Evan Schuman's StorefrontBacktalk

Hart then moved into a discussion of specific technologies that she thinks should be dealt with. “Two years ago, PCI presented a report that that had been prepared by PricewaterhouseCoopers. It touted encryption and tokenization to aid compliance and reduce scope. That same report said certain technologies had the potential to reduce fraud and even ‘eliminate the need for PCI,’ but has PCI even considered promoting the technologies that could render themselves useless? The answer is simply ‘no.’ Cardholder data is but one element of a safe and secure payment system, and it can only be protected by strong authentication. Encryption is a distraction.”

EMV, which Visa recently endorsed for the U.S., was her next target. “The promise of EMV is dynamic authentication, but EMV is a 25-year-old protocol for so-called smart cards, which is a cute term for a microprocessor embedded in a piece of plastic. EMV cards are expensive to issue: five to 10 times the cost of a magstripe card. They are expensive to process and will require massive changes to our payment infrastructure, which will take years to implement and billions of dollars. Merchants will need to purchase new terminals at their expense. Consumers and merchants will need to learn new behaviors. And after 10 years or more, what will we have? A card that is still susceptible to cloning. It’s just a little piece of silicon, like the processor in my laptop. For security, it relies on complex key management routines. These routines fall under human process control, which we all know can break down rapidly. We have trouble enough with managing keys between terminals and acquirers. Now envision managing keys on every card you issue and ensuring interoperability on every terminal the card may interact with.”

Hart then spoke of the EMV card’s physical vulnerabilities. “The EMV cards are also fragile. The chip can be destroyed by microwave, by a ball peen hammer, or simply bent or broken in your wallet. They’re costly to issue and costly again to reissue. There is little dynamic data, a three-character CVV is all there is between you and the criminals. The PAN is still in the clear, which means PCI still applies. And what value will the U.S. version of EMV bring to E-Commerce fraud? Without a PIN, the user cannot be authenticated. So the cardholder will have a much more expensive card, but one that still carries the PAN, so keeps the merchant in scope of PCI, and adds not a shrivel of security to the online purchase. I am not against Chip-and-PIN, but I do question the business case and the need to so radically change a payment system that ‘on average’ functions quite well. If the world wants EMV, I say bring in on. It will be good for business. But respect its limitations. If it’s dynamic authentication you’re looking for, there are far less expensive ways to get it and use it.”