What’s the Big Deal with Point-to-Point Encryption?

EMV, P2PE—What’s the difference and why should merchants implement Point-to-Point Encryption (P2PE) in their transaction environment that is PCI compliant?

EMV chip technology (named after Europay, MasterCard, and VISA—the pioneers in chip technology implementation) only protects against counterfeit card use but does nothing to safeguard vulnerable cardholder data from being captured in transit by hackers to use for online fraud and identity theft.

To combat hackers, the best weapon is to implement P2PE across the entire transaction lifecycle. P2PE expands the level of security by adhering to strict standards regulated by PCI. These include:

  • Using PCI Data Security Standard (PCI DSS)-validated payment devices
  • Loading devices with software applications and encryption keys in limited-access environments
  • Encrypting card data at the point of interaction (POI) (i.e. when the card is swiped or inserted)
  • Transmitting that data securely over the network where it is later decrypted and passed for authorization

These standards ensure a strict chain of custody before, during, and after possession by the merchant. By mitigating these data breach risk points, merchants can improve data security and make business operations more efficient.

For more information on how P2PE benefits both the merchant and your sales opportunities with the merchant, download our P2PE white paper today.

 

End to End Encryption and Tokenization

E2EE and Tokenization are often positioned as an either/or solution, but this is not the case. Each technology has its place in payment security. This article defines both solutions and their significant characteristics.

E2EE ensures the security of sensitive cardholder information from the moment the card is swiped all the way to when it is processed by a gateway or processor and passed on to a bank for authorization.

This technology ensures that at the point of card acceptance, i.e. within the Magnetic Stripe Reader (MSR) itself, the card data is securely encrypted at the Point of Sale (POS). MSR’s use Triple DES Encryption and DUKPT key management technology to encrypt and transmit cardholder data securely over the network. Once within a Secure PCI DSS certified payment network, it is de-crypted and passed for authorization.

Historically, encryption has been the standard for securing data and is used in virtually every transaction for many different reasons. In using E2EE for credit card data security, Primary Account Number (PAN) data is converted into a complex algorithm which cannot be easily understood. A decryption key is required to translate the data back into a readable format. E2EE addresses a major insider threat. For many companies encryption is not centrally managed. It is a feature that is easily added to applications, built into operating systems, databases, POS devices and so on.

The Payment Card Industry Security Standards Council (PCI SSC) has mandated E2EE technology for processors, software providers and merchants. An example of true end-to-end encryption is the distribution of a secret key under a Key Exchange Key (KEK) process between two hardware security modules (HSMs). The KEK process is a common practice in many other industries including government, telecommunications and banking, in applications where end-to-end security must be ensured. Using this technique, the secret key is never seen in the clear outside of the two endpoints. The first HSM (the origin) encrypts the secret key using the Key Exchange Key then the encrypted key can be securely sent to the second HSM (the destination) where it is decrypted.

However, there are drawbacks to this technology:

  • Anyone who obtains the decryption key can easily access the sensitive and valuable credit card data.
  • Hackers who obtain a series of encrypted data that was generated using the same algorithm can mathematically reverse it to de-code the data.
  • Using E2EE, card data may have to pass through multiple systems internally on the way to the acquiring bank or processor. The result is the dreaded “encrypt, decrypt, re-encrypt” scenario, which opens up holes to unauthorized insiders.

One important question is: Will end-to-end encryption eliminate the chance that stolen cardholder data can be used successfully for fraudulent transactions? The answer, unfortunately, is no. There is an old saying in the security industry that you cannot secure a grass hut with a steel door. In other words, if you harden the merchant and processor systems with end-to-end encryption, criminals may simply skim magnetic stripe data elsewhere. Imagine hordes of credit card magnetic stripe skimmers in the hands of restaurant employees. Or criminals using false fronts on ATMs in the U.K. to capture magnetic stripe and (Personal Identification Number)PINs, and then sending cloned magnetic stripe data to the U.S. for fraudulent attacks.

Tokenization

Tokenization replaces sensitive card data information with unique id symbols that keep all the essential data without compromising its security. This approach has become popular as a way to increase security of credit card and e-commerce transactions while minimizing the cost and complexity of PCI DSS regulations and standards. Tokenization involves the replacement of the (PAN) and other data by a surrogate number or “token” and then centralizing (or outsourcing) the card data.

There is never a need to decrypt it or to call the real PAN back into the environment as the tokens can be used repeatedly, so hackers have nothing of value to steal.

Drawbacks to using tokenization exclusively:

  • Tokenization does require the use of encryption for transmission of credit card data from the customer to the token vendor.
  • There is no industry standard established for tokenization, although the PCI DSS Security Council has created a special interest group to construct a set of best practices for the technology.

Using Both Tokenization & E2EE

In the early stages of this new technology, large pin pad manufacturers such as (EQUINOX, Ingenico, and VeriFone) partnered with companies which handle E2EE & tokenization or have developed their own solutions. These companies such as TransArmor® (First Data), Element, Voltage, EPX and others have since developed hardware and processor agnostic functionality and interface with most credit card processing companies as long as the credit card data is encrypted at the MSR. VeriFone was one of the first to develop their own, VeriSheild®, which has had success since its inception in 2008.

E2EE and Tokenization and are often positioned as an either/or solution, but this is not the case. Encryption has many uses and will likely never be completely obsolete and tokenization solutions will incorporate some sort of encryption into its process. E2EE and tokenization will best exist together offering the best data protection. Suggesting that one can take the place of the other does not take into account the reality of the large, multi-channel merchants, gateways or service providers.

Conclusion – While each technology has its place in payment security, tokenization is emerging as the primary solution for organizations seeking to mitigate the potential impact of a security breach as well as reduce their overall PCI DSS scope and related costs.

For further information on using E2EE & Tokenization contact POSDATA, Inc. at sales@posdata.com

PCI 1.3 vs. 2.0 vs. 2.1… What Does It All Mean?

By now, I’m sure you’ve all been exposed to the talk about PCI 1.3 terminals, PCI 2.0 terminals, PCI 2.1 terminals and why one is better than the other.  Since this year’s National Retail Federation show this January, the landscape has become a little bit clearer.  For those of you who want to know more about the PCI mandates and what they mean to you and your multilane customers, read on.

There are basically three PCI mandates that terminal manufacturers and merchants have had to concern themselves with.  They are PCI versions 1.0, 2.0 and 3.0.  These mandates lay out physical security requirements that terminal manufacturers have to meet (as tested by independent laboratories) in order to manufacture and sell new terminals. The basic mandates are released every few years as new technologies and methods are developed to fight against physical and communication security breaches.

In the middle of the last decade, terminals began to be manufactured that met the first PCI standards (V1.0 with added further addendums to V1.3).  After 2007, terminals that did not meet these standards could no longer be purchased or installed.  These terminals met new standards and will be certified for sale and installation until 2014.

Towards the end of the decade, PCI 2.0 specifications were released that included added security as well as things like encrypted card readers etc.  These terminals have been certified for sale and installations through the end of 2017.  The V2.0 mandate has had certain documents updated and has changed to V2.1.  For the purpose of security however, V2.0 and V2.1 are identical.  It was also announced that PCI V3.0 mandate specifications would be released in the 2010-2011 timeframe.

So where does that leave everyone?  Let me begin by saying that V1.3 devices (most of the newest PCI terminals in the field today) are safe and certainly contain far more security than those terminals sold previous to 2008. No merchant should fear that they are somehow “stuck” with a V1.3 device that makes them vulnerable to a breach.  Version 1.3 terminals when encrypted with TDES keys should be quite secure. They should, however, be made aware that there is a new generation of terminals being introduced that contain even newer security features that are certified for sale and installation through the end of 2017. While most V1.3 terminals should be produced by manufacturers through their certification period (2014), V2.1 devices will have an additional 3 years of availability. Obviously, when V3.X terminals are introduced (2-3 years from now) they will have yet another extended certification period.

Hypercom and UIC both announced V2.X products in 2009. Hypercom announced an upgraded L4150 product that meets the new V2.X standards and UIC introduced the PP795 that is 2.X compliant. Both had deliverable products in Q4 of 2009. In mid January, VeriFone announced that they would be offering the MX8XX product line in 2.X certified form.  ViVotech announced two terminals (8600 and 8800) that are V2.X certified.

So now, everyone has jumped into the fray with some version of a PCI V2.X product. Some terminals are deliverable today and the rest will be available sometime later in 2010.

The rules remain the same as they have always been. The merchants and acquirers are liable for breaches if they don’t have TDES after July 1, 2010. Fines for non-compliance could be as high as $500,000 for each occurrence. Additionally, compromised terminals such as the VeriFone PP101, 201, 2000, Everest P003-3XXX, Hypercom S7S, S8, Ingenico eNCrypt 2100 and eNCrypt 2400 (also known as the C2000 Protégé) should be removed immediately from service to avoid merchant liability. Only POS PED devices that are PCI 1.3 or higher should be purchased for installation at a merchant’s location.

A higher level of security is always better. Visa Best Practices advise 2.X terminals for installations going forward.

POSDATA can help you when your customers have any questions. We have the latest information on products and the availability of 2.X devices. Call your sales representative for more information.