Researchers: UK's Chip and PIN Payment System Flawed

Researchers published a paper detailing an attack of intermediate difficulty that they say makes it possible for criminals to use any "Chip and PIN" smart card that they take into their possession.

Researchers published a paper detailing an attack of intermediate difficulty that they say makes it possible for criminals to use any "Chip and PIN" smart card that they take into their possession.UK banks continue to refuse to refund payments to UK customers who claim that their cards were used by someone other than themselves, and without any authorization. Recently published research may force bank's to reconsider their faith in the so-called more secure "Chip and PIN" payment architecture.

News about the attack started surfacing earlier this year, when researchers said, without providing much detail, that they had found a flaw so fundamental that it threatened the security of the entire payment system.

The report, Chip and PIN is Broken [.pdf], by three researchers at the University of Cambridge Computer Laboratory, Cambridge, UK delivers the details on how such an attack would work:

"In this paper we describe and demonstrate a protocol flaw which allows criminals to use a genuine card to make a payment without knowing the card's PIN, and to remain undetected even when the merchant has an online connection to the banking network. The fraudster performs a man-in-the-middle attack to trick the terminal into believing the PIN verified correctly, while telling the card that no PIN was entered at all."

The researchers clearly show how, by my estimation, someone with a college level education in electronics could duplicate the attack. Not a very high bar for a potentially very profitable crime. Essentially the attacker would place a shim that blocks the communication between the PIN verification message from being properly achieved, and then tricking the system into thinking a signature-based transaction has been authorized:

"We have shown how the PIN verification feature of the EMV protocol is flawed. A lack of authentication on the PIN verification response, coupled with an ambiguity in the encoding of the result of cardholder verification as included in the TVR [Terminal Verification Results], allows an attacker with a man-in-the-middle to use a card without the correct PIN. This attack can be used to make fraudulent purchases on a stolen card. We have shown that the live banking network is vulnerable by placing a transaction using the wrong PIN, with every major UK bank and foreign banks too. The records indeed falsely show that the PIN was verified, and the money was actually withdrawn from an account."

Now, the banks will have a harder time telling their customers that they have to eat the fraudulent charges even though they claim they didn't have their card in hand. According to this story, that ran this past February in the Telegraph, a survey found that about one in seven respondents reported having money taken from their bank account or credit card. Of those about half didn't get reimbursed for their loss, despite their insistence that they didn't use their card or authorize an account withdrawal.

Maybe they were actually telling the truth.

How does this happen? Easy. The banks design a system that pushes the risk away from them and onto the merchants and the customers that use their system. These types of systems are always about pushing liability downstream as much, if not more, than they are about security.

And the response to this paper by the banks will likely be the same as those of software and IT hardware vendors when flaws first surface. They'll probably call the attacks theoretical. They'll probably say the attack is too technical and too complicated for use in the real world. And they'll probably keep saying so until someone is caught actually using the attack technique.

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About the Author(s)

George V. Hulme, Contributing Writer

An award winning writer and journalist, for more than 20 years George Hulme has written about business, technology, and IT security topics. He currently freelances for a wide range of publications, and is security blogger at

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