Beginning in July, the use of physical one-time password generators (OTPs) from six companies will be discontinued. This is due to the expansion of new security media, such as joint certificates and mobile OTPs, which led to a large number of physical OTP manufacturers shutting down. Financial institutions have decided to encourage customers using this OTP to switch to other media such as mobile OTPs.
Physical OTPs are portable security media that generate a one-time password for each online financial transaction. There are token types in the form of small devices and card types the size of credit cards. Since most banks adopted physical OTPs in the 2000s, they have now been replaced by joint certificates, private certificates, and digital OTPs mediated by smartphones. The mandatory use of security cards and OTPs for online transfers was abolished in 2016, leading to a sharp decline in users.
According to the financial sector on the 9th, banks and securities companies have decided to stop using physical OTPs from the six companies that have shut down starting July 1. Since February, the registration of new users with these companies' OTPs at financial institutions or transfers to other institutions has been restricted.
The companies that have shut down include ▲003 Internet Security ▲005 InCard ▲007 Active Identity ▲008 Identita ▲009 Topan Forms ▲011 Smart Innovation. Consumers using this OTP must visit financial institutions before July to obtain products from other manufacturers or change their authentication methods.
Certification agencies, including the Financial Settlement Service, have maintained the system to allow continued use of OTPs from these companies even after they shut down. However, for OTPs from companies that have been out of business for a significant period, compatibility with the system has become difficult, resulting in the decision to discontinue their use.
Physical OTPs still have a large number of users, especially among the elderly and self-employed individuals who engage in many financial transactions. Banks procure these products through annual bidding to supply to customers. However, with the decline of manufacturers, there are difficulties in supplying physical OTPs. Currently, it is reported that 4 to 5 small manufacturers are producing physical OTPs.
Banks are also encouraging customers who use OTPs from the closed companies to adopt alternative authentication methods such as mobile OTPs or smart certificates.
A representative from a major bank said, "In the case of self-employed individuals, many still believe that they need to use physical OTPs to transfer large amounts of money, and the elderly have a reluctance toward mobile OTPs," adding, "Due to malfunctions, loss, and battery life expiration, many customers are visiting branches, leading to the maintenance of stock exceeding 10,000 units."