The small hardware device generates a one-time password every 30 seconds. When users opt to use this, they just enter the six digit code along with other personal information to login to the system. This system is said to hopefully reduce data-phishing scams.
PayPal spokeswoman, Sara Bettencort, stated that "if a fraudulent party somehow got hold of a person's username and password, they still wouldn't be able to get into the account because they don't have the six-digit code." On the other hand she also claimed that this system would not completely annihilate fraud but is "another layer of protection".
This type of system is already being used by large corporations to keep security checks on private corporate resources and banks and brokerages offer this feature to high net worth clients.