Securing Mobile Payments – It’s Still Early

Written by David Taylor
July 29th, 2009

GuestView Columnist David Taylor is the Founder of the PCI Knowledge Base and former E-Commerce and Security analyst with Gartner.

Mobile payments are exciting, no question about it. The very idea of allowing consumers to buy stuff anywhere, at any time, with the touch of a button, gets retail, banking and communications executives to the point where you almost have to hose them down. So, what better way to ruin the party than to bring up security and compliance issues?

Actually, the need for this emerging payment “channel” and the specific payment platforms, software and services to be PCI compliant should be obvious. After all, the PCI standards have been around for about 5 years, so one would assume that PCI compliance would be “built in” to mobile payment products and services.

However, if you assumed that, you’d be wrong. We’re still far more focused on selling mobile payment to merchants, and much less focused on securing mobile payment and ensuring that the approaches are PCI compliant.

  • Is Everyone Doing a Mobile Payment Pilot?
    Mobile payment is all about pilots. There are currently hundreds, perhaps thousands of them. It makes sense. Between technical viability, transaction management and consumer usability there are a ton of issues that have to be resolved. There are also myriad ways to do mobile payment: contactless smart cards, RFID stickers on mobile phones, payment-capable chips for phones and next generation PDAs. It’s difficult for a retailer to decide which of the dozen possible mobile payment pilots are worth pursuing.

    It’s not my place to help select one platform over another. However, I believe it is very reasonable for merchants to add PCI compliance to the requirements for mobile payment pilots. While that may seem obvious to some, it isn’t.

  • PCI Compliance Isn’t Built-In to Most Mobile Payment Platforms
    We started work on mobile payment security for a restaurant industry project and we were surprised that two recent, and otherwise comprehensive, reports on mobile payments and security either didn’t mention PCI compliance at all, or mentioned it only in passing.

    In April 2009, Global Platform (“the standard for the smart card infrastructure”) wrote a 35-page report on Near Field Communication (NFC) Mobile Payment and Secure Element Management that doesn’t mention PCI compliance whatsoever. A May 2009 paper from the Smartcard Alliance on the Security of Proximity Mobile Payments says only that NFC payment platforms should be designed to address “industry best practices, such as PCI DSS, dynamic cryptograms and multi-factor authentication.”

  • advertisement

    2 Comments | Read Securing Mobile Payments – It’s Still Early

    1. TY Chua Says:

      Just one point. The TSM provides end-to-end security ‘ISSUANCE’ not end-to-end ‘Payment Security’. In short, the TSM is responsible for the personalization of data to the Secure Element in the mobile device. The TSM is not responsible for the payment transaction between the Secure Element in the device and the conventional payment terminals.

    2. Dave Taylor Says:

      TY, you’re right. I am hopeful that the model will evolve and the role of the TSM will expand to include end-to-end payment security. I think it’s a matter of the market demand not existing today. As more merchants insist on end-to-end payment security (e.g., encryption, tokenization) managed by a third party, the TSM (as managed by a bank, telco, network provider, or a combination) will become the provider of this service. There is a real issue as to HOW the market evolves to this, and how long it will take, but that is my expectation, based on things I’ve heard from several of the players in the space and our interviews with leading retailers and restaurants.
      Thanks for the comment. Dave T.


    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.