This is page 2 of:

Encryption Implementation Really Matters

August 26th, 2010

As such, although I may have been wrong in my original premise, the business reality is that it may be a mistake to assume a “proper implementation” of your cryptographic system. It is not enough to recommend using a reputable API like the Java crypto API or RSA’s Bsafe suite. Retail CIOs should be as concerned with the implementation of these routines as they are about key management. That is, you need to make sure you buy more than just a toolkit; you need to be sure that you’re solving the problem.

Taking a step back, perhaps the value of last week’s column and the discussion it provoked among StorefrontBacktalk readers was the recognition of how much time, study and effort it takes to become a good cryptographer and how valuable it is for retailers to have access to this expertise. CIOs managing in-house encryption need to be smart about this issue. Do they use a reputable API rather than try to implement their own instance of AES? Do they think through the implications of messy details like mode of operation and initialization vectors? What about salting or pseudo-random number generators? There’s a lot to consider.

Should every QSA be a good cryptographer? I don’t think so. Rather, based on my conversations with cryptographers, what QSAs should and will focus on is evidence of the proper implementation of any cryptography or tokenization system. This means we need to work closely with retailers and their vendors.

Retailers looking to purchase a product rather than develop one in-house have to be equally thoughtful. The should make sure the software vendors providing their POS applications have experts on cryptography as part of their development teams. It’s not enough to ask what algorithm or key length the POS uses or even to check that the application is on the PA-DSS list of Validated Payment Applications without understanding the operational implications of how that application handles cryptographic functions.

Retailers and their CIOs need to understand how their vendors accomplish the key management processes and procedures detailed in PCI Requirement 3.6 (and its eight subsections), how they help the retail organization meet its PCI DSS compliance requirements with respect to keys, and whether or not the cryptosystem was really designed with all of the complexities of modern cryptography in mind.

The implications of weak or poorly implemented cryptosystems and tokenization systems for cardholder data security are ominous. As pointed out in another reader comment, if we can’t adequately protect every database with cardholder data, the bad guys will continue to prey on the weak ones. Based on my recollection, there are roughly 10 million merchants accepting payment cards, so there are bound to be lots of poorly protected retailers out there with the equivalent of targets painted on their chests.

I wish I had an answer to the question of how we make sure every retailer’s cryptosystem is properly implemented and secure. Since cloning existing crypto experts will take too long, maybe increased training is the answer. What do you think? I’d like to hear your thoughts. Either leave a comment or E-mail me at


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

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...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.