Joey Greenwald
June 12, 2024

The ROI of Passkeys and Passwordless Authentication Technology

In our last post, we wrote about why businesses should think twice about building their own passkey solution. Namely, it can be a major headache for developers, end-users, and the digital leaders who commission the projects. 

In this post, we’ll cover the return on investment (ROI) of licensing a passkey solution with passwordless authentication like OwnID. 

The tl;dr of passwordless authentication technology is this: Brands can expect to increase customer logins, increase new account creation, increase checkout conversion, and reduce customer service costs. 

For anyone who cares about defining success in our increasingly digital world, these are undeniably positive developments. But when it comes to truly measuring ROI — and understanding it — simply saying “increased,” “improved,” or “better” isn’t enough. 

So, we built an ROI calculator based on real metrics and the impact our clients have experienced after implementing OwnID authentication technology. Let’s break it down.

Increasing conversions (and sales) 

The user experience benefits of passwordless authentication is fairly self-evident. Filling out form fields (and remembering usernames and passwords) is cumbersome. By comparison, biometric authentication — the same fingerprint or facial recognition tech people use dozens of times a day to access their phones — reduces friction to sign-up, sign-in, and purchase. 

In particular, our clients have seen these three user metrics improve: 

  • Account creation: On average, our retail clients experience a 10% increase in accounts created for new customers. This is especially important considering the impending end of third-party cookies and brands’ priority of capturing more first-party data.
  • Total logins: Our retail clients typically see 30% more logins from website traffic after they implement passkeys. And logged in customers are much more likely to purchase than anonymous traffic. Especially when you factor in loyalty programs and web personalization.
  • Checkout conversions: With increased accounts and logins, our clients increase the size of their purchase funnels. And on top of that, they also see an additional 1% boost to checkout conversion rates — largely because payment information is stored and can be unlocked with the same biometric authentication. 

Put simply, less friction leads to improved conversions. And improved conversions ultimately drive increases in purchases and revenue. More on that in a moment. 

Reducing operational costs

One of the overlooked aspects of passkeys and biometric authentication experiences is the positive benefit on customer service. Lost or forgotten passwords often lead the list of most common call center contacts — and therefore, they are among the top operational expenses. 

Our customers have typically seen a 50% reduction in costs from account access-related support inquiries. 

More savings we don’t count: Security risks minimized

One financial benefit we don’t include in our typical ROI exercise is the reduction of security expenses. Services that rely on usernames and passwords have more exposure to security breaches, which can be costly for both IT teams and customer support organizations. 

It’s difficult to put a dollar value on the ROI of security safeguards. One breach will be costly. However, many variables determine the cost of a breach — including the long-term negative impact on the brand. Implementing passkeys and reducing reliance on passwords will make your user data systems incrementally safer – which is positive, even if we can’t put a dollar value on it.  

Talking dollars: The ROI of passwordless authentication

Now, let’s see how some of those percentages from above turn into actual dollars. Here’s an example ROI calculation including monthly metrics blended from a few of our retail clients.

To start, let’s say a hypothetical retail website sees 10 million unique web visitors each month, 450K unique logins per month, 50k new accounts created per month, and 350K successful checkouts per month. 

When we apply ROI calculations based on historical OwnID average impact, this amounts to $355,500 in additional revenue per month at scale. 

And when it comes to operational costs, assuming an average customer service cost of $17 to help 2,000 users who forgot/lost passwords, OwnID can save an additional $17,000 a month by reducing the number of customer service tickets in half.

This brings us to a total monthly ROI of $372,500.

Now in this scenario, the monthly ROI of passkeys (and passwordless authentication) assumes that 100% of account owners will adopt biometric authentication from Day One, which isn’t realistic. 

On average, our clients see 25% adoption in the first month – so about one-quarter of the monthly ROI could be realized 30 days after rollout. Adoption largely depends on a combination of factors, from how our clients decide to roll out our solution to different checkout processes, sites, and regions to how users are incented to enable biometrics.  

By the end of the first year, we usually see at least 50% of users adopt — which, in this example, would yield nearly $200,000 in monthly ROI, or over $2M in Y1. 

For our larger customers, ROI can even be much higher, upwards of $20M+ in Y1.

Want to talk passkey ROI?

One reason I wanted to write this post is because not enough people think about ROI when it comes to authentication technology. Many consider authentication just a one-size-fits-all piece of technology that’s required as “plumbing”. But the more we learn about friction, the more we understand how many customers — and how much revenue — we lose with traditional password-based authentication. 

In other words, not all authentication is the same. And, accordingly, not all authentication comes with the same cost and return on investment. If you want to understand more about how passkeys and biometric authentication can boost your business, reach out to us. 

Whether you want to build or license passkey technology, we can help you understand these costs — and the ROI you can expect. Because we’re always happy to talk ROI. 

Joey Greenwald is a seasoned GTM professional with over 15 years of experience in B2B SaaS and enterprise technology. He is VP of marketing at OwnID, helping enterprise eCommerce companies and Fortune 500s deploy next-generation customer identity and digital Commerce technology solutions.