What is OTP?

Customers expect secure, seamless sign-ins and transactions. One-Time Passwords (OTPs) deliver exactly that: a short, single-use code that confirms identity during login, checkout, or sensitive actions. If you’re searching for “what is otp?” or wondering “what does otp mean?” this guide breaks it down in plain language, showing how OTPs work, where they’re used, and how to implement them effectively. By adding a dynamic, time-limited code to your flows, OTPs strengthen security beyond a username and password and help ensure only the authorized user completes the action at that moment.

Use this overview to help make confident decisions about delivering, validating, and managing OTPs across channels like SMS, email, push, and authenticator apps.

What is a one-time password (OTP)?link to this section

An OTP is a temporary, unique code generated for a single authentication session or transaction. Once used—or once it expires—it becomes invalid. In multi-factor authentication (MFA), OTPs help verify that the person requesting access is the rightful user.

Unlike static passwords that remain the same until changed, OTPs cannot be reused. This reduces risk from password theft, phishing, credential stuffing, and replay attacks because a captured code is useless outside its short validity window.

OTPs are widely used across industries. Banks authorize transfers and account changes with OTPs. Retailers confirm buyers and prevent fraudulent orders. Healthcare organizations secure patient portals. Enterprises protect VPN logins and privileged actions. Consumer apps verify phone numbers or email addresses during sign-up or recovery.

How do OTPs work?link to this section

OTPs are created by an authentication system using algorithms to produce unpredictable, time-bound or event-based codes. Two widely used standards include:

• TOTP (Time-based One-Time Password): Generates codes that expire after a short interval, often 30 seconds.
• HOTP (HMAC-based One-Time Password): Produces a new code each time a counter is incremented, typically upon a login attempt or request.

During login or verification, the server calculates a code using a shared secret (known only to the server and your device or token) and either the current time (for TOTP) or a counter (for HOTP). You receive the code and enter it in the application. The server validates the code by running the same calculation and comparing the result.

Delivery methods include SMS, email, voice calls, authenticator apps, push notifications, and hardware tokens. Each balances usability, security, and availability. Strong implementations enforce expiration, single-use constraints, rate limits, and logging for fraud detection. OTP checks can slot into MFA policies, risk scoring, and access controls so you can match verification strength to the sensitivity of the action.

Benefits of one-time passwordslink to this section

• Stronger protection for accounts and transactions: OTPs add a dynamic factor that attackers cannot easily predict or reuse. Even if a static password is compromised, the attacker still needs the time-limited code.
• Reduced impact of common attacks: OTPs limit the effectiveness of credential stuffing, replay attacks, and phishing by requiring a valid code within a specific time window or event sequence.
• Improved user experience with modern methods: Authenticator apps and push approvals streamline verification with minimal friction. Adaptive policies can request OTPs only for higher-risk events, keeping routine access fast while tightening protections when needed.

Types of one-time passwordslink to this section

OTP security best practiceslink to this section

Strong OTP implementations follow established standards and protect secrets throughout the lifecycle.

• Use vetted algorithms and libraries (TOTP/HOTP) and keep dependencies up to date.
• Protect shared secrets during provisioning with encrypted channels and secure storage (such as hardware-backed key stores).
• Enforce short expiration windows, single-use codes, rate limiting, and lockouts after repeated failures.
• Offer reliable fallback methods, such as recovery codes, trusted devices, or alternate channels, and verify ownership before enabling them.
• Monitor for anomalies in login patterns, request volumes, IP addresses, device posture, and geolocation.
• Adopt phishing-resistant methods where possible, including authenticator apps, push approvals with number matching, or FIDO-based security keys.
• Educate users on recognizing scam prompts and not sharing codes, even with supposed “support” agents.
• Use device binding, risk-based policies, and step-up verification for high-risk actions.
• Audit authentication logs regularly, rotate secrets if exposure is suspected, and test failover for delivery channels.

OTPs in a broader security strategylink to this section

OTPs are most effective when layered with other protections. Pair them with strong passwords or passkeys, device health checks, behavioral analytics, and encryption. For high-value actions—such as wire transfers or administrative changes—add step-up verification, transaction signing, and clear prompts that show what the user is approving.

Frequently asked questionslink to this section

Are OTPs secure?

Yes. OTPs substantially improve security by adding a dynamic, single-use factor. Effectiveness varies by delivery method and implementation. App-based and hardware-generated codes are generally more secure than SMS or email due to lower interception risk.

How long do OTPs last?

Time-based codes typically expire within 30 to 120 seconds. Event-based codes remain valid until successfully used but should be enforced as single-use by the system.

Can OTPs be hacked?

Attackers may phish for codes, perform SIM swaps, or exploit compromised email accounts. Using authenticator apps, push approvals with number matching, FIDO security keys, and anti-phishing safeguards greatly reduces these risks.

What if I don’t receive an OTP?

Check phone signal, data connection, and email spam folders. Try resending the code, verify contact details, or use a backup method like recovery codes. If issues persist, contact support and consider switching to an authenticator app for more reliable local code generation.

Is an OTP the same as two-factor authentication?

Not exactly. OTPs are often the second factor in a 2FA process, but 2FA can also include push approvals or hardware security keys. OTP refers specifically to the one-time code used for verification.

Deliver OTPs at scale with 8x8link to this section

8x8 makes it simple to send and validate OTPs through reliable channels like SMS, email, and push—so customers can authenticate anywhere, anytime. Our platform provides high deliverability, global coverage, and detailed analytics to optimize verification flows.

• Send millions of OTPs with consistent performance and redundancy.
• Use automated fallbacks so undelivered messages switch to another channel.
• Get read/delivered receipts, rate limiting, and fraud monitoring baked in.
• Integrate quickly with clear API docs, SDKs, and onboarding support.

Connect with 8x8 to streamline authentication, reduce friction, and keep accounts secure.