In The Security Vs. Compliance Battle Of The Mind, Security Is Winning

Written by Walter Conway
January 18th, 2012

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

If ever there was an argument where security trumped compliance, the debate about tokenization versus encryption is it. Readers have made that point abundantly clear following a recent column describing the PCI scope reduction benefits of tokenization versus encryption. The shift in emphasis from compliance to being secure is not new, but I was struck by how pronounced a perspective change retailers are experiencing.

Andrew Jamieson’s comment emphasized security over scope reduction. He described how he would put more faith in the security of a tested and proven technology like encryption than he would in tokenization. I know Andrew as a PCI and crypto pro, and although we have never met, we have exchanged ideas and thoughts on PCI-related issues remotely for a couple of years.

Where we differ is that, based on my experience, not every merchant has the expertise to implement an encryption system as well as Andrew might. He works for a security firm. A retailer’s IT department has a lot of other things to manage, and encryption may not be a core strength internally. Properly deployed, strong encryption can protect cardholder data and be PCI compliant. But compliance alone is not my focus. I look at minimizing PCI scope.

Where a merchant has the expertise (internally or through a partner), encryption can protect cardholder data. I believe the PCI scope will be broader than a similar implementation with tokenization. I agree with Andrew that if it is properly done, the encryption solution could be secure. I also believe we both would agree that either choice, properly implemented, would be more secure than the other if that one is poorly implemented.

Jeff Man got readers thinking about the process, drawing parallels between tokenization and encryption and pointing out that tokenization, too, is ultimately reversible. I know Jeff as a respected QSA and a crypto expert with impressive experience. He made the point that both processes are subject to compromise: Either the encryption keys or the token vault could be inadequately protected.


One Comment | Read In The Security Vs. Compliance Battle Of The Mind, Security Is Winning

  1. Andrew Jamieson Says:

    Nice update post Walt, and thanks for the kind words :) I agree with pretty much all of what you have to say, and I think the implementation point is exactly why PCI is currently beavering away on the Point to Point Encryption (P2PE) program.

    One of the major goals of this program is to place the burden of implementation back to the hands of the vendor(s), so that the merchant can rest assured that as long as they use the system provided for payments, everything else is taken care of.

    I think that this has the potential to provide a terrific win for the merchants in scope for these sorts of systems, and also to the security posture of payments as a whole – exactly because it should ensure that people who know what they are doing are the only ones involved in the details.


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.