OTP authentication depends on two factors: For example, one factor can be the personal identification number( PIN), and the other can be the smart card or a token card that the user uses to identify himself to the software. When using a security token, the randomly generated password is used in combination with the PIN number, giving the user a unique password that can only be used for a single authentication. This password loses its validity after authentication and is thus secure against unauthorized use because it is invalid. Security tokens are used in two-factor authentication( 2FA) and multifactor authentication( MFA), among others. The PIN/ TAN procedure and other TAN procedures such as eTAN, chipTAN, mTAN and iTAN are corresponding procedures that work with a transaction number that can be used once.
With some OTP procedures, the authentication is displayed on the user's smartphone. With the Time-Based One Time Password( TOTP), there is a temporary one-time password that is only valid for a few seconds and which can significantly increase security.