Dialoging About Tokenization And Transaction Encryption

Last week I published two research reports on the hottest topic in PCI: Tokenization and Transaction Encryption. Part 1 was an introduction into the topic and Part 2 provided some action items for companies to consider during their evolution of these technologies. Respected security blogger, Martin McKeay, commented on Part 1. Serendipitously, Martin was also in Dallas (where I live) last week and we got an opportunity to chat in person about the report and other security topics.

Martin’s post highlighted several issues that deserve some response. He felt that I, “glossed over several important points people who are considering either technology need to be aware of.” Let me review those items:

Comment: “This is one form of tokenization, but it completely ignores another form of tokenization that’s been on the rise for several years; internal tokenization by the merchant with a (hopefully) highly secure database that acts as a central repository for the merchant’s cardholder data, while the remainder of the card flow stays the same as it is now.”

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Stop the Madness! Payment Apps are on the iPad too soon.

Even though the iPad is barely birthed, there is already a push to provide payment applications for the device. It's time to pull the emergency brake on this trend. Are these applications PA-DSS certified? Do they have swipe devices with crypto hardware built-in? Has the Pin Entry Device been rigorously tested and meet all the PIN Transaction Security Guidelines? There are so many things consumers should know about the security of these new methods of payments *before* they allow their credit card to be captured by an iPad or iPhone. Is the card's Personal Account Number (PAN) encrypted at the moment it is swiped by the device? Does the device establish an encrypted tunnel to transport the transaction to the payment gateway? Doe the iPad store the PAN? Is that storage encrypted or unencrypted? Does the processor support a tokenization scheme to keep the iPad out of PCI scope? Is the payment app the only thing running on the iPad?

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