---
url: 'https://www.corbado.com/faq/enterprises-passkeys-payment-authentication'
title: 'Why do enterprises use passkeys for payment authentication?'
description: 'Enterprises use passkeys for payment authentication to enhance security, prevent fraud, and comply with PSD2’s Strong Customer Authentication (SCA) requirements.'
lang: 'en'
---

# Why do enterprises use passkeys for payment authentication?

## Why Are Enterprises Using 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.

## Key Reasons Enterprises Are Using Passkeys for Payments

### 1. Passkeys Meet PSD2’s Strong Customer Authentication (SCA) Requirements

- **PSD2 mandates multi-factor authentication (MFA)** for online
  [payments](https://www.corbado.com/passkeys-for-payment).
- Passkeys fulfill **SCA requirements** by combining:
    - **Something You Have** – a device with a secure key.
    - **Something You Are** –
      [biometric authentication](https://www.corbado.com/blog/passkeys-biometric-authentication) (Face ID, Touch
      ID, [Windows Hello](https://www.corbado.com/glossary/windows-hello)).
- **Unlike SMS OTPs, passkeys provide phishing-resistant, hardware-backed
  authentication**.

### 2. Strong Protection Against Payment Fraud

- **Passwords and OTPs are vulnerable** to [phishing](https://www.corbado.com/glossary/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**.

### 3. Enhanced User Experience and Faster Checkouts

- 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.

### 4. Dynamic Linking for Secure Payment Authorization

- **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](https://www.corbado.com/passkeys-for-payment) amounts or
      recipients.

### 5. Lower Costs Compared to SMS-Based Authentication

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

### 6. Seamless Cross-Device and Multi-Platform Usage

- 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**.

## Which Enterprises Benefit the Most from Passkeys?

### 1. Financial Institutions and Banks

- [PSD2](https://www.corbado.com/blog/psd2-passkeys) and **Strong Customer Authentication (SCA) regulations**
  require secure authentication.
- Banks **use passkeys for login and transaction approvals**, reducing fraud risk.

### 2. E-commerce and Payment Providers

- **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**.

### 3. Large-Scale Consumer Platforms

- Subscription services, [marketplaces](https://www.corbado.com/passkeys-for-e-commerce), and
  [travel](https://www.corbado.com/passkeys-for-travel) platforms benefit from **seamless authentication**.
- **Passkeys enhance security without disrupting the customer experience**.

## Conclusion

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**.

## Read the full article