What type of password is specifically designed for one-time use in banking?

The type of password specifically designed for one-time use in banking is known as a one-time password (OTP). OTPs enhance security by generating a unique password that is valid for only a single transaction or session. This means that even if someone intercepts the OTP, it cannot be reused, making it an effective defense against unauthorized access. OTPs are commonly delivered via SMS, email, or through an authenticator app, adding an additional layer of verification beyond the traditional static or dynamic passwords. In banking, this helps protect users' accounts during online transactions, ensuring that only the legitimate user can complete the action.

Static passwords remain the same until changed, dynamic passwords change with each login attempt based on certain rules but are not inherently designed for single use. Multi-factor authentication codes involve a combination of factors (like a password and a hardware token), but they do not offer the unique, single-use characteristic that defines OTPs.