Passkeys for E-commerce: A Game Changer Part 1
Passkeys for E-commerce: A Game Changer Part 1
In today’s digital landscape, the frustration of password management for users has become a universal experience. Whether you’re trying to read an online magazine or make a purchase, being prompted for a password you can’t remember is a common pain point that affects both users and businesses.
The Problem with Passwords
Password technology is 50+ years-old, and we still rely on it today, creating real business challenges:
- Revenue Impact: Users avoid creating new accounts when prompted for passwords, with 25% abandoning account creation entirely. On mobile devices, the problem is even worse, with 20% more guest checkouts compared to desktop.
- Security Vulnerabilities: Passwords remain the number one source of breaches due to phishing, man-in-the-middle attacks, and server-side credential stealing, all of which damage brand reputation.
- Operational Costs: Up to 80% of users recover their accounts annually, creating unnecessary support costs and user frustration.
The experience passwords deliver is frustrating for end users and provides little security when protecting data, applications, and services. Layering on two-factor authentication or multi-factor authentication has only complicated the experience, and hackers are finding ways around them. But what is the alternative?
Enter Passkeys: The Passwordless Solution
Passkeys represent a revolutionary approach to authentication that solves these problems by leveraging cryptography, biometrics, and native device support. As a FIDO-based standard endorsed by major tech companies and regulatory bodies, passkeys are becoming mainstream, with 75% of consumers already aware of them (a 75% increase since 2022).
Key Benefits for E-commerce
- Improved User Experience
- 10-20% increase in account creation success
- 2-17x faster sign-in times
- 6x better sign-in success rates
- 65-99% reduction in account recovery needs
- Enhanced Security
- Phishing-resistant authentication
- Protection against server-side credential theft
- No shared biometric data (GDPR-friendly)
- Cross-Platform Consistency
- Create one passkey and use it across web and mobile apps
- Works seamlessly across multiple devices (smartphones, tablets, laptops)
- Syncs through platform providers like Apple, Google, and Microsoft
Implementation Strategy
Phase 1: Planning and Early Adoption
The journey to passkey authentication in e-commerce begins with thoughtful planning and an early adoption phase. Here, organizations must clearly define the use cases where passkeys will deliver the most value, such as streamlining checkout or securing account management, and identify the target user groups most likely to benefit from a passwordless experience. Establishing key performance indicators (KPIs) is essential to measure success, whether it’s reduced login friction, increased conversion rates, or improved security metrics. During this phase, it’s critical to allow users to opt into passkeys rather than mandating the change, ensuring a smooth transition and minimizing resistance. By closely monitoring adoption rates and gathering user feedback, organizations can iterate on the experience, address pain points, and build trust in this new authentication paradigm.
Phase 2: Incentivizing Adoption
Once the foundation is set, the next phase focuses on accelerating adoption by actively incentivizing users. E-commerce organizations can offer tangible rewards, such as loyalty points or exclusive discounts, for customers who create and use passkeys, turning security into a value-added proposition. Proactive prompts and clear messaging should encourage users to set up passkeys, highlighting the benefits of speed, convenience, and enhanced protection against phishing. For new users, the onboarding process can be made passwordless from the outset, eliminating legacy friction and setting a new standard for account creation. This phase is about making passkeys not just available, but desirable, leveraging both behavioral nudges and direct incentives to drive widespread uptake.
Phase 3: Password Deprecation
With strong adoption in place, organizations can move toward the final phase: password deprecation. At this stage, passkeys become the default—and eventually the required—authentication method for all new users, ensuring that the next generation of customers never needs to create or remember a password. For existing users, a gradual migration strategy is key: targeted communications, in-app prompts, and support resources can help guide them through the transition. High-security features, such as account recovery or payment management, can be made passkey-only to further reduce risk and reinforce the new standard. By phasing out passwords, e-commerce organizations not only enhance security but also deliver a seamless, modern user experience that sets them apart in a competitive market.
In the next blog, we’ll continue this discussion by covering important implementation considerations, some best practices based on our experiences, and finally, how to get started on this journey.