How Passwordless Authentication Works: A Complete Guide

According to Verizon's 2023 Data Breach Investigations Report, over 80% of data breaches are caused by weak or compromised passwords. This risk is even greater in industries like banking and fintech, which are frequent targets of cyberattacks.

That's where passwordless authentication comes in. Several studies have proved that businesses using passwordless solutions can significantly reduce authentication-related breaches while also enhancing user experience. If you want to learn more about passwordless authentication and how it works, you're in the right place. By the end of this article, you will understand how passwordless authentication works and why it is the best solution for protecting your business's digital assets.

What is Passwordless Authentication?Passwordless authentication is a security method that allows users to access their online accounts and other digital assets without using traditional passwords. With passwordless authentication, users validate their identity through other methods such as using their fingerprints, facial recognition, and security keys. Passwordless authentication is considered more secure because it eliminates most of the knowledge-based risks associated with traditional passwords.

How Does Passwordless Authentication Work?

The three authentication factors are:

Knowledge factors: "Something you know," such as passwords or PINs.
Possession factors: "Something you have," like physical tokens and smartphones.
Inherence factors: "Something you are," which relies on biometric data, such as fingerprints, facial recognition, or voice patterns.

Passwordless authentication leverages possession and inherence factors to verify a user's identity without requiring them to recall or input a password.

However, it doesn’t mean that knowledge factors can’t be used. Most organizations will still use a password or PIN as the first authentication factor, but then use a second, passwordless factor as an added security layer. This is known as multi-factor authentication (MFA).

Benefits of Passwordless Authentication

Some of the benefits for the adoption of passwordless authentication solutions include:

Enhanced Security: Passwordless authentication significantly reduces the risk of phishing attacks since there are no passwords for attackers to steal. This method also mitigates the threat of password stuffing, where attackers attempt to use stolen passwords across multiple sites.
User Experience: One of the key advantages of passwordless authentication is the speed and convenience it offers. Users can log in quickly, often with a simple biometric scan or a one-time code, without the need to remember or enter passwords. This streamlined process reduces friction, leading to a more satisfying user experience.
Cost-Effectiveness: Passwordless solutions can lower the costs associated with password management, such as help desk support for password resets and expenses related to password-related security breaches. The improved security after adopting passwordless authentication solutions also minimizes the financial impact of fraud and data breaches.
Compliance: Passwordless authentication helps businesses align with regulatory requirements related to data protection and security. Regulations like GDPR and PCI-DSS often mandate robust security measures, and passwordless methods can meet or exceed these requirements.

Challenges of Passwordless Authentication

Adoption Barriers: Integrating passwordless authentication into existing systems, especially legacy ones, can be technically challenging and resource-intensive. It also requires educating users familiar with traditional passwords to ensure a smooth transition.
Security Concerns: Biometric methods, though secure, can be vulnerable to spoofing attacks, where attackers might use photos or replicas. If devices used for authentication are lost or stolen, they can pose security risks, making protection and recovery plans crucial.
Scalability: As businesses grow, passwordless systems must handle increasing user numbers and authentication requests without slowing down. The costs of implementing and maintaining these solutions can also rise with scale.

Types of Passwordless Authentication

Passwordless authentication can be implemented in various ways depending on the hardware options available to the target users. Let’s explore some of the popular types of passwordless authentication, along with their pros and cons.

Possession Factors

Possession factors are authentication methods that rely on something the user physically has. Common examples include:

Security Tokens: These are small hardware devices that generate a one-time code or use cryptographic methods to authenticate the user. When logging in, the user presents the token, which is checked against the server’s records.

Smart Cards: These are credit card-sized devices embedded with a chip that stores authentication information. With this method, users insert the card into a reader or use it with an NFC-enabled device to gain access to any given asset.
One-Time Passwords: OTPs are unique, short-lived codes sent to a user's phone or email, typically used for one-time access. The user enters the OTP to verify their identity, and it expires after a single use, enhancing security.
Mobile Apps: Apps like Google Authenticator or Microsoft Authenticator generate time-based one-time passwords (TOTP) or provide push notifications for authentication. With these methods, you simply enter your email or username, and the rest of the login process is completed by following the instructions provided in the authentication app.

Pros and Cons

Pros

Ease of Use: Often straightforward for users who simply need to present the token or use their mobile app.
Enhanced Security: Eliminates the risk of phishing attacks as there is no password to steal.
Wide Adoption: OTPs are widely supported across various platforms and services, making them a versatile option that can be easily integrated into existing systems.

Cons

Risk of Loss or Theft: Physical tokens or smart cards can be lost or stolen, potentially compromising security.
High Costs at Scale: The cost of sending SMS-based OTPs are significant, and managing physical device such as smart cards is increasingly costly.
Lower Security Compared to Biometrics: OTPs are susceptible to interception, phishing, and other attacks. Since they rely on external channels like SMS or email, they don’t offer the same level of security as biometric authentication methods, which are harder to replicate or steal.

Biometric Authentication

Biometric authentication uses unique physical characteristics of the user to verify identity. Common forms include fingerprint, face, and iris recognition. These methods leverage the uniqueness of individuals to provide a high level of security. Let’s explore how each of these methods works.

Fingerprints: The user's fingerprint is scanned using a device like a smartphone or dedicated fingerprint scanning device and compared to a stored template. Most of the Android, Windows, and iOS devices on the market today have fingerprint sensors, which makes this authentication method incredibly accessible.
Facial Recognition: With this method, a camera is used to capture the user's facial features and match them against a stored digital image. Advanced systems use 3D mapping using other sensors like the infrared dot projector in addition to the camera to enhance accuracy. iPhones and iPad Pros are among the popular devices that support facial recognition.
Iris Recognition: Iris recognition involves analyzing the Iris using an iris scanner for distinct patterns, which are compared to a stored iris profile stored by the system. Devices like Apple’s Vision Pro use this method for authentication.

Pros and Cons

Pros

High Security: Difficult for unauthorized users to replicate physical traits, providing robust security.
Convenience: Users don’t need to remember passwords or carry additional devices. Facial and Iris recognition is even more convenient since the user literally has to look at their device without doing anything else for them to get authenticated.

Cons

Privacy Concerns: Storing biometric data raises privacy issues and potential misuse. Using more private and secure passwordless authentication solutions like Keyless’ Zero-Knowledge Biometrics can help with this.
Operational Limitations: Biometric authentication systems may have limitations based on user conditions. For example, fingerprint scanners might not work if fingers are wet or covered by gloves, and some facial recognition systems require good lighting to function correctly.
Data Breach Risks: If biometric data is stolen or compromised by attackers, it cannot be changed like a password, posing a significant long-term security risk.

Final thoughts

As discussed throughout this article, traditional passwords are becoming increasingly vulnerable to modern cyber threats. For this reason, passwordless authentication solutions have emerged as a powerful solution. Passwordless authentication eliminates the reliance on easily compromised passwords, providing enhanced security, improved user experience, and reduced costs for businesses. But just like another new technology, passwordless authentication solutions present challenges like adoption barriers and potential user privacy risks. However, their overall benefits significantly outweigh the drawbacks.