Passkeys vs Passwords: What Should Your Business Use?

Zac Tassone

Published 16 October 2026 · Updated 26 October 2026

For business accounts that support them, passkeys are the better choice. They are faster to use than passwords, cannot be guessed or reused, and cannot be typed into a fake login page, which stops most phishing attacks. Most businesses will still need passwords for some systems for a while, so the practical approach is to use passkeys wherever they are available and strong, unique passwords with multi-factor authentication everywhere else.

This guide explains how passkeys work, how they compare with passwords, and how a small business can start moving across without disrupting staff.

Want stronger sign-in security across your team? Our managed IT security services can plan and roll out passkeys and MFA, or start with a free IT Health Check.

What is a passkey?

A passkey is a way to sign in without typing a password. Instead of something you remember, it uses a pair of cryptographic keys. One key is held by the website or service. The other, private key stays on your device, such as your phone or laptop, or on a physical security key.

When you sign in, your device proves it holds the private key, and you confirm it is really you with your fingerprint, face or device PIN. The private key never leaves your device and is never sent to the website.

The Australian Cyber Security Centre explains that a passkey lets you log in without entering a password, and recommends using passkeys where your provider supports them. Its passkeys guidance also suggests disabling password login on an account once a passkey is set up, where possible.

Passkeys vs passwords: how they compare

Security

Passwords can be guessed, reused, stolen in data breaches and handed over on fake login pages. Passkeys avoid all of these problems:

• Nothing to guess. There is no password for attackers to brute force or spray across accounts.
• Nothing to reuse. Each passkey is unique to one service.
• Nothing useful to steal from the website. The service only stores a public key, which is useless to an attacker on its own.
• Built-in phishing protection. A passkey is tied to the real website address, so it simply will not work on a lookalike phishing site.

Ease of use

Passkeys are usually quicker than passwords. Staff confirm with a fingerprint, face scan or PIN instead of typing a long password and then waiting for an MFA code. Fewer forgotten passwords also means fewer reset requests.

Multi-factor by design

A passkey combines something you have (your device) with something you are or know (your biometric or PIN). That means a passkey on its own already provides strong multi-factor authentication.

Where passwords still win

Passwords work everywhere, on any device, with no setup. Passkeys are not yet supported by every system, especially older business software, some supplier portals and shared accounts. Recovery also needs planning: if a staff member loses their only device, they need a secure way back in.

Why this matters for small businesses

Many attacks on small businesses start with a stolen login. Attackers send phishing emails that lead to fake Microsoft 365 sign-in pages, reuse passwords leaked from other websites, or try common passwords across every account in the business. Our articles on unexpected ways hackers get into accounts and password spraying explain these techniques.

Standard MFA, such as SMS codes or approve/deny prompts, has made attacks harder, but criminals now use tools that relay codes in real time or bombard users with prompts until they approve one. Phishing-resistant methods such as passkeys and FIDO2 security keys stop these attacks because there is nothing to relay or trick someone into approving.

Where you can use passkeys today

• Microsoft 365 work accounts: Microsoft Entra ID supports passkeys stored in the Microsoft Authenticator app and on FIDO2 security keys, as well as Windows Hello for Business on company PCs.
• Google Workspace and personal Google accounts
• Apple devices, with passkeys synced through iCloud Keychain
• Password managers, many of which can now store and sync passkeys across devices
• A growing number of banks, accounting platforms and online services

Support is expanding quickly, so it is worth checking the security settings of the systems your business relies on most.

A practical plan for moving to passkeys

1. Secure your most important accounts first

Start with Microsoft 365 or Google Workspace, because your email account is the key to resetting almost everything else. Then move to banking, accounting software and administrator accounts.

2. Use phishing-resistant MFA for administrators

Accounts with admin rights should use passkeys or hardware security keys as a priority. The ACSC recommends considering a FIDO2 security key for your most important accounts, with a backup key kept somewhere safe.

3. Decide where passkeys are stored

For business accounts, store passkeys on company-managed devices or in an approved business password manager. Avoid syncing work passkeys to shared or personal devices you do not control.

4. Plan account recovery

Write down how staff regain access if they lose or replace a phone. In Microsoft 365, this usually means an administrator issues a temporary access pass so the person can register a new passkey.

5. Keep strong passwords and MFA where passkeys are not available

For systems that still need passwords, use long, unique passphrases stored in a password manager, and turn on MFA. Our complete guide to strong passwords and authentication and small business guide to MFA cover the details.

6. Train staff in a few minutes

Most people find passkeys easier once they have used them once. A short demonstration and a one-page guide is usually enough.

How passkeys fit with the Essential Eight

Multi-factor authentication is one of the eight core controls in the ASD Essential Eight, and higher maturity levels call for phishing-resistant MFA. Passkeys and FIDO2 security keys are among the simplest ways for a small business to meet that requirement.

Frequently asked questions

Are passkeys safer than passwords with MFA?

Generally, yes. Passwords with SMS codes or push prompts can still be phished in real time. Passkeys are tied to the genuine website and cannot be used on a fake one, which makes them resistant to phishing.

What happens if I lose my phone with my passkeys on it?

If your passkeys are synced through a password manager or your device platform, you can restore them on a new device. For work accounts, your IT administrator can verify your identity and help you register a new passkey.

Can we get rid of passwords completely?

Not yet for most businesses. Some systems still require passwords. The realistic goal is passkeys for your most important accounts and strong, unique passwords with MFA for everything else.