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Adopt passkeys over passwords to improve UX, drive revenue
Password use leads to higher UX friction and lost sales because customers want a smoother sign-in experience. Passkeys can simplify authentication and improve UX.
The digital economy continues to rely on password-based authentication, but password weaknesses -- and human nature -- make them horrible for security. Password use also impacts businesses' bottom lines because every year, forgotten passwords and password resets result in millions of dollars of lost sales and wasted IT staff hours.
It's a "password tax" on businesses and consumers that no one can seem to get past.
As the digital economy has grown, so has the value associated with passwords. As a result, phishing and credential theft continue to run rampant, with stolen credentials sold openly on the dark web.
To protect people, organizations add more friction and worsen UX. They ask users to create long and complex passwords, change passwords every few months and use MFA. This results in lost sales, reduced company productivity and added costs.
A secure alternative to the password has emerged: passkeys. This option can strengthen organizations' security posture because passkeys have the potential to generate billions in revenue and cost savings for businesses.
Customers expect a simple authentication experience
Fundamentally, companies are interested in growth, and consumers expect a personalized digital experience to stay loyal. For companies, that means knowing who the customer is to reduce friction and deliver a personalized experience so customers engage and transact.
For example, travel companies must know who the customer is to offer curated deals and packages. Commerce sites must make it easy for customers to pay so they are likely to buy from them. This all depends upon building a direct relationship with customers by knowing the person -- their name, interests, payment details, history, shipping information and location.
For consumer service providers, this relationship is centered around the consumer's online account. When customers are signed in, transactions become smoother and increase in frequency. It's easier to offer personalized recommendations and promotions and increase engagement and cart size, among other benefits, to customers who are logged in.
This is the "sign-in economy." What companies might have thought of as a simple sign-in screen is the entry point for consumers to access these better experiences. And, unfortunately, the collective dependence on the flawed password is holding companies back from truly realizing better customer experiences and the higher revenues that come with them.
An October 2024 FIDO Alliance report found that 42% of customers have abandoned a purchase at least once in the past month because they could not remember their password. This could have potentially been avoided by implementing passkeys over passwords.
What's a passkey?
Passkeys are based on open authentication standards whereby cryptographic key pairs replace passwords. Passkeys are a rare win-win innovation in that they make signing into websites and applications both phishing-resistant and easier than signing in with passwords and other methods, such as texted or emailed codes. With passkeys, users approve their sign-ins the same way they unlock their devices, via local biometrics, PINs, patterns, etc.
Passkeys can also provide substantial business benefits. Organizations that have adopted passkeys for authentication have reported increased revenues because passkeys provide faster sign-in rates, more successful sign-ins and reduced cart abandonment, and also reduced direct and indirect costs associated with legacy forms of MFA.
For example, Air New Zealand reduced call center handling time and all but eliminated credential-stuffing attacks targeting its users. Its business now measures revenue gained from passkeys. Credential manager Dashlane's 2024 "Passkey Report" found a 70% increase in conversion rate for signing in with a passkey versus a password.
Using passkeys over passwords to improve sales
Imagine if customers never needed a password and logging in happened quickly and securely. What if users were able to pass the gates of e-commerce, digital media and rideshare apps with an E-ZPass? That's passkeys.
According to the FIDO Alliance, passkeys are now supported by 20% of the world's top 100 websites, including Amazon, Uber and GitHub. In the past year, major websites, such as WhatsApp, Roblox, Target, PlayStation, X (formerly Twitter), Discord and LinkedIn have all added support. Amazon announced that more than 175 million of its customers already use passkeys while Google has authenticated users via passkeys more than 1 billion times across over 400 million Google Accounts.
More sign-ins mean more transactions and less churn. It's no surprise that e-commerce sites have seen the greatest share of passkey usage, making up four out of 10 passkey authentications, according to Dashlane's Passkey Report.
It's only a matter of time until every consumer is using at least one passkey. The question now is how quickly businesses can help users get there and realize the benefits of this new technology, both for the security of accounts and the potential it has to unlock untapped revenue and cost savings for every organization looking to thrive in this sign-in economy.
Andrew Shikiar is the CEO and executive director of FIDO Alliance, a global consortium committed to creating and driving adoption of open standards for stronger user authentication. With over 20 years in the identity industry, Shikiar also advises firms like Liminal and 1414 Ventures. He previously led market development for Tizen Association and the Liberty Alliance, and held executive roles at Sun Microsystems and RadicalMail. Most recently, he was promoted from the chief marketing officer role to lead the FIDO Alliance as CEO. Prior to this, he served as vice president of marketing and business development for BigML. Shikiar is a frequent industry speaker and media resource.
Dhiraj Kumar is the chief marketing officer at Dashlane. A senior marketing executive, board director and growth expert, Kumar has built a track record in scaling multibillion-dollar businesses and building best-in-class marketing functions at high-growth companies such as PayPal and Meta. With multidisciplinary expertise in organizational and profit and loss management, media, e-commerce and cybersecurity, Kumar has driven transformative change in rapidly evolving digital enterprises. He is also a thought leader who routinely speaks about innovation, brand transformation and leadership.
