In today's digital age, protecting financial transactions from fraud has become a predominant concern for all banking customers. Unified Payments Interface (UPI) has revolutionized the way we transact and is widely cited as a significant achievement in digital payment systems. Nevertheless, it comes with its own set of challenges in terms of ensuring the safety of transactions conducted through it. This is where the secure mechanism of OTP or One-Time Password comes into play.

This article will delve into the role of OTP in safeguarding Unified Payment Interface (UPI) transactions against potential fraud.

What is OTP?

An OTP or One Time Password is a unique, temporary numeric password that is valid for a single login session or transaction. It provides an added layer of security for sensitive financial transactions, helping to fortify your account against potential compromises.

Ensuring Safety in UPI Transactions with OTP

UPI facilitates instant, 24x7 transacting between banks with the use of mobile platforms. While the convenience it provides is undeniable, this aspect also makes it attractive to fraudsters who constantly devise new ways to trick users and commit fraud. However, OTP can safeguard user interest in various ways:

Confidentiality: 

When you make a UPI transaction, an OTP is sent to your registered mobile number linked to your bank account. This means only you, the official account holder, can access it. Other parties, even if they somehow obtain your bank credentials, cannot complete the transaction without the OTP.

Single-use Security: 

An impactful feature of OTP is that it's one-time-use. Once used, it becomes invalid. Hence, even if someone intercepts the OTP, they cannot misuse it as it expires very quickly, usually within a few minutes. This greatly enhances the overall security of UPI transactions.

Two-Factor Authentication: 

OTP offers an additional security layer in the form of two-factor authentication. In this method, two different components are used to verify the users identity. UPI uses something you know (PIN, password) and something you have (mobile phone to receive OTP) creating a much tougher barrier for fraudsters to surpass.

Protection Against Phishing Attacks: 

Phishing refers to fraudulent attempts to acquire sensitive information such as usernames, passwords, and bank details by pretending to be a trustworthy entity. OTP acts as a formidable shield against phishing as a successful transaction requires the OTP sent to the registered mobile, minimizing the impact of leaked bank details.

Extra Check Point:

 An OTP not only authenticates the user but also verifies the transaction. Thus, you have an extra checkpoint to ensure that you are conducting the transaction with the right party and for the correct purpose.

Keeping OTP Safe

While OTP ensures security, it is essential to remember that it is susceptible to interception if not carefully handled. Follow these guidelines to guarantee safe utilization of OTP:

a) Never share your OTP:

 Always remember that no bank or financial institution will ever ask you to share your OTP. Sharing OTP over call, SMS or mail can lead to misuse.

b) Avoid public Wi-Fi: 

Public Wi-Fi may not be secure and poses a risk for a breach. Avoid performing financial transactions when connected to one.

c) Regularly check account statements:

 Regular monitoring of account transactions can ensure early detection of any unauthorized transactions.

d) Update your mobile number: 

Make certain that your mobile number is up to date in the bank's records. This will help to ensure that the OTP sent by the bank is received by you only.

The introduction of OTP has undoubtedly notched up the security level of online transactions, especially in the context of UPI interfaces. However, individual user behaviour also plays an essential role in ensuring the holistic effectiveness of this security measure. OTP is a powerful tool in safeguarding UPI transactions against fraud, but users also need to be vigilant and proactive in keeping their financial information secure. With appropriate utilization of OTP, we can unravel the limitless possibilities of safe and secure digital transactions.