Passkey Authentication in Payment Systems: A Practical Guide for 2026
- David Pop
- Oct 10
- 14 min read
Passkeys in payments are a new form of authentication that replace passwords and SMS codes with secure, device-based verification. They use biometric identifiers (like a fingerprint or face scan) or a local PIN to confirm the user’s identity during online payments.
Unlike traditional logins, passkeys never share biometric data outside the device — instead, they rely on encrypted cryptographic keys managed by the user’s hardware. This makes the process faster, more convenient, and resistant to phishing or credential theft.
Built on FIDO2 standards, payment passkeys integrate smoothly with existing payment systems to enable passwordless, biometric payment authorization across e-commerce platforms. Major card networks such as Mastercard and Visa are already rolling out passkey-based authentication, allowing users to confirm payments with a simple face or fingerprint scan.
Passkeys can be implemented at different levels — by issuers, merchants, payment service providers, or card networks — helping reduce fraud, simplify compliance, and cut costs associated with traditional authentication methods.
What Are Passkeys and How Do They Work?
Passkeys are a modern, passwordless authentication method that replaces traditional passwords and codes with secure, device-based verification. They are built on public-key cryptography, making them highly resistant to phishing and credential theft.
When a user registers with a service, their device creates two cryptographic keys:
Public Key: Stored on the server and linked to the user’s account.
Private Key: Stored securely on the user’s device and never leaves it.
During login, the server sends a one-time challenge to the device. The device signs this challenge using the private key, and the server verifies it with the public key. This process confirms the user’s identity without transmitting or exposing sensitive data.
Passkeys are typically verified using biometrics (like Face ID or a fingerprint) or a device PIN, providing both strong security and convenience. They sync securely across trusted ecosystems—such as Apple’s iCloud or Google accounts—allowing seamless sign-ins on authorized devices.
Based on FIDO2 and WebAuthn standards, passkeys ensure each credential is unique to a specific user and domain, preventing reuse or phishing attacks. By eliminating passwords entirely, they simplify authentication while significantly improving security.
Public Key vs. Private Key in Passkeys
In passkey authentication, the public key and private key work together to provide secure, passwordless, and phishing-resistant login:
Private Key:
Stored securely only on the user’s device and never leaves it.
Used to sign authentication challenges sent by the server, proving the user’s identity.
Access typically requires biometric verification (Face ID, fingerprint) or a device PIN.
Remains private, ensuring sensitive data is never transmitted.
Public Key:
Stored on the server and linked to the user’s account.
Used to verify the signature created by the private key.
Can be safely shared because it cannot be used to authenticate by itself.
How They Work Together: The private key signs challenges to prove identity, while the public key on the server verifies those signatures. This combination ensures strong security, eliminates the need for passwords, and protects against phishing attacks.
How the private key is stored and protected on devices
Private keys in passkey systems are stored and protected on devices using multiple secure methods, ensuring they remain confidential, tamper-proof, and inaccessible to attackers.
Device-Specific Secure Storage
Secure Enclaves (Apple Devices): On iPhones, iPads, and Macs, private keys are stored inside a Secure Enclave, a dedicated hardware component isolated from the operating system. Keys are generated within the enclave and never leave it, making them inaccessible even if the device is compromised. Apple also stores biometric data like Face ID or Touch ID here for additional protection.
Trusted Execution Environment (Android Devices): On Android, private keys reside in a Trusted Execution Environment (TEE) built into the device chip. TEEs isolate sensitive data from the main OS and apps, preventing unauthorized access.
Hardware Security Modules (HSMs) and Tamper-Resistant Storage
Advanced devices or enterprise-grade systems may use HSMs or FIPS-certified modules for private key storage. These hardware solutions resist physical attacks, including side-channel attacks, adding another layer of protection.
Encrypted Local Storage
When hardware protection is impractical, private keys are stored locally on the device in an encrypted filesystem. Keys never leave the device, ensuring they are not transmitted over the network.
Biometric and PIN-Based Access
Access to the private key requires user verification through biometrics (fingerprint or face recognition) or a device PIN. Authentication happens entirely within the secure environment, and the private key is used to sign challenges without ever leaving the device.
End-to-End Encryption for Communication
During authentication, only the cryptographic proof or signed challenge is transmitted to the server. The private key itself is never sent over the network, protecting against interception or man-in-the-middle attacks.
Backup and Cross-Device Sync
Passkeys can be securely synced across devices using end-to-end encrypted cloud services:
Apple iCloud Keychain: Keys are encrypted and only accessible on devices linked to your Apple ID.
Google/Android Cloud: Keys are similarly encrypted, ensuring only authorized devices can decrypt them.
Multi-Factor Authentication Integration
Devices can combine biometrics with PINs or other verification methods to unlock the private key, enhancing security. Some systems may also require confirmation from another device or channel.
How the Public Key Is Stored and Protected on Servers
In passkey authentication, the public key is stored on the server and associated with the user’s account. Unlike private keys, public keys are not secret and cannot be used to impersonate a user, but they still require proper protection to maintain integrity and prevent misuse.
Basic Storage
The public key is uploaded to the server during account registration and stored in the database as part of the user’s account information.
Its primary purpose is to verify cryptographic signatures generated by the private key on the user’s device.
Encryption and Integrity Protection
While the public key does not need secrecy, it can be stored in an encrypted database or filesystem to prevent tampering.
Encryption ensures the public key remains unchanged even if the server is breached.
Secure Transmission
Public keys must be transmitted securely between devices and servers using protocols like TLS/SSL (HTTPS) to prevent interception or modification during transit.
Server-Side Security Measures
Access Control: Only authorized systems or personnel can access public keys.
Database Security: Public keys are stored in secure databases with strict read/write permissions and may use field-level or full-database encryption.
Logging & Monitoring: Authentication events are logged to detect unusual behavior, while rate limiting and anomaly detection prevent brute-force or suspicious access attempts.
Authentication Process
During login or transaction authentication, the server uses the public key to verify the signature created by the private key.
Each request involves a unique challenge or nonce to prevent replay attacks, ensuring that intercepted signatures cannot be reused.
Key Management
Public Key Rotation: Public keys can be rotated periodically alongside their private keys to enhance security.
Key Revocation: If a device or private key is compromised, the server can revoke the public key and require the user to re-register a new key pair.
Private vs Public Key Storage and Protection
Aspect | Private Key (Device) | Public Key (Server) |
Storage Location | On user devices (phones, tablets, computers) | On the server associated with user account |
Secrecy | Highly secret, never leaves the device | Not secret, can be safely stored and shared |
Secure Storage Methods | Secure Enclave (Apple), Trusted Execution Environment (Android), Hardware Security Modules (HSMs), Encrypted local storage | Encrypted databases or filesystem, standard server security measures |
Access Control | Requires biometrics (Face ID, fingerprint) or device PIN; MFA can be added | Server-side access control; only authorized systems/users can access |
Transmission | Never transmitted; only signed challenge/proof is sent to server | Transmitted securely via TLS/HTTPS for verification |
Tamper Protection | Protected by hardware isolation, encryption, and secure environments | Protected via encryption, database integrity checks, monitoring |
Authentication Role | Signs authentication challenges to prove identity | Verifies signatures generated by the private key |
Backup/Sync | End-to-end encrypted cloud sync (iCloud, Google) across authorized devices | Optional key rotation and revocation for account management |
Protection Against Attacks | Resistant to malware, physical attacks, side-channel attacks | Resistant to tampering, replay attacks; logs and monitoring prevent misuse |
How passkeys and biometrics work together?
Passkeys and biometrics work hand-in-hand to provide secure, passwordless authentication. Biometrics—like fingerprints or facial recognition—verify a user’s identity locally on the device, while passkeys use cryptographic public-private key pairs to authenticate with the server. This combination ensures strong security, phishing resistance, and a seamless user experience.
Key relationship: Biometrics unlock the private key on your device; the server never sees biometric data.
1. Registration / Setup
The device generates a public-private key pair.
The private key stays securely on the device (in a Secure Enclave, TEE, or equivalent), while the public key is sent to and stored on the server.
During setup, the device requires a local verification (biometric or PIN) to bind the private key to the user.
Biometric data never leaves the device.
2. Authentication / Login
The server sends a random challenge to the device.
The device requires local biometric (or PIN) verification to unlock the private key.
The private key signs the challenge locally.
The signed challenge is sent back to the server, which verifies it using the public key.
The server only sees the signed challenge, not the biometric data.
Key Points and nuances: Passkeys and Biometrics
Biometrics and passkeys create a secure, seamless authentication system by keeping sensitive data on the device, confirming user identity locally, and using cryptography for server verification—eliminating the need for passwords and reducing fraud risks.
Aspect | Explanation |
Role of Biometrics | Used locally on the device to verify the user (fingerprint, face scan). Unlocks the private key for authentication. |
Server Visibility | Biometric data never leaves the device. The server only sees the signed cryptographic challenge. |
Optionality | Biometrics are convenient but optional. Other methods like PIN or device passcode can be used to unlock the private key. |
Authentication Method | Authentication is performed via the private key signing a challenge; biometrics do not authenticate directly to the server. |
User Verification vs Presence | Presence: simple device interaction (touch) to confirm user is there. Verification: stronger check using biometrics or PIN. |
Fallbacks | If biometric fails, PIN or device passcode can unlock the private key. |
Cross-Device Syncing | Private keys can sync across devices via encrypted cloud storage (iCloud, Google). Each device uses its own local verification to unlock the key. |
Security Benefits | Ensures phishing resistance, prevents password leaks, keeps sensitive data on-device, reduces fraud risk. |
Passkey Adoption by Companies
Company / Service | Passkey Implementation / Timeline | Key Notes & Metrics |
Aflac | Partnered with Transmit Security for passkey authentication | Enrolled 500,000+ customers; 32% reduction in password recovery requests |
KDDI (Japan) | FIDO-based passkeys for mobile users | 13.6 million users; significant reduction in support calls |
LY Corporation (Yahoo! JAPAN ID) | Passkey support for smartphone logins | 28 million active passkey users; ~50% of smartphone authentications use passkeys |
Mercari (Japan) | Passkey adoption across e-commerce platform | 9 million users; zero phishing incidents since Mar 2023 |
Microsoft | Rolled out passkeys starting in 2024 | Nearly 1 million new registrations daily; improved login speed & success |
NTT DOCOMO (Japan) | Passkeys for d ACCOUNT users | >50% authentications use passkeys; drop in successful phishing attempts |
Samsung Electronics | Passkeys via Samsung Pass / Wallet on Galaxy devices | Integrates biometrics with FIDO protocols; secure device storage |
VicRoads (Australia) | Mobile passkey deployment | 80% activation rate shortly after launch |
Zoho Corporation | Passkey rollout to workforce and users | 100+ million users; reduced password reset queries |
Passkeys for Google Accounts; Advanced Protection Program; sync via Password Manager | 800+ million accounts using passkeys globally; cross-device syncing | |
Amazon | Website and iOS app passkey support; Android coming | 175 million users in first year; passwordless sign-in |
PayPal | Passkeys on Apple & Android; web / Chrome support | Expanded to Asia-Pacific markets (Singapore, India); phased rollout |
Mastercard | Payment Passkey Service for online payments | Supports face/fingerprint/PIN; pilots in India; integrated with Click to Pay |
Visa | Visa Payment Passkey for online payment authorization | Launched in Ukraine 2025; supports biometric and Click to Pay |
Facebook / Meta | Passkeys on iOS & Android; Messenger and Meta Pay integration | Announced mid-2025 |
X (formerly Twitter) | Passkey login on iOS April 2024; Android later | Global rollout for mobile apps |
1Password, Dashlane, Shopify, Yahoo! JAPAN, eBay, Uber, WhatsApp | Started or expanded passkey support | Reported by Google in public security updates |
Sony (PlayStation) | Passkey adoption for global gaming accounts | Faster sign-in times; enhanced security |
Hyatt, IBM, Target, TikTok | Workforce authentication with passkeys | Added as optional login method |
Nikkei, Tokyu Corporation, Nulab (Japan) | Growing adoption for corporate & consumer logins | Dramatic improvement in passkey usage; Nikkei deployment early 2025 |
Passkeys in the payment process
Passkeys streamline payments by combining device-based authentication with cryptographic security, creating a faster, safer, and more compliant checkout experience:
Card issuers can use passkeys to authorize transactions within 3D Secure flows, letting customers unlock their device via biometrics (face/fingerprint) or local PIN.
Merchants, digital wallets, and Payment Service Providers (PSPs) can authenticate transactions using passkeys for faster, smoother payment processing.
Improved User Experience: Checkouts are quicker and easier than entering SMS or email codes.
Enhanced Security: Passkeys provide cryptographic proof of authentication, reducing fraud and phishing risks.
Regulatory Compliance: Using FIDO-based passkeys supports strong customer authentication (SCA) and builds overall security resilience.
Using a VISA credit or debit card with a passkey
Visa has introduced passkeys to the payments industry, enabling customers to authorize online purchases using biometric authentication on their smartphones or computers. This functionality is powered by the Visa Payment Passkey Service, which is built on Visa’s Fast Identity Online (FIDO) server. By leveraging this service, merchants can integrate passkey-based payment authorization into their checkout systems without the need to set up their own authentication servers, simplifying implementation.
From the user’s perspective, a private key is securely stored on their device, while a public key resides on Visa’s FIDO server. During checkout, customers can use the same biometric methods they rely on to unlock their devices—such as Face ID or fingerprint scanning—to approve Visa payments online.
Enrollment is a one-time process, binding the payment credential to the device, after which users can make secure, passwordless payments with any participating merchant that supports the Visa Payment Passkey Service. This approach improves user experience, enhances security, and provides a globally interoperable solution for online transactions.
Benefits of Visa Payment Passkeys
Visa Payment Passkeys deliver clear advantages for merchants, cardholders, and issuers by combining convenience, security, and efficiency.
For Merchants:
Merchants benefit from lower fraud-related chargebacks and higher purchase conversion rates, as passkeys provide smooth, passwordless authentication flows. By eliminating the need for OTPs, SMS codes, or passwords, the checkout experience becomes faster and more seamless, helping reduce cart abandonment and increase customer satisfaction.
For Cardholders:
Consumers enjoy a simpler, consistent experience across all devices. They can register their card once on a device and securely use it at any participating merchant that supports Visa Payment Passkeys. Biometric authentication, such as Face ID or fingerprint, provides a faster, more convenient checkout with fewer manual inputs.
For Issuers:
Issuers gain improved security and liability protection since transactions are fully verified. Passkeys can help reduce fraud while maintaining compliance and consistency across digital channels.
Key Metrics:
Biometric authentication can reduce fraud rates by 50% compared to SMS one-time passcodes (OTPs).
100% of major OS providers and 90% of web browsers natively support FIDO® authentication.
Over 4 billion consumer devices globally support FIDO® authentication.
Overall, Visa Payment Passkeys create a secure, convenient, and scalable solution for digital payments, enhancing both user experience and business performance.
Using a Mastercard credit or debit card with a passkey
Mastercard has integrated passkeys into its Token Authentication Service (TAS), enabling secure, frictionless payment experiences using device-based biometrics.
Shoppers can authorize transactions using fingerprints, facial recognition, or other biometric methods on their devices. The passkey securely unlocks the payment process by confirming the user’s identity locally, without sharing personal data. This eliminates the need for traditional passwords or one-time codes (OTPs).
The TAS is tightly integrated with Mastercard’s tokenization infrastructure, replacing actual card details with unique tokens. Combined with biometric passkeys, this ensures a strong second layer of security, protecting sensitive card information and reducing fraud risk.
If a customer has already linked a Mastercard Payment Passkey to their card, they can authenticate securely and easily at any participating merchant. At checkout, they select their Mastercard and verify their identity using biometrics or device PIN, unlocking the passkey stored on their device.
The transaction completes seamlessly without passwords or OTPs. The same passkey can be used across multiple merchants, while new devices may require identity verification and creation of a device-specific passkey.
Business Impact of Passkeys in Payments
Passkeys are transforming the payments landscape by combining robust security with a seamless user experience. The table below highlights the key business benefits for issuers, merchants, and networks, along with their measurable impact on fraud reduction, checkout efficiency, customer satisfaction, and brand trust.
Business Value | Description | Business Impact |
Fraud Reduction & Security | Passkeys use public–private key cryptography, making them resistant to phishing, credential stuffing, and account takeover. | Lower fraud losses, fewer chargebacks, reduced reimbursement costs, stronger trust in the network. |
Frictionless User Experience | Biometric and passwordless authentication enables faster, seamless checkout across devices. | Higher conversion rates, reduced cart abandonment, improved customer satisfaction and loyalty. |
Operational Cost Savings | Eliminates password reset support and SMS OTP delivery; reduces fraud-related handling. | Improved margins for issuers and networks. |
Ecosystem Interoperability | Standardized FIDO-based authentication. | Consistent global adoption, simpler merchant integration, wider acceptance of passkey-enabled payments. |
Brand Differentiation & Trust | Modern, secure, and user-friendly authentication strengthens consumer confidence. | Competitive advantage, stronger merchant partnerships, long-term brand equity. |
Cart Abandonment Reduction | Simplified checkout ensures a smooth user experience. | Faster transactions, increased return visits, higher revenue. |
How Passkeys Reduced Checkout Abandonment in 2025
Password friction remains a major driver of cart abandonment. A FIDO Alliance survey found that 42% of consumers had abandoned a purchase at least once in the past month because they couldn’t remember their password. This issue is particularly pronounced among younger shoppers, with 50% of those aged 25–34 citing forgotten passwords as a reason for leaving a checkout.
Passkeys and other passwordless authentication methods address this pain point by replacing passwords with device-stored cryptographic keys, often unlocked via biometrics or a PIN. The results are clear: passkey-authenticated transactions saw a 70% reduction in account takeover (ATO) rates, improved login success rates by over 10%, and faster, smoother checkout experiences.
Real-world data from PayPal in January 2025 highlights the impact of this shift:
15–25% reduction in cart abandonment
20–35% faster checkout completion times
40–60% fewer authentication-related support tickets
For an enterprise generating $50 million in annual e-commerce revenue, a 20% reduction in abandonment could translate to $3–4 million in recovered sales. Eliminating the friction of forgotten passwords not only enhances security but also delivers a smoother journey that directly drives conversion and customer satisfaction.
Conclusion
The Future of Payment Authentication Is Passwordless. With Visa, Mastercard, and PayPal already deploying passkey-based authentication, 2026 will mark a tipping point in global adoption.
For issuers and merchants, the business case is clear: lower fraud, faster checkout, and measurable revenue uplift.
For end-users, the experience feels natural—just a touch, glance, or PIN away from completing a transaction.
Working with technology partners experienced in FIDO2, biometrics, and payments infrastructure integration (such as Crafting Software) can help you move from experimentation to full-scale deployment efficiently, securely, and globally.
FAQ: Adopting Passkeys in Payment Systems
1. How can my company start implementing passkeys for payments?
Begin by integrating FIDO2 and WebAuthn protocols into your authentication flow. For payments, this often means connecting to network services like Visa Payment Passkey or Mastercard TAS. A technical vendor such as Crafting Software can help you design, build, and deploy passkey authentication aligned with your existing 3D Secure or checkout stack.
2. Do we need to replace our entire authentication system to support passkeys?
No. Passkeys can be introduced incrementally. They work alongside existing methods like passwords or OTPs, allowing for hybrid login or step-up authentication during transition periods.
3. Are passkeys compliant with PSD2 and Strong Customer Authentication (SCA)?
Yes. Passkeys fulfill the SCA requirements for “something you are” (biometric) and “something you have” (the device), meeting EU and UK regulatory standards for online transactions.
4. What’s the average time and complexity to deploy passkey authentication?
Initial pilots can be integrated in as little as 6–10 weeks, depending on your infrastructure. Full rollout across customer and merchant ecosystems may take 3–6 months. Working with experienced payment integration partners can shorten implementation time significantly.
5. How does a passkey system handle multi-device or cross-platform users?
Passkeys sync across devices using end-to-end encrypted cloud services (e.g., Apple iCloud Keychain, Google Password Manager). Each device enforces local biometric or PIN verification, ensuring security even across ecosystems.
6. Can passkeys reduce fraud and chargebacks in real terms?
Absolutely. Passkey-authenticated transactions are phishing-resistant and cryptographically verified, reducing fraud-related losses by up to 50% compared to SMS OTPs and minimizing chargeback risk for merchants.
7. What technical resources or partners are required for implementation?
You’ll need developers experienced in FIDO2, WebAuthn, and tokenization integration with card networks. Partnering with a software vendor specializing in payment and authentication architecture (like Crafting Software) ensures compliance, scalability, and smooth integration with your existing systems.
8. How does this improve customer experience and conversion rates?
Passkeys remove friction at checkout—no more forgotten passwords or waiting for OTPs. This typically translates to 15–25% fewer cart abandonments, faster checkout, and higher customer satisfaction, especially for returning users.
9. How does functional programming improve security and scalability in passkey systems?
Functional programming, used in languages like Elixir, enforces immutability and stateless design—critical for authentication systems. It ensures that every request (e.g., key generation, signature validation, token exchange) is isolated, predictable, and free of side effects. This model drastically reduces concurrency errors and makes horizontal scaling of FIDO/WebAuthn services simpler and safer.
In distributed payment environments, functional principles help guarantee idempotent operations (e.g., replays of authentication events don’t cause duplicate authorizations).
10. Can you implement passkey verification in Erlang/Elixir?
Yes. Elixir (built on the Erlang BEAM VM) is ideal for concurrent, fault-tolerant authentication systems.
Example: Verifying a passkey signature in Elixir (simplified WebAuthn flow)
This example shows how a passkey is verified using the stored public key on a FIDO2 server, ensuring secure, phishing-resistant authentication in real time.
