PCI And EMV Cards: The Urban Myth That Won’t Die
Written by Walter ConwayA 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.
The recent comments by leading retailers that want U.S. card issuers to move to the EMV standard for card authentication are missing the point. EMV cannot, does not and will not make PCI go away, regardless of recent moves by Visa Europe. As I have observed many times in the past, PCI is impervious to silver bullets of any kind. There are a few things every retailer needs to understand about both EMV and PCI before jumping on this particular bandwagon. To see what I mean, we need to conduct a little thought experiment.
In this thought experiment we will assume, as was suggested, that EMV becomes the “metric system” equivalent for payment cards. That means Chip-and-PIN—like a shift to the metric system—replaces all previous card and cardholder authentication methods. My EMV metric system card has no signature panel, no magnetic stripe. And the PAN is printed, not embossed, on the front of the card. Does PCI go away?
I suggest it does not. Retailers still have mail order and telephone order (MOTO) transactions where call center operators will key-enter cards and other payment information. Those call centers—including the people, processes and systems—will all be in scope for PCI. Retailers will also still need to deal with the security codes (CVV2, CVC2, CID). The same situation would hold for Web-based E-Commerce transactions.
Card-present transactions will rely on cardholders entering their PIN. That means PCI PTS rules would apply, and retailers would still need to meet PCI DSS Requirement 3.2.3 and not retain the PIN data. Much of the data is protected, to be sure, but that does not mean PCI becomes irrelevant.
Regardless of how perfect the EMV technology and its implementation are, some percent of face-to-face transactions will fail. This may be due to a system or power failure. In this case, the retail employee will need a (PCI-compliant) procedure to enter the PAN manually. Once again, the transaction process is in scope for PCI. The only alternative is to decline the card and accept only cash, an option most retailers will be loathe to take.
Lastly, although Europe and North America all adopt the EMV “metric standard,” what are cardholders to do when they travel to the rest of the world? How are travelers to use their EMV metric system card that now has a fancy chip but lacks a magstripe or even embossing? Someone will need to manually enter those PANs, and that process is certainly subject to PCI compliance.
Moving away from our thought experiment, my experience is that there is a lot more to PCI than securing the POS, as important as that is.
-Marc
May 4th, 2011 at 8:23 am
I can not read the whole story, as I’m not a premium subscriber. However, in my humble opinion, PCI is not an issue for certain merchants that implement EMV. Why? In at least a common implementation in my own country, the merchant will simply not have any access to CHD. The PAN goes encrypted from the terminal to the PSP, and the merchant does not have access to the decryption keys.
There is no integration between the terminal and the POS system that exposes any CHD.
May 4th, 2011 at 7:49 pm
Thanks for the comment, Erik, and you actually hit on a key point I was trying to make.
That is, EMV can help with POS-only systems so long as everything goes right. But it’s the other situations like card-not-present (MOTO), ecommerce (can’t read the chip using my keyboard, at least), or when the chip or reader or clerk fails, or any of a million other things happen, we bring all those systems, people, and processes into PCI scope.
Let’s also remember all the merchant back office and post processing systems that use the PAN as a user ID. Bad practice to be sure, but the unfortunate reality all too often, and EMV won’t re-write those legacy applications anytime soon.
I wish there were a silver bullet for PCI. Really, I do. It just doesn’t exist in the real world.
May 5th, 2011 at 3:00 pm
I would say that you don’t need PCI anymore once all transactions are chip based. And in Europe we will reach this stage pretty soon. Even on the Internet I now need my chip to generate a token, in case the merchant website implements MasterCard SecureCode.
May 12th, 2011 at 9:49 am
EMV does not encrypt all sensitive card data. Just the authentication data. “Track equivalent data” is still handled by the point of sale system in clear text. There’s a few digits changed so if magstripe cards are made with it, the issuer will know it’s a fraud. But the account number and expiration date are still in plain text. Mike Dahn has a good info here: http://chaordicmind.com/blog/2010/05/29/the-real-deal-on-chip-and-pin-emv-in-the-us/