How OTPs are Securing Credit Card Transactions In India

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01 DECEMBER, 2022

How Are Credit Card Transactions Secured in India with OTPs?

Digital payments are widely available in India and have encouraged cashless transactions. "Faceless, Paperless, and Cashless" is one of the objectives of the Government of India's flagship initiative, Digital India. Credit cards and debit cards, along with UPI, have a significant role in this initiative.

Credit card transactions cannot be completed without an OTP. The bank sends a temporary OTP of four to six digits to your registered phone number to authenticate a credit card transaction.

You must input the OTP into the payment gateway when the message pops out on your screen. It is typically valid for up to 8–10 minutes. The bank approves the credit card transaction once you have validated the OTP. The bank or credit card provider will block your credit card when you input the incorrect OTP more than three times. This is to ensure that your credit card remains safe in case of theft or loss.

Uses of OTP When Using a Credit Card

All of your financial and credit card online transactions have an additional layer of protection due to the 4 or 6-digit OTP number. Any transaction carried out without an OTP is problematic since it removes the additional layer of protection that your card has.

Transactions Requiring OTP For Credit Card Payments

You need OTP for payments through credit cards for the following transactions.

Online Transactions

We all enjoy shopping online these days. As a result, using a credit card to make purchases has also become widely popular. One security feature on your credit cards is the Card Verification Value (CVV), which lowers the risk of fraudulent transactions. But if someone has your card details, this level of security can easily be compromised.

Therefore, OTP can avoid such occurrences because the bank only shares it on the customer's registered email address or mobile number, making your credit card online transaction more secure and confidential.

Payment of Utility Bills

Using your credit card to pay for your utilities is a simple method to manage your spending and make timely bill payments. Utility bills can be regularly paid with a credit card by using an automated bill payment feature.

Nevertheless, it is essential to remember that credit card payments require an OTP for authorisation.

Repayment of Loans

Repay your college loans, mortgages, or car loans using credit cards. EMI Payments help you to monitor your monthly repayments. The OTP feature helps confirm that the payment is approved by the individual and not a third party.

Benefits of Using an OTP For Credit Card Transactions

Let's discuss the importance of OTPs and how a credit card owner might profit from them.

One-Password Solution

One-password solutions are offered to customers through OTPs. They remove the challenge of remembering passwords.

Additional Layer of Protection

No one can use your credit card unless they enter the OTP sent to your registered mobile number or email address.

Aids in Keeping You Alert

When someone tries to use your credit card, you’ll receive an OTP to authorise the transaction. In this case, notify the bank immediately and block your card.

Simple Process

Using an OTP to validate your credit card online transaction is a simple process that takes a few seconds only.

Can We Use a Credit Card Without an OTP?

It is always suggested to use an OTP to keep your transactions under the cover of an additional level of protection. However, a few methods exist for using a credit card without an OTP. The details for such cases are mentioned below.

Swipe the credit card at the POS terminals and enter the 4-digit PIN while making an offline purchase. The only assurance for approving the transactions will consist of your credit card PIN.
During online transactions, OTP is not considered for second-level security at the payment gateways to complete a credit card online transaction.
International credit card transactions without OTP can be possible when the payment gateway you’re using has permitted the same. Your credit or debit card can be used to make international purchases without an OTP authentication. This is because only domestic transactions are subject to the RBI's OTP authentication. Its directive does not regulate international payments. Therefore, the smart move in this situation is to either disable international transactions or selectively permit them when necessary.

How to Use Credit Card OTPs? - Dos and Don'ts

The Dos and Don'ts of using credit card OTPs have been discussed below.

Dos of Using Credit Card OTPs

The website on which you are entering the OTP must use reliable and secure encrypted communications. So the best thing is to make sure the website begins with HTTPS://.
Using a firewall and antivirus software that is up to date is essential while using a credit card OTP.

Don'ts of Using Credit Card OTPs

Responding to emails that request personal information, such as your credit card or bank account number, is never a good idea.
Your credit card information, including the CVV number, PIN, expiration date, and OTP, should never be shared with anybody.

Conclusion

Digital payments are rising in India. The use of OTP for credit card transactions has proven to be of great value to credit card users. OTP adds extra protection to credit card transactions by verifying the payment processing using a private, randomly generated password.