Authentication is proving your identity to an information system or online service provider. Two-factor authentication means you have to use two different things to prove your identity. Typically this is something you have, like an ATM card, and something you know, like a PIN code. Adding a second authentication factor significantly increases security. An example of a second factor in an information system or online service is a one-time password (OTP) generator, a small token that creates a unique code for every login. This is much more secure than a regular password because it makes every login unique. Anyone who steals your password, like a hacker or identity thief, cannot use it to gain access to your account because they also need the one-time password.
Even more secure is a certificate, a type of digital identity credential, stored on a smart card. The computer in the smart card interacts with the PC or mobile device and the server; it uses cryptographic techniques to prove your identity and the identity of the Web server, and to encrypt all communications to protect the session.