's extensive carrier network, covering 220+ countries with 99.99% uptime SLAs and premium 24-hour support.
- Pre-approved templates: Boost your OTP conversions with ready-made, pre-approved message templates designed to save time and enhance user engagement.
Ready to see how Plivo can enhance your security with OTP solutions? Request a trial today.
