OTP vs Token

Posted by Felix Okoli on Monday August 3, 2015 at 12:18:47:

When it comes to doing online banking in Nigeria, apart from having funds and internet banking service, a bank customer also needs to at leave make use of an added security feature in order to complete certain transactions. Two of the most commonly used assets in Nigeria are the One Time Password(OTP) and the Token generated by a Hardware device.

The OTP is normally generated on the web and sent as an sms to the bank customer's phone so that he can confirm the transaction by entering the password received before it can be completed. It's a security feature used by banks in Nigeria in conjuction with their payment processors such as Interswitch and Etranzact. I think customers are charged about N4 per sms sent to their phones when they request for the OTP.

The hardware token or toke is another asset that a bank customer can use to complete and online transaction and it is normally generated offline on a portable hardware device on which tokens have been pre-loaded. The hardware token is normally issued by banks for a fee of at about N2000 to a customer that requests for it and it can be used to confirm online transactions from the person's bank account.

I've used both of them before and have to say that the One Time Password which is normally auto-generated on the web and sent as SMS to my phone is more convenient for me since I can always carry my phone unlike the hardware token which I may not always carry along. Besides, the high fees bank charge just to issue a low quality hardware device is too much and OTP requests are much cheaper to me.

I think if one were judging in terms of cost, which of the above 2 assets is most affordable, it would depend on the volume of transactions the individual does for that year. Let's assume that the average life span of a hardware token is year and the cost of OTP SMS costs N4 per transaction while the cost of the hardware token generator is N2000, then it would be cheaper to just get the hardware token if you were going to request for more than 500 OTPs within that year. However, for people who don't do up to 500 transactions per year, it may just be more affordable and make send to just stick with the OTP platform rather than requesting for a token generator from your bank. S, hardware token generators are better suited for those who do a lot of online transactions.

Secondly, if were were judging in terms of portability, then I'd say that the OTP platform is more portable than carrying a hardware token generator because when using the OTP, the only thing one needs is his mobile phone but when using tokens, you'd also need to carry along your hardware token generator all the time. So, OTP is probably better for people who use mobile banking while Tokens are token generators are probably ok for people who do online banking at a fixed location such as their homes or offices.

If you make use of online banking, do you prefer using the OTP or a hardware Token?