Latin America May Offer Roadmap for Passkeys to Replace Passwords

The passwordless future has long been promised, but has long been just over the horizon — remaining more an aspiration than a reality.

Passwords, after all, are sticky. We’ve used them for decades, augmented by security questions drawing upon moms’ maiden names, the color of our cars, the first concert we ever attended. Then there’s the one-time passcode, meant to verify that it’s you holding a device before interacting and transacting with a bank and/or a merchant.

Yet the fraudsters have worked overtime to co-opt those details and lines of defense, buying passwords on the dark web, leveraging SIM swaps and other scams to exploit loopholes that come with static or knowledge-based authentication and access to a broad range of everyday financial activities.

The Passkeys

The passkey exists as a passwordless login — a digital credential that is tied to an individual, allowing them to move seamlessly into and across websites, banking apps and online accounts. The passkeys themselves use biometrics (face IDs or fingerprints) or PINs to let users sign into their devices to complete authentication.

As has been reported by PYMNTS, FIDO (Fast Identity Online) Alliance’s standards have helped, as a consortium, to foster open, scalable and interoperable authentication standards. Tech giants such as Google, Microsoft and Apple have been introducing their own passkeys that are designed to work across various platforms.

Beyond the actual technological developments, there must be a receptive market for passkeys to take root. Generally speaking, the readiness is there. PYMNTS Intelligence has noted in past research conducted in collaboration with Entersekt that nearly half of consumers surveyed are unsatisfied with their bank’s security protocols — and that two-thirds of consumers surveyed were using passwords to access the accounts and services they wanted to use. Slightly more than half of the individuals queried for the report had also been familiar with or used biometrics, which in turn sets the stage for the use of passkeys.

Latin America Stands Out

A confluence of factors may make passkeys a widely embraced authentication method in countries and regions where digital banking and commerce are prevalent, where mobile devices are ubiquitous, and “connected economies” are firmly entrenched.

Latin America checks all of those boxes. In the PYMNTS Intelligence report from earlier this year, “How the World Does Digital,” Brazil offers a microcosm of those trends. The country is the most connected of economies, with 361 overall “activity days” in the digital realm, compared to the regional average of 281. Mobile banking is used by more than 63% of the population at least weekly.

In a separate report, PYMNTS Intelligence found that most countries in Latin America were seeing double-digit declines in the use of cash to transact.

Earlier this month, Mastercard partnered with Sympla, an events platform in Brazil, and Yuno, a global payments orchestrator based in Latin America, to bring its Payment Passkey Service to the region. The two partner firms are the first among a larger rollout by the payments network that will begin in 2025. Mastercard’s own data, per the company’s release last week, noted that in Latin America, 85% of respondents prefer using biometric authentication over traditional passwords for online transactions.

In terms of the joint efforts, Mastercard’s tokenization technology replaces the primary account number (PAN) with a token, to ensure that no card data is shared with third parties. Shoppers can choose their Mastercard card when checking out with Click to Pay, or select a card already stored on file with a merchant.