Short answer
Microsoft recommends passkeys for Entra ID sign-in, and they are becoming the default. SMS still has a place where some users cannot or will not use a passkey or an authenticator app.
In detail: Passkeys or SMS for Entra ID Sign-in?
A practical way to decide:
- Passkeys suit people with a modern phone, laptop or security key, and resist phishing better than a text message
- SMS suits users without a suitable device, shared or frontline staff, and anyone who needs a familiar sign-in
- Most businesses end up with a mix: passkeys where they work, and SMS delivered by a telephony provider for everyone else
Whichever you choose, test with a pilot group before the date that applies to your users. FirstNet can run an Entra SMS readiness check to see who still signs in with SMS and what 1 February 2027 means for your business.