Microsoft SMTP AUTH Changes: What It Means for Your Business and How to Prepare

Microsoft has confirmed a significant change to how Microsoft 365 handles email authentication, and it has the potential to disrupt automated email workflows across thousands of businesses. If your organisation uses Microsoft 365 and relies on software applications, printers, or legacy integrations to send email, this update is relevant to you.

This guide explains what is changing, when, and most importantly, what your business needs to do before the deadline when Microsoft Auth 2.0 is rolled out.

What Is SMTP AUTH Basic Authentication?

When an application or device needs to send an email through Microsoft 365, it must authenticate with Microsoft’s mail servers. The traditional method of doing this is called Basic Authentication: the application connects using a fixed username and password associated with a Microsoft 365 mailbox.

This approach is known technically as SMTP AUTH (Simple Mail Transfer Protocol Authentication), and it has been the standard method used by a wide range of systems for many years, including:

  • Manufacturing and ERP software sending automated notifications
  • Multifunction printers and copiers using scan-to-email
  • Legacy line-of-business applications integrated with a Microsoft 365 mailbox
  • Automated reporting or alerting tools

Basic Authentication is straightforward to configure, which is why it remains widely used. However, it presents a meaningful security risk: if the stored credentials are compromised, an attacker can use them repeatedly until the password is changed. This makes password-based SMTP credentials a common target for credential theft and brute-force attacks.

What Is Microsoft Changing and Why?

Microsoft has been moving away from Basic Authentication across its entire platform for several years, and SMTP AUTH is the latest component to be affected.

The reasoning is clear: password-based authentication is inherently vulnerable. Modern authentication methods such as OAuth 2.0 use short-lived access tokens rather than stored passwords, significantly reducing the risk of credential compromise.

Microsoft’s updated timeline for the deprecation of SMTP AUTH Basic Authentication is as follows:

Date
Event Taking Place
Now – December 2026
SMTP AUTH Basic Authentication continues to function as normal for existing tenants.
End of December 2026
Basic Authentication for SMTP AUTH will be disabled by default for all existing Microsoft 365 tenants. Administrators can re-enable it if needed, but it will no longer be on by default.
New tenants created after December 2026
Basic Authentication for SMTP AUTH will be unavailable entirely, OAuth 2.0 will be the only supported authentication method.
Second half of 2027
Microsoft will announce the final and permanent removal date for SMTP AUTH Basic Authentication across all tenants.

It is worth noting that “disabled by default” is where unplanned disruption tends to occur. Systems that are working today may fail silently after a routine security review, an administrator tidying tenant settings, or a Microsoft policy update, even before the formal permanent removal in 2027.

How to Check Whether Your Business is Affected

Before deciding on a course of action, it is important to determine whether your systems currently use Basic Authentication for SMTP. The most reliable way to do this is through the Microsoft Exchange Admin Centre.

Steps to check your current SMTP AUTH usage:

  1. Sign in to the Exchange Admin Centre
  2. Navigate to: Reports → Mail Flow → SMTP AUTH Clients Submission Report
  3. Review which users, applications, or devices are submitting mail and which authentication method they use. 

If the report shows Basic authentication for any entry, those workflows will be affected by the December 2026 change and will require remediation. If the report shows OAuth, those workflows are already on the modern authentication path, and no immediate action is needed.

It is also advisable to check whether Microsoft 365 Security Defaults are enabled in your tenant. Security Defaults can automatically block Basic Authentication at the tenant level, meaning some systems may already be affected or could be affected sooner than expected if Security Defaults are turned on.

Your Options for Migration

Once you have identified which systems are using Basic Authentication, there are several paths available to ensure continued email functionality. The right option will depend on your existing infrastructure, the devices and applications involved, and your organisation’s IT capabilities.

 

Option 1: Migrate to OAUTH 2.0 Modern Authentication 

OAuth 2.0 is Microsoft’s preferred long-term solution. Rather than storing a permanent username and password, OAuth 2.0 uses short-lived access tokens that must be regularly refreshed. This approach is significantly more secure and aligns with modern cybersecurity standards.

If your applications and devices support OAuth 2.0, this is the recommended path. However, there are practical considerations:

  • OAuth must typically be configured on each device or application individually
  • Firmware updates may be required on multifunction printers before OAuth 2.0 becomes available as an option
  • Not all older devices support OAuth 2.0, and some manufacturers have not yet released compatible firmware

If you are using a multifunction printer, it is worth checking directly with your device manufacturer or IT provider to confirm whether your model and current firmware version support OAuth 2.0 for SMTP email.

 

Option 2: Microsoft 365 Connector-Based Sending (SMPTP Relay)

For organisations with devices or applications that cannot support OAuth 2.0, configuring a Microsoft 365 connector-based relay is a practical alternative. Rather than authenticating with credentials, this method uses IP-based restrictions and TLS encryption to allow mail to be sent through Microsoft 365.

This approach is compatible with a broader range of hardware and legacy software, making it a common choice for businesses with older multifunction printers or applications that cannot be easily updated.

It does require careful configuration to ensure security and deliverability, and is best implemented with the support of your IT team.

 

Option 3: Microsoft High Volume (HVE)

Microsoft’s High Volume Email service, released in 2024, is designed for scenarios involving large volumes of automated or system-generated email. Notably, HVE is expected to continue supporting Basic Authentication until September 2028, providing additional runway for businesses that need more time to migrate.

HVE is best suited to environments where the majority of automated email traffic is sent to internal recipients. If your use case involves high volumes of email to external recipients, a dedicated email delivery platform may be more appropriate.

 

Option 4: Document Management and Workflow Software

For businesses where scan-to-email is used primarily as a document routing mechanism, for example, scanning invoices, delivery notes, or HR paperwork, it may be worth considering whether a document management solution would better serve your needs.

Modern document management platforms can handle secure capture, automated routing, naming conventions, and delivery to the correct system, without dependence on per-device SMTP configuration. This approach can also improve traceability and auditability, which is of particular value in manufacturing and production environments.

 

Option 5: On-Premises Exchange Hybrid Routing

For organisations already running an on-premises Exchange server in a hybrid configuration with Microsoft 365, it may be possible to route automated SMTP traffic through the on-premises Exchange environment rather than directly through Microsoft 365. This effectively transfers authentication and relay responsibility to the internal Exchange server.

This is most practical where hybrid Exchange is already part of your infrastructure. It is not generally recommended as a long-term standalone solution for organisations that are otherwise fully cloud-based, as it introduces ongoing operational overheads.

What This Means For CIM Software Customers

Before deciding on a course of action, it is important to determine whether your systems currently use Basic Authentication for SMTP. The most reliable way to do this is through the Microsoft Exchange Admin Centre.

Steps to check your current SMTP AUTH usage:

  1. Sign in to the Exchange Admin Centre
  2. Navigate to: Reports → Mail Flow → SMTP AUTH Clients Submission Report
  3. Review which users, applications, or devices are submitting mail and which authentication method they use. 

If the report shows Basic authentication for any entry, those workflows will be affected by the December 2026 change and will require remediation. If the report shows OAuth, those workflows are already on the modern authentication path, and no immediate action is needed.

It is also advisable to check whether Microsoft 365 Security Defaults are enabled in your tenant. Security Defaults can automatically block Basic Authentication at the tenant level, meaning some systems may already be affected or could be affected sooner than expected if Security Defaults are turned on.

We recommend taking the following steps:

  1. Check the Exchange Admin Centre to confirm whether your current email configuration uses Basic Authentication
  2. Speak with your IT team or IT support provider to plan your preferred migration path before the December 2026 deadline
  3. Contact the CIM Software support team if you have questions about how your specific system configuration interacts with Microsoft 365 email, or if you need assistance reviewing your current setup

Act now rather than waiting until closer to the deadline! This will give your IT team sufficient time to test and implement changes without disruption to your day-to-day operations.

Key Dates to Remember

Milestone
Date
Current setting continue
Now – December 2026
Basic AUTH disabled by default in existing tenants
End of December 2026
Basic AUTH unavailable for new tenants
From January 2027
Permanent removal to be announced
Second half 2027

Need Help?

If you are unsure whether your CIM Software system is affected or would like guidance on reviewing your Microsoft 365 email configuration, our IT team is happy to assist. Please use the form below and select IT Services this will ensure the right team receives your request.

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