Two-factor authentication works with two separate security or validation mechanisms. Typically, one is a physical validation token, and one is a logical code or password. Both must be validated before accessing a secured service or product. Generally, an authenticating procedure requires a physical token or identity validation, followed by a logical password or personal identification number (PIN).

The security procedure for an ATM machine is a common example of two-factor authentication, which requires that a user possess a valid ATM card and PIN.