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Attacks/Breaches

2/24/2015
01:00 PM
Sara Peters
Sara Peters
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7 Things You Should Know About Secure Payment Technology

Despite the existence of EMV and Apple Pay, we're a long way from true payment security, especially in the US.
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Apple Pay Really Is Good
"Monopoly Free Parking Ver2," by StockMonkeys.com.

In September, Apple announced details on the iPhone 6 and Apple Watch, including that the new devices will be equipped with Apple Pay -- a contactless mobile payment scheme that tokenizes payments, never communicates credit card data to the merchant, and essentially turns an iPhone into a mini point-of-sale terminal.

[Need a primer on Apple Pay? See "Apple Pay Ups Payment Security But PoS Threats Remain."]

As Apple describes it:

With Apple Pay, instead of using your actual credit and debit card numbers when you add your card, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element, a dedicated chip in iPhone and Apple Watch. These numbers are never stored on Apple servers.

So, the only point of failure is on the card-holder's Apple device, not on an Apple server that could be targeted by attackers. There are certainly benefits to that system, but Apple Pay raises a new question: do you want Apple, not merchants, to be responsible for payment data security?

"While for those who work in fraud and security there is still a bit of a question mark," says Pascual, "the average consumer, they don't care."

In any case, Apple Pay is "worlds more secure than what you're using now," says Pascual. "Regardless of whether or not Apple has the payment security chops, it's better than the pedestrian, old-school" magnetic stripe methods that are currently in use.

Litan agrees: "It's actually very secure," she says, noting that it is not built on a proprietary Apple tokenization protocol, but rather the EMVCo tokenization standard.

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macker490
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macker490,
User Rank: Ninja
2/27/2015 | 9:11:08 AM
Let's get it right
Fixing the Point of Sale Terminal (POST)

THINK: when you use your card: you are NOT authorizing ONE transaction: you are giving the merchant INDEFINITE UNRESTRICTED access to your account.

if the merchant is hacked the card numbers are then sold on the black market. hackers then prepare bogus cards -- with real customer numbers -- and then send "mules" out to purchase high value items -- that can be resold

it's a rough way to scam cash and the "mules" are most likely to get caught -- not the hackers who compromised the merchants' systems .


The POST will need to be re-designed to accept customer "Smart Cards"

The Customer Smart Card will need an on-board processor, -- with PGP

When the customer presents the card it DOES NOT send the customer's card number to the POST.  Instead, the POST will submit an INVOICE to the customer's card.  On customer approval the customer's card will encrypt the invoice together with authorization for payment to the PCI ( Payment Card Industry Card Service Center ) for processing and forward the cipher text to the POST

Neither the POST nor the merchant's computer can read the authorizing message because it is PGP encrypted for the PCI service.  Therefore the merchant's POST must forward the authorizing message cipher text to the PCI service center.

On approval the PCI Service Center will return an approval note to the POST and an EFT from the customer's account to the merchant's account.

The POST will then print the PAID invoice.  The customer picks up the merchandise and the transaction is complete.

The merchant never knows who the customer was: the merchant never has ANY of the customer's PII data.

Cards are NOT updated.  They are DISPOSABLE and are replaced at least once a year -- when the PGP signatures are set to expire.  Note that PGP signatures can also be REVOKED if the card is lost.

Transactions are Serialized using a Transaction Number ( like a check number ) plus date and time of origination.    This to prevent re-use of transactions.   A transaction authorizes one payment only not a cash flow.

EMV is no solution: and EMV card passes the cardholders account number, name, expiration date, et al
to the POST in plain text -- making the same error that the mag stripe reader makes and which
has been heavilly exploited by criminals.

~~~

Sara Peters
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Sara Peters,
User Rank: Author
2/26/2015 | 9:17:47 AM
Re: How Much Clout Does Apple Have?
@Dr. T  "Google will most likely capture big part of the secure payment market in my view." I can see that happening, but I'm not sure when or how. Google Wallet hasn't accomplished much. Maybe as more Android phones add fingerprint scanners, Google will make a bigger play in the secure payment space.
Dr.T
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Dr.T,
User Rank: Ninja
2/25/2015 | 9:04:13 PM
Re: How Much Clout Does Apple Have?
Agree. Apple will always do it in their own ways and generally different from the rest. That is good and bad. We always need interoperability between systems but we also want Apple ways. :--))
Dr.T
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Dr.T,
User Rank: Ninja
2/25/2015 | 8:59:25 PM
Re: How Much Clout Does Apple Have?
Agree. Apple simple says I do not know anything about you, if that is true, then we have the right implementation in Apple Pay, they do not need to know anything about us.
Dr.T
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Dr.T,
User Rank: Ninja
2/25/2015 | 8:56:34 PM
Re: How Much Clout Does Apple Have?
I agree. Google wallet has been around for long time but they failed to engage big banks and other financial institutes. Obviously Apple noticed that and started with right course of actions.
Dr.T
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Dr.T,
User Rank: Ninja
2/25/2015 | 8:53:19 PM
Re: How Much Clout Does Apple Have?
Apple has a good chance with Apple payment where iPhone is being used, Google will most likely capture big part of the secure payment market in my view.
Dr.T
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Dr.T,
User Rank: Ninja
2/25/2015 | 8:51:18 PM
Right direction
We have been hearing a lot on secure payment systems recently, this is a good news, and there are good opportunities for small and big companies such as Apple, Google, Samsung. It is actually very late but very important for us to switch this new trend.
Drew Conry-Murray
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Drew Conry-Murray,
User Rank: Ninja
2/25/2015 | 7:11:19 PM
Re: How Much Clout Does Apple Have?
Thanks for the update, Tom!
Thomas Claburn
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Thomas Claburn,
User Rank: Ninja
2/25/2015 | 3:42:34 PM
Re: How Much Clout Does Apple Have?
> they may not like letting Apple insert itself so closely into the customer relationship.

As I understand it, Apple Pay does not interfere at all with that relationship -- Apple designed its system so the transaction remains known to the merchant and buyer, but not to Apple. Had it done otherwise, companies would have been far more wary.
Sara Peters
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Sara Peters,
User Rank: Author
2/25/2015 | 11:26:46 AM
Re: How Much Clout Does Apple Have?
@Drew "Regarding tokenization, I'm guessing whichever road Apple goes down becomes a de facto standard." I think you're right, and it doesn't hurt that Apple already built Apple Pay on an existing standard.
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