Risks of Offline Verify PIN on Contactless Cards

Contactless card payments are being introduced around the world al- lowing customers to use a card to pay for small purchases by simply placing the card onto the Point of Sale terminal. Contactless transactions do not require veri- fication of the cardholder’s PIN. However our research has found the redundant verify PIN functionality is present on the most commonly issued contactless credit and debit cards currently in circulation in the UK. This paper presents a plausible attack scenario which exploits contactless verify PIN to give unlimited attempts to guess the cardholder’s PIN without their knowledge. It also gives experimental data to demonstrate the practical viability of the attack as well as references to support our argument that contactless verify PIN is redundant functionality which compromises the security of payment cards and the cardholder

Nonbanks in the payments system

Nonbanks have always been a key component of the nation's payments system. In recent years, however, nonbanks have become even more prominent. This heightened visibility raises several questions. In which payments activities are nonbanks engaged? What roles do nonbanks play in specific payments types? What types of risk are potentially associated with nonbank participation? This paper begins to address these questions. Preliminary findings include: (1) Nonbanks are involved in a myriad of activities and roles, both in traditional and emerging payments types; (2) Nonbank business relationships with banks and other participants in the payments systems are often highly complex and interrelated; (3) Nonbanks are rarely directly involved in settlement activities and, hence, appear to be associated with limited settlement and systemic risk; (4) Both nonbanks and banks appear to be increasingly susceptible to operational risk factors. ; Published as a book in 2003.Payment systems ; Nonbank financial institutions ; Nonbank activities

Host card emulation with tokenisation: Security risk assessments

Host Card Emulation (HCE) é uma arquitetura que possibilita a representação virtual (emulação) de cartões contactless, permitindo a realização de transações através dispositivos móveis com capacidade de realizar comunicações via Near-Field Communication (NFC), sem a necessidade de utilização de um microprocessador chip, Secure Element (SE), utilizado em pagamentos NFC anteriores ao HCE. No HCE, a emulação do cartão é efetuada essencialmente através de software, geralmente em aplicações do tipo wallet. No modelo de HCE com Tokenização (HCEt), que ´e o modelo HCE específico analisado nesta dissertação, a aplicação armazena tokens de pagamento, que são chaves criptográficas derivadas das chaves do cartão original, críticas, por permitirem a execução de transações, ainda que, com limitações na sua utilização. No entanto, com a migração de um ambiente resistente a violações (SE) para um ambiente não controlado (uma aplicação num dispositivo móvel), há vários riscos que devem ser avaliados adequadamente para que seja possível materializar uma implementação baseada no risco. O presente estudo descreve o modelo de HCE com Tokenização (HCEt) e identifica e avalia os seus riscos, analisando o modelo do ponto de vista de uma aplicação wallet num dispositivo móvel, que armazena tokens de pagamento para poder realizar transações contactless

Can smart cards reduce payments fraud and identity theft?

In the United States, when a consumer presents a payment to a merchant, the merchant typically makes a request for authorization before accepting the payment. Personal information, such as an account number, address, or telephone number, are often enough to initiate a payment. A serious weakness of this system is that criminals who obtain the correct personal information can impersonate an honest consumer and commit payments fraud. ; A key to improving security-and reducing payments fraud-might be payment smart cards. Payment smart cards have an embedded computer chip that encrypts messages to aid authorization. If properly configured, payment smart cards could provide direct benefits to consumers, merchants, banks, and others. These groups would be less vulnerable to the effects of fraud and the cost of fraud prevention would fall. Smart cards could also provide indirect benefits to society by allowing a more efficient payment system. Smart cards have already been adopted in other countries, allowing a more secure payments process and a more efficient payments system. ; Sullivan explores why smart cards have the potential to provide strong payment authorization and thus put a substantial dent into the problems of payments fraud and identity theft. But adopting smart cards in the United States faces some significant challenges. First, the industry must adopt payment smart cards and their new security standards. Second, card issuers and others in the payments industry must agree on the specific forms of security protocols used in smart cards. In both steps the industry must overcome market incentives that can impede the adoption of payment smart cards or limit the strength of their security.

The Dangers of Verify PIN on Contactless Cards

Contactless / Near Field Communication (NFC) card payments are being introduced around the world, allowing customers to use a card to pay for small purchases by simply placing the card onto the Point of Sale terminal. Although the terminal needs to be able to verify a PIN, it is not clear if such PIN verification features should be available on the NFC card itself. We show that contactless Visa payment cards have (largely redundant) functionality, Verify PIN, which makes them vulnerable to new forms of wireless attack. Based on careful examination of the Europay, MasterCard and Visa (EMV) protocol and experiments with the Visa fast Dynamic Data Authentication transaction protocol, we provide a set of building blocks for possible attacks. These building blocks are data skimming, Verify PIN and transaction relay, which we implement and experiment with. Based on these building blocks, we propose a number of realistic attacks, including a denial-of-service attack and a newly developed realistic PIN guessing attack. The conclusion of our work is that implementing Verify PIN functionality on NFC cards has no demonstrated benefits and opens up new avenues of attack

Contactless payments :usability at the cost of security?

PhD ThesisEMV (Europay, MasterCard, Visa), commonly termed “Chip & PIN”, is becoming the dominant card based payment technology globally. The EMV Chip & PIN transaction protocol was originally designed to operate in an environment where the card was physically inserted into the POS terminal / ATM and used a wired connection to communicate. The introduction of EMV contactless payments technology raises an interesting question “has usability been improved at the cost of security?”. Specifically, to make contactless payments more convenient / usable, a wireless interface has been added to EMV cards and PIN entry has been waived for contactless payments. Do these new usability features make contactless cards less secure? This PhD thesis presents an analysis of the security of the EMV contactless payments. It considers the security of the EMV contactless transaction protocols as stand-alone processes and the wider impact of contactless technology upon the security of the EMV card payment system as a whole. The thesis contributes a structured analysis methodology which identifies vulnerabilities in the EMV protocol and demonstrates the impact of these vulnerabilities on the EMV payment system. The analysis methodology comprises UML diagrams and reference tables which describe the EMV protocol sequences, a protocol emulator which implements the protocol, a Z abstract model of the protocol and practical demonstrations of the research results. Detailed referencing of the EMV specifications provide a documented link between the exploitable vulnerabilities observed in real EMV cards and the source of the vulnerability in the EMV specifications. Our analysis methodology has identified two previously undocumented vulnerabilities in the EMV contactless transaction protocol. The potential existence of these vulnerabilities was identified using the Z abstract model with the protocol emulator providing experimental confirmation of the potential for real-world exploitation of the vulnerabilities and test results quantifying the extent of the impact. Once a vulnerability has been shown to be exploitable using the protocol emulator, we use practical demonstrations to show that these vulnerabilities can be exploited in the real-world using off-the-shelf equipment. This presents a stronger impact message when presenting our research results to a nontechnical audience. This has helped to raise awareness of security issues relating to EMV contactless cards, with our work appearing in the media, radio and TV

Does the online card payment system unwittingly facilitate fraud?

PhD ThesisThe research work in this PhD thesis presents an extensive investigation into the security settings of Card Not Present (CNP) financial transactions. These are the transactions which include payments performed with a card over the Internet on the websites, and over the phone. Our detailed analysis on hundreds of websites and on multiple CNP payment protocols justifies that the current security architecture of CNP payment system is not adequate enough to protect itself from fraud. Unintentionally, the payment system itself will allow an adversary to learn and exploit almost all of the security features put in place to protect the CNP payment system from fraud. With insecure modes of accepting payments, the online payment system paves the way for cybercriminals to abuse even the latest designed payment protocols like 3D Secure 2.0. We follow a structured analysis methodology which identifies vulnerabilities in the CNP payment protocols and demonstrates the impact of these vulnerabilities on the overall payment system. The analysis methodology comprises of UML diagrams and reference tables which describe the CNP payment protocol sequences, software tools which implements the protocol and practical demonstrations of the research results. Detailed referencing of the online payment specifications provides a documented link between the exploitable vulnerabilities observed in real implementations and the source of the vulnerability in the payment specifications. We use practical demonstrations to show that these vulnerabilities can be exploited in the real-world with ease. This presents a stronger impact message when presenting our research results to a nontechnical audience. This has helped to raise awareness of security issues relating to payment cards, with our work appearing in the media, radio and T

Consumer-facing technology fraud : economics, attack methods and potential solutions

The emerging use of modern technologies has not only benefited society but also attracted fraudsters and criminals to misuse the technology for financial benefits. Fraud over the Internet has increased dramatically, resulting in an annual loss of billions of dollars to customers and service providers worldwide. Much of such fraud directly impacts individuals, both in the case of browser-based and mobile-based Internet services, as well as when using traditional telephony services, either through landline phones or mobiles. It is important that users of the technology should be both informed of fraud, as well as protected from frauds through fraud detection and prevention systems. In this paper, we present the anatomy of frauds for different consumer-facing technologies from three broad perspectives - we discuss Internet, mobile and traditional telecommunication, from the perspectives of losses through frauds over the technology, fraud attack mechanisms and systems used for detecting and preventing frauds. The paper also provides recommendations for securing emerging technologies from fraud and attacks