One tangible benefit to the recent high-profile security breaches in the retail and hospitality industries is that they have shined a light on weaknesses tied to commerce platforms and, at minimum, forced many companies to ponder security upgrades.
An inaccurate storyline is emerging that the solution to these problems will be EMV, which stands for “Europay, MasterCard and Visa.” EMV is a global standard (the United States actually lags behind the world in terms of transaction security) for the inter-operation of integrated circuit cards, IC card-capable point-of-sale (POS) terminals and automated teller machines (ATMs) for authenticating credit and debit card transactions.
So-called “chip and PIN” cards should be commonplace in the United States by late 2015.
The EMV chip card is different than a standard magnetic stripe card because it incorporates a microprocessor chip that is embedded in the card. After being inserted into a card device, the card is read and the customer enters a PIN number instead of signing the receipt (that’s generally a useless gesture in terms of security; anyone can sign a name and store clerks rarely take the time to compare signatures).
In essence, the process will now be similar to the act of withdrawing cash from an ATM.
Chip and PIN will certainly be an improvement to help prove that the person holding the card is the owner of the card, but its usage does not prevent credit card data from being accessed through weaknesses in the POS or network.
EMV simply isn’t enough. It will not keep hackers at bay.
Remember that EMV is about the interaction with the card and the reader device. That means the device may well send clear-text account information to the POS – the same information as when a magnetic stripe PIN debit or signature card is used.
Meantime, retailers that require a PIN to complete a transaction will still be at risk, since hackers can steal that as easily as a card number. Considering reports about how many people use a PIN of “1234”or “4321” and “1111,” it isn’t a stretch to think hackers won’t have successes.
In other words, potential danger lies ahead!
Fortunately, upgraded commerce technology is becoming available in North America that provides hardware-to-hardware encryption, a secure POS and point-of-interaction (POI) distribution chain, as well as immediate, continued PCI DSS compliance.
Never before available in North America, certified point-to-point encryption (P2PE) technology is now available, helping secure commerce systems while enabling companies to embrace trends in payment innovation. An added bonus of implementing P2PE as part of the EMV deployment is that PCI DSS compliance is dramatically reduced.
P2PE works by encrypting all sensitive data inside the PIN entry device (PED). That data remains encrypted until it exits the retailer’s control at the processor or acquirer; it never touches the retailer’s memory, hard drive or network. Because the responsibility for managing the encryption generally is not with the merchant, that means there is no operational overhead in adopting P2PE; by itself, this cost reduction usually produces a positive return on investment.
Under this kind of arrangement, the infamous malware attacks that occurred during the holiday season likely wouldn’t have happened. That’s because the sensitive information is never in the POS.
Given the limited operational overhead required by reducing the costs and time associated with PCI audits, incorporating EMV backed up by P2PE saves dollars and makes sense for any retailer looking to offer the safest transaction experiences available. And that should be every retailer.