Evan Schuman's StorefrontBacktalk

This GuestView column is from J. David Oder, the CEO of Shift4 Corp., an independent payment gateway company.

For the past two years, the Payment Card Industry Security Standards Council (PCI SSC) has been taunting merchants with offers of a specialized (and simplified) Self-Assessment Questionnaire (SAQ) for those using “validated P2PE” approaches. At first, the council told merchants to wait while it drew up plans to validate the products. Then—finally—seven months ago, PCI SSC released its standards and told merchants to go right ahead and pick one of these validated options. There’s only one problem: As of Thursday (Feb. 7), the council hadn’t validated any.

That’s right. Seven months after the standards were released and nearly two full years from PCI SSC’s initial announcements on the matter, the council has yet to validate a single P2PE vendor that can offer the promised scope reductions and a simplified SAQ to merchants.

Why? Well, quite frankly, because the council designed the wrong standard. Pandering only to massive merchant organizations (that not only hold weight in the industry but also hold seats on the council), the SSC built a P2PE standard that applied only to hardware/hardware approaches. A hardware/hardware approach requires P2PE hardware at the merchant location and a hardware-based key management and decryption tool—known as a hardware security module (HSM)—at the other end. Only merchants with in-house “switch” systems have this set up and, for those that don’t, the infrastructure costs are astronomically prohibitive. This move denies the P2PE benefits, which have been lauded by the PCI SSC for the past two years, to more than 90 percent of its members.

Then, in December, realizing the limitations of its prior attempt, the council released a new standard: a hardware/software “hybrid” standard for P2PE that still requires hardware encryption but that also allows software decryption—so long as the keys are still managed by an HSM. HSMs are not perfect and have been breached.

The fact that PCI has made the HSM an untouchable “black box” means vendors don’t get to validate the code it runs. Vendors have to use someone else’s certified HSM. Essentially, the council is asking vendors to trust some HSM manufacturer with not only their customers’ data but with their whole livelihood. If that HSM goes down, vendors may not be able to fix it.

We in the vendor community would have to entirely rely on a third party to keep our product running. Not to mention that it would likely put us in violation of PCI DSS requirements 2.2.1 through 2.2.3, which state that each component in our environment must be validated.

That is just not acceptable. How does this new hybrid standard address those issues? Well, frankly, it doesn’t. It makes things worse. Now, not only are there HSM issues to worry about, but we also have to accept the fact that—according to PCI—the HSM can pass the keys (in the clear, so long as the network is “properly segmented”) to the software decryption stack. Keys in the clear on a segmented network? Haven’t enough companies been burned that way already?

The new hybrid approach does allow a few new players into the marketplace, but at what potential cost? Yet again, the PCI Council has released a standard that will allow less-than-adequate security measures to be checked off as “compliant.” And, the coucil has once again left those of us who know better than to place blind faith in an HSM out in the cold.