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Verifone: Steal This Card Data

March 9th, 2011

The essence of VeriFone’s attack on Square is that the Square device, on its own, offers no hardware encryption.

“Square disregards the core issue of encryption and acknowledges their devices have no layer of security to protect mag-stripe data on consumer credit cards. They are deflecting responsibility and are solely relying on card issuers to protect consumers,” said Paul Rasori, Senior Vice President, Global Marketing, VeriFone, according to an E-mailed statement VeriFone sent.

Consultant Dan Stiel posted one of many reactions to VeriFone’s move. “Verifone failed to mention in their rhetoric that Square happens to be out-selling Verifone several-fold as their biggest competitor in mobile payments.”

When VeriFone dismissed Stiel’s comment (“Well, they’re not a public company, but I doubt they’re coming close to $1 billion in annual revenue. That statement was incredulous,” E-mailed VeriFone’s Bartolik), Stiel clarified that he was referring to the number of mobile card readers that Square has distributed for free, so no revenue is involved.

Stiel said that the number of mobile card readers that Square is distributing is “many times greater than the number of mobile phone readers that VeriFone has distributed,” adding that he’s seen figures of 40,000-50,000. “My clients include some very large ISOs that are telling me that they are not selling any of the VeriFone mobile card readers,” he said.

One of the problems with downloadable apps—especially free ones—is accurately tracking the figures. Not only is it difficult to keep reliable data, but the numbers can change very quickly. A quick search, for example, turned up an Android-only version of the Square mobile payment software that apparently had, as of the morning of March 10, “more than 250,000” downloads. If the Android version alone was more than 250,000, it’s likely that the total of downloads (adding in downloads for the iPhone and iPad) is much higher.

When we asked VeriFone for their comparable figures, Bartolik said, “We haven’t disclosed that number. All our sales go thru channel partners. But they’re all actively used, not sure Square can say the same.”

Stiel also addressed the encryption concerns.


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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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