Why do enterprises use passkeys for payment authentication?

Enterprises are rapidly adopting passkeys for payment authentication due to their superior security, compliance with PSD2, and frictionless user experience. Traditional authentication methods, such as passwords and SMS-based OTPs, are prone to phishing, credential theft, and fraud, making them unsuitable for securing financial transactions.

• PSD2 mandates multi-factor authentication (MFA) for online payments.
• Passkeys fulfill SCA requirements by combining:
  • Something You Have – a device with a secure key.
  • Something You Are – biometric authentication (Face ID, Touch ID, Windows Hello).
• Unlike SMS OTPs, passkeys provide phishing-resistant, hardware-backed authentication.

• Passwords and OTPs are vulnerable to phishing and man-in-the-middle (MITM) attacks.
• Passkeys eliminate password-based fraud by:
  • Using public-key cryptography – private keys never leave the user’s device.
  • Being resistant to credential stuffing and replay attacks.

• Traditional MFA methods (e.g., SMS OTPs) cause friction and increase cart abandonment rates.
• Passkeys streamline payment authentication, allowing users to verify transactions instantly with biometrics.
• Enterprises see higher conversion rates due to reduced friction at checkout.

• PSD2 requires dynamic linking, ensuring each transaction is cryptographically tied to its details.
• Passkeys support WebAuthn signatures, which:
  • Bind authentication to specific transaction details.
  • Prevent unauthorized modifications to payment amounts or recipients.

• SMS OTP authentication is expensive and prone to fraud.
• Enterprises save on authentication costs by eliminating SMS-based OTPs in favor of passkeys.

• Passkeys can sync across user devices, enabling frictionless authentication without requiring additional MFA steps.
• Supported by Apple iCloud Keychain, Google Password Manager, and third-party password managers.

• PSD2 and Strong Customer Authentication (SCA) regulations require secure authentication.
• Banks use passkeys for login and transaction approvals, reducing fraud risk.

• Checkout friction leads to lost sales – passkeys improve user experience and increase completed transactions.
• Payment processors integrate passkeys to comply with PSD2 and reduce fraud liability.

• Subscription services, marketplaces, and travel platforms benefit from seamless authentication.
• Passkeys enhance security without disrupting the customer experience.

Enterprises use passkeys for payment authentication because they provide strong security, reduce fraud, and improve user experience while ensuring compliance with PSD2’s Strong Customer Authentication (SCA) requirements. With phishing-resistant authentication, dynamic linking, and seamless biometric verification, passkeys are the future of secure online payments.