OTP and a New Opportunity for E-Wallets

EghtesadOnline: Rules announced by the Central Bank of Iran to make one-time password obligatory can help foster the business of e-wallet startups, says a board member of Tehran Chamber of Commerce.

News ID: ۷۴۹۳۵۱

01 January 2020

"When the OTP is launched, more people will start looking for electronic wallets as they might prefer to use static passwords, which is expected to foster the business of these startups in long term," IBENA quoted Majid Hosseini as saying.

The measure is designed to considerably improve the safety of online transactions, but could create some challenges for the ecommerce sector, according to Financial Tribune.

"Decline in the number of online payments is predicted in the first weeks of the plan’s implementation.  But OTP will certainly help cut the number of phishing cases."

Hosseini, who also is the founder of a well-known travel startup, claims that most of the startups are expecting a drop in sales and revenue once the OTP is fully launched.

Rise in phishing activities pushed banks to make one-time passwords obligatory for online payment. The CBI announced a deadline based on which using the OTP will be obligatory for all non-card transactions from January 21 and static passwords will become a thing of the past.

Illegal withdrawals from bank account for 65% of cyber-crime in Iran. Tehran cyber police recorded 23,000 cases of phishing in the past nine months.

The one-time password, developed to address shortcomings of static passwords, is a code valid for a single login or online transaction on a computer system or other digital devices that gets discarded in 60 seconds.

Ecommerce accounts for 10.4% of Iran’s GDP with the market’s nominal value at 2.08 quadrillion rials ($18.4 billion). There are 270,000 ecommerce businesses in Iran with an operating website.