What Are Passkeys, and Should Your Small Business Use Them?

Passwords have long been one of the biggest security risks for any small business.

Employees often reuse passwords across multiple accounts, store them in unsafe places, or accidentally enter them into convincing phishing websites. Cybercriminals know this, which is why stolen passwords remain one of the most common causes of data breaches.

Passkeys are a new technology designed to replace traditional passwords and eliminate many of the risks that small businesses face every day.

A passkey allows employees to sign in using the same fingerprint, facial recognition, or PIN they already use to unlock their devices. With no password to type, there's nothing for cybercriminals to steal, guess, or trick users into revealing.

Let's explore how passkeys work, why they're becoming the preferred login method, and why your small business should consider using them.

What Is a Passkey?

A passkey replaces traditional passwords with device-based security.

Instead of entering a password, users verify their identity using a fingerprint, facial scan, or PIN on their phone, tablet, or computer.

When a passkey is created, two cryptographic keys are generated:

• A private key that stays securely stored on the user's device.
• A public key that is stored by the website or application.

When signing in, the website sends a challenge that only the private key can answer. Once the user verifies their identity with a fingerprint, face scan, or PIN, access is granted.

Because there is no password involved, attackers have nothing to steal or reuse. This technology is built on the FIDO security standard used by Microsoft, Apple, and Google.

Why Passkeys Are More Secure for Small Businesses

For most small businesses, passwords remain one of the weakest points in their cybersecurity strategy. Passkeys solve many of the common problems associated with traditional login methods.

They Can't Be Phished

A passkey only works on the legitimate website it was created for.

If an employee accidentally visits a fake login page, the passkey simply won't work. This makes phishing attacks far less effective and helps protect your small business from credential theft.

There Are No Passwords to Steal

When websites use passkeys, they only store a public key.

Even if a website experiences a data breach, cybercriminals cannot steal passwords because none exist. This significantly reduces the risk to your small business.

No More Weak or Reused Passwords

Employees can no longer create simple passwords or reuse the same password across multiple systems.

Each passkey is automatically unique, helping small businesses improve security without placing extra responsibility on staff.

Where Can Small Businesses Use Passkeys?

Passkey adoption has grown rapidly.

Many major platforms already support passkeys, including:

• Microsoft 365
• Microsoft Entra ID
• Google Workspace
• Apple Accounts
• Password Managers
• Financial Institutions
• Business Applications

Because Microsoft, Google, and Apple have built passkey support directly into their devices and browsers, many small businesses can begin using passkeys with little or no additional investment.

There are two main passkey options:

Synced Passkeys

These passkeys are securely backed up to a user's Apple, Google, or Microsoft account.

If a device is lost or replaced, employees can still access their accounts from another approved device.

Device-Bound Passkeys

These passkeys remain tied to a single device or physical security key.

Many small businesses use device-bound passkeys for highly sensitive accounts, such as administrators, financial managers, and executives.

Should Your Small Business Start Using Passkeys?

For most small businesses, the answer is yes.

The good news is you don't need to replace every password overnight. A gradual rollout often works best.

If your small business uses Microsoft 365, passkeys are already available through Microsoft Entra at no additional cost.

Employees can sign in using:

• Microsoft Authenticator
• Security keys
• Windows devices
• Mobile devices with biometric authentication

Passkeys are also faster than traditional password-based logins. Instead of entering a password and waiting for a verification code, users can sign in with a quick fingerprint or facial scan.

How Small Businesses Can Get Started

1. Start with High-Risk Accounts

Enable passkeys first for:

• Microsoft 365 administrators
• Finance personnel
• Payroll departments
• Business owners
• Anyone with access to critical systems

2. Allow Employees to Adopt Passkeys Gradually

Offer passkeys as an alternative alongside existing login methods while employees become comfortable with the new technology.

3. Create Backup Authentication Methods

Ensure every employee has a backup option, such as:

• A second trusted device
• A hardware security key
• Recovery methods managed by IT

This prevents lockouts if a phone or laptop is lost.

Things Small Businesses Should Consider

While passkeys offer significant security improvements, there are a few considerations.

Account Recovery

If an employee loses their only device and has no backup authentication method available, recovery can be more challenging.

Having backup passkeys or secondary devices is important.

Older Software May Not Support Passkeys Yet

Although adoption is expanding quickly, some legacy applications still require passwords.

Most small businesses will likely use both passwords and passkeys for a period of time.

Shared Accounts Need a Plan

Passkeys are designed for individual users.

If your small business currently relies on shared logins, you may need to rethink access management and move toward individual user accounts.

Why Passkeys Matter for Small Businesses

Cybercriminals frequently target small businesses because they often have fewer security controls than larger organizations.

Passkeys help eliminate many of the most common attack methods by removing passwords completely. They provide stronger security, reduce the risk of phishing attacks, and make sign-ins faster and easier for employees.

As more applications add support for passkeys, they are quickly becoming one of the most effective ways for small businesses to strengthen cybersecurity while simplifying the user experience.

Ready to Improve Security for Your Small Business?

Passkeys are helping small businesses reduce cyber risks while making account access easier for employees. If you're interested in learning how passkeys can work with Microsoft 365 or other business applications, contact us today. We'll help you develop a secure and practical rollout plan that protects your small business now and into the future.