OTP (One-Time Password) verification is an additional authentication process that uses a unique code valid only once and for a limited time. OTP verification typically complements a password or PIN when logging into an account or completing a transaction. OTPs usually consist of 4–8 digits or a combination of letters and numbers, sent via SMS, WhatsApp, email, or an authenticator app.
Two-Factor Authentication (2FA) is currently the most effective way to strengthen account security. According to a report from Market Research Future, as cited by Authgear, the global 2FA market is expected to grow from USD 14.65 billion in 2022 to USD 44.67 billion by 2030. Interestingly, OTP still dominates the market, accounting for about 56–60% of its total value.
The purpose of OTP verification is to add a layer of security to the login or transaction process, ensuring that only the rightful owner of the device or account can complete the process.
That’s why OTP codes should never be shared and have a short validity period—usually between 1 and 5 minutes. After that, the code expires and is no longer valid.
How important is OTP as a security layer for your account? Why can't we just rely on passwords? Here’s a detailed comparison of passwords and OTPs across different aspects:
| Aspect | Password | OTP |
|---|---|---|
| Validity Period | Permanent or until changed manually. No automatic expiry, making it vulnerable if not updated regularly. | Valid for a short period, usually 30 seconds to 5 minutes. Expires automatically after that. |
| Creator | Created by the user. Its strength depends on the user's awareness of using strong and unique combinations. | Automatically generated by the system or server using specific algorithms. Users can’t control the content. |
| Character Length | Typically 6–20 characters, including letters, numbers, and symbols, depending on the user's choice. | Typically 4–8 digits or alphanumeric, designed for quick and easy entry. |
| Usage | Used as the primary login credential (first-factor authentication). | Used as a secondary layer in two-factor authentication (2FA), following the password entry. |
| Security Level | Generally secure, but vulnerable to brute force, credential stuffing, or phishing—especially if reused or weak. | More secure for one-time use, but still susceptible to SIM swapping, malware, and phishing if the user isn't cautious. |
Many users fall for scams when they receive OTPs they didn’t request—often a social engineering attempt to hijack their accounts.
Countries like Singapore have started moving away from OTP verification. The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) are shifting to digital tokens due to OTP’s vulnerability to phishing.
SIM swap attacks can occur when cybercriminals trick mobile operators into transferring your phone number to their SIM card, allowing them to receive your calls and messages—including OTPs.
Android malware can request permission to read your SMS and silently forward received OTPs to cybercriminals.
Repeated OTP requests can exhaust or confuse victims, leading them to unknowingly approve unauthorized access attempts.
To tackle the security risks of OTPs, VIDA offers more secure, phishing-resistant authentication solutions:
VIDA PhoneToken leverages Public Key Infrastructure (PKI) to bind a user’s identity to their specific device. Without relying on OTP, authentication remains secure because only the registered device can be used for login.
VIDA FaceToken combines liveness detection, face matching, and device authentication to ensure that only the real person behind the account can access it.
With these solutions, logins and transactions no longer depend on OTPs, which can be easily exploited.
OTP verification is still widely used because many people are unaware of its risks. However, the rise in sophisticated cyber fraud techniques calls its safety into question. To stay protected, consider switching to OTP-less authentication methods like FaceToken and PhoneToken, which offer stronger, more secure verification.