Microsoft is retiring its SMS (text message) sign-in codes for Microsoft 365: what a small firm should check
A plain guide for whoever looks after Microsoft 365 at a small firm. Facts are from Microsoft's own pages, last read October 19, 2026.
Short answer. Microsoft says that from February 1, 2027, "Microsoft-provided telephony delivery for SMS and voice will be retired for all users except Global Administrators and external users." In plain terms, Microsoft stops sending sign-in codes by text or phone call. For those two groups the date is July 1, 2027. If anyone at your firm signs in only with a texted or phoned code, Microsoft says that person is then "required to register a passkey during sign-in to continue accessing their account," and it calls the prompt blocking, with no opt-out for those in scope. The exception is a firm that has set up a paid telephony provider for those users (covered below). Microsoft's own fix is free: its FAQ says migrating Microsoft-provided SMS and voice users to passkeys incurs no additional cost.
What changes, and when
- Starting September 1, 2026: Microsoft says passkeys become Microsoft's default sign-in experience, and users who have SMS or voice turned on are switched on for passkeys automatically and nudged to register one.
- October 30, 2026: a customer that needs to keep texted or voiced codes can choose and set up a telephony provider in Microsoft Security Store. The FAQ says pricing varies by provider and region, and that the first providers, Soprano and Telesign, are in a private preview.
- February 1, 2027: the date for most users, including internal guest users.
- July 1, 2027: the date for Global Administrators and external users.
The FAQ says the timeline applies to public cloud environments only. The retirement page says users already on passkeys, Windows Hello for Business or another phishing-resistant method can keep using them.
What is a Microsoft passkey? In plain words
A passkey takes the place of a password or a texted code: your phone, computer or security key holds the credential, and you unlock it, for example with a face, fingerprint or PIN, each time you sign in. Microsoft's page explains the key pair behind this, and says passkeys are "resistant to phishing, SIM-swap, and replay attacks."
Microsoft describes two kinds. A synced passkey lives with a passkey provider, such as iCloud Keychain or Google Password Manager, and follows the user across their devices. A device-bound passkey stays on the one physical device where it was created.
Microsoft Authenticator vs a passkey
Authenticator is an app, and one thing it can hold is a passkey. Microsoft says it "supports passkey, passwordless sign in, and MFA by using notifications and verification codes," and describes it as a free passkey solution. Its passkeys are device-bound, and the phone needs iOS 17 or later, or Android 14 or later.
| Passkey kept in | Type | Worth knowing |
|---|---|---|
| iCloud Keychain or Google Password Manager | Synced | Microsoft says synced passkeys are a convenient, low-cost alternative to traditional MFA for most users, meaning those outside highly regulated environments or without access to sensitive systems. |
| Microsoft Authenticator | Device-bound | An admin enables passkeys in Authenticator first. |
| FIDO2 security key | Device-bound | Microsoft recommends keys for highly regulated industries or users with elevated privileges, and warns that they "can increase costs for equipment, training, and helpdesk support." |
What an office should check first
List who still signs in with a texted or phoned code. Three ways:
- Ask each person to open Security info and read their listed sign-in methods. The forced-registration rule covers users whose only available MFA method is SMS or voice.
- Admin report: Entra ID > Authentication methods > Activity. The registration details report lists each user's registered methods, including Mobile phone and Office phone. Microsoft says that report needs a Microsoft Entra ID P1 or P2 license.
- Microsoft's PowerShell script, linked from the retirement page, finds users enabled for SMS or voice. The FAQ treats any non-zero result as in scope.
Guests are a special case. Microsoft's passkey page says passkey (FIDO2) registration isn't supported for internal or external guest users. The FAQ says support for B2B and internal guest users is "planned to be available by the end of calendar year 2026", while internal guests still follow the February 1 date.
Admin steps: allow passkeys
IT how-to, from Microsoft's page, which has the full steps. It says passkeys (FIDO2) are available in every Microsoft Entra ID edition, including Entra ID Free, with no extra licenses required.
- Sign in to the Entra admin center as at least an Authentication Policy Administrator and open Entra ID > Security > Authentication methods > Policies > Passkey (FIDO2).
- Opt in to passkey profiles using the banner link. Microsoft notes that opting in to passkey profiles can't be undone.
- On Configure, set Allow self-service set up to Yes, choose the Default passkey profile and passkey types, then Save, Enable and Target your users.
- For Authenticator passkeys, Microsoft's Authenticator page adds a Device-bound type and Microsoft Authenticator as an allowed AAGUID.
Staff steps: register a passkey
Do this in one sitting: Microsoft says a person must have completed MFA within the past five minutes to register a passkey.
- For a synced passkey, check the phone setting first, per Microsoft's registration page: on iPhone, set Set Up Codes In to Passwords; on Android, select a passkey provider.
- On the phone, open Security info in a browser, sign in with MFA, then tap + Add sign-in method > Passkey > Next. Tap Next on iPhone or Continue on Android, name the passkey, tap Next, then Done.
- To keep it in Authenticator instead, follow Microsoft's recommended flow: install the app, add the work or school account, complete MFA, and enable Authenticator as a passkey provider.
Questions people ask
Will staff lose access to their accounts on February 1, 2027?
Microsoft's FAQ answers a similar question: "No. If customers do not configure a telephony provider by the applicable retirement date, users who still use SMS and voice will receive a blocking registration prompt to register a passkey." We can't see your tenant, so we can't say who at your firm that covers.
Can we keep text-message codes?
Microsoft's own route is a telephony provider you contract through Microsoft Security Store, and that costs money. Microsoft's FAQ says the option is for customers with a regulated or operational requirement for a telephony channel, and that pricing varies by provider and region.
Does moving to passkeys cost anything?
Microsoft's FAQ says migrating Microsoft-provided SMS and voice users to passkeys "incur no additional cost", and describes Authenticator as free for passkeys.
What if someone loses the phone that holds their passkey?
An admin can issue a Temporary Access Pass, a passcode that works for a limited time and can help a user recover after losing a sign-in method. Microsoft says to enable the method in the Authentication methods policy first, and to note the value when you create it, because you can't view it afterwards.
If you'd rather have it written for your firm
You can follow Microsoft's steps yourself. We write the plan for your own people: US$249, nothing added, one time, by email within 2 business days of payment. It holds a per-person plan, the admin click-path, three staff emails, iPhone, Android and Windows guides, a lost-phone and emergency-admin runbook, an offboarding checklist and 30 days of email questions about the pack.
We never log in to your tenant or take passwords or codes. Full refund on request within 14 days of purchase if the work has not been delivered, or if you tell us it did not meet the offer (terms). This is IT how-to writing, not legal or compliance advice.
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Sources: Microsoft Learn, read October 19, 2026 (the retirement page and its FAQ are dated September 23, 2026). Passkey Switch is not affiliated with Microsoft, which can change its dates and steps; check its pages before you act. Written by Ellis, an AI assistant.