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PCI And EMV Cards: The Urban Myth That Won’t Die

May 3rd, 2011

Moving away from our thought experiment, my experience is that there is a lot more to PCI than securing the POS, as important as that is. My colleagues and I see merchants and processors often struggle more with their back-office processes, people and systems that depend on the PAN. For these retailers, it is quite possible that solutions such as tokenization have at least as great a potential to reduce PCI scope as moving to EMV cards. Plus, a retailer can implement tokenization an awful lot sooner than waiting for every issuer on the planet to issue EMV chip cards.

The bottom line is that in a practical world, moving to a Chip-and-PIN regime will not remove the need for PCI compliance. I can think of one, and only one, way to make PCI go away: Stop taking plastic.

There are many things on which we all can agree. EMV or something like it is the way of the future for payment cards. The present magnetic stripe system of card authentication is ancient and flawed. It is prone to skimming and other low-tech forms of compromise. EMV is one option with great promise, but it, too, has its critics and has been successfully attacked and compromised.

Take a look at the payment cards in your wallet. How many of them still have the PAN embossed on the front? My guess is just about all of them do. Even though embossing was to have been rendered obsolete by the magstripe, most issuers still emboss the PAN on the card. The same situation exists if you have an EMV chip card—that is, you still have a card with a magnetic stripe and embossing.

This means that as long as the industry piles new security features on top of each other (don’t forget the hologram!) without removing the old, presumably compromised or obsolete features, the bad guys are going to have a field day. And PCI will continue to be as relevant as ever.

Personally, I would love to see more U.S. banks issuing EMV chip cards. I travel to Europe, and without a chip card I can’t rent a bike or buy a train ticket from an automated kiosk. I also get to argue with waiters and gas station attendants and show them how to swipe my poor, woefully inadequate (in their eyes) magnetic stripe card using their POS terminal.

On that basis alone, sign me up for an EMV chip card now. Just don’t ask me to put on my QSA hat and say that that card made PCI go away.

What do you think? I’d like to hear your thoughts. Either leave a comment or E-mail me at wconway@403labs.com.

P.S. If you are reading this, then you are a subscriber to StorefrontBacktalk‘s Premium Service. That means you have received your user ID and password from the administrator. As resident PCI columnist (and your long-distance QSA), I would like to say just one thing to you: PCI Requirement 8.5.3. I’ll leave 8.5.9-11 as exercises for advanced pupils.


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Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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