Evan Schuman's StorefrontBacktalk

For all the complaints we’ve had about the PCI Council dragging its feet on mobile devices, this may be the best evidence yet that the Council’s go-slow approach was right. There are simply too many players in the mobile process, especially when phones are involved. Even with the best of intentions, the fact is that carriers or their outsourced minions can peer into the workings of any of their phones. That’s just not compatible with the needs of payment security.

This Carrier IQ fiasco resets the baseline for what retailers have to consider when it comes to payments. In practice, phones are out, at least until handset makers can verify that the devices being used for POS are safe from outside poking, prodding or peering.

Phone functions turned off and locked down? That’s not enough, because that “performance monitoring” software can still communicate over Wi-Fi connections even when phones are in airplane mode. That monitoring software simply has to be gone to make phones PCI-safe. (Apple says it will be blocking Carrier IQ with a future rev of iOS. Google says the problem is with the mobile carriers, who can change their software at will. The carriers haven’t promised anything yet.)

What about non-phone handsets such as the iPod Touch, which lots of big chains have settled on? They presumably don’t have Carrier IQ installed, but there’s still no guarantee that they’re free from outside sniffing. That means the devices need to be locked down to the store’s Wi-Fi connections that are used exclusively for them—connections that are isolated from the Internet. That prevents associates from adding any unauthorized apps and handset vendors from adding any unexpected updates, in addition to blocking any genuine malware.

Payment cards can only be taken with a sled that encrypts card data as soon as it’s read—that’s already necessary for meeting current PCI requirements. Other functions that chains were expecting to work by way of near-field communication (NFC) chips may also have been called into question. (Are you certain that none of the payment-card information stored by Google Wallet, Isis or any other NFC system is ever exposed to carrier monitoring software? If you’re not, what will you tell your QSA?)

The one bright spot in the Carrier IQ exposures may be that, as handy and useful as off-the-shelf handsets are when it comes to in-store mobile POS, it’s now clear that retailers have just been too trusting. Trusting Apple? OK, maybe. Trusting Apple and AT&T? That may be a stretch. Trusting Apple, AT&T and every unknown third party who anyone in the mobile-communications process has hired and potentially given complete access to what is supposed to be a POS device? That’s a little too much.