PCI and Mobile Payment Application Security

So far, the world of mobile payments has been a "Wild West", before the sheriff came to town. The vendors have been making their own rules, though at least a few have been smart, and have prepared for what they guessed would happen. The solution can be expressed in one word.

Encryption. As early in the payment process as possible, all the way to the bank (acquirer).

The PCI Council has issued a press release on mobile payment security, along with an "At a Glance" publication. These usually precede the release of new standards/best practices documents by a few months as fair warning. This post is my attempt to analyze where the Council sits on the matter, and a bit of reading between the lines to try to predict what's coming.

End to end encryption, or point-to-point encryption (P2PE), as the PCI Council calls it, is easily the best solution to securing the explosion of mobile payment applications now on the market. It is ideal because, in most cases, when implemented, it is invisible to the user, the merchant and the application. Apps don't have to be rewritten, the user experience doesn't suffer, and the merchant still has the same level of convenience. Most importantly, when done correctly, it is easily the most secure approach available.

There is a price though, and it is on the merchant. All solutions I've seen offered raise the transaction rate. Such is the price for the convenience of mobile payment acceptance in this case.

Blah blah encryption blah P2PE, what are we really talking about here, Adrian? 

We're talking about encrypting the cardholder data in the same hardware that reads your card. The Android/iOS/Psion/QNX/Whatever mobile operating system never handles unencrypted payment data. Furthermore, in a P2PE environment, the key to decrypt this data should not be present. In most cases, this encrypted data will be sent directly to a payment gateway, and will not be stored. At this point, risk and attack vectors are minimized, and you've added little to no disruption in the sales process.

It takes a lot of work and expense to switch POS solutions, however. For environments already planning to switch, or entering mobile payments for the first time though, it makes sense to get it right the first time, and the Council will soon be publishing P2PE-certified POS solutions,  making it easier to choose a secure, vetted product. Currently, a lot of vendors are offering half-baked solutions that only reduce some of the risk, and it is difficult to separate the pretenders from the real deal. Beware.

If this is such a perfect solution, why isn't everyone already doing it?

1. Vendor lock-in. Many merchants' POS solution and processing come from the same vendor, and that vendor may not have a P2PE or tokenization solution ready yet.
2. Cost of new hardware/POS solution.
3. Increased per-transaction cost - You pay more for using payment gateways, and you'll pay more for a P2PE solution where the processor decrypts your transactions. How much more? Some level 1/level 2 merchants could potentially be going from paying $0.01 to $0.36 or more per transaction! Those kinds of increases really add up for merchants processing 1 million+ transactions annually.
4. Too early. Most vendors are at 1st Gen or earlier with P2PE products. We're just getting started here, and most established POS vendors don't operate at startup speeds. This is an interesting market to watch however, because there are some very interesting startups popping up in this space!

I think you've been hitting the Council Kool-Aid pretty hard.

A valid perspective, but this isn't just idle speculation from the stands. I've had an opportunity to assess a startup employing a P2PE approach first hand. I got down into the weeds with them, dug into their solution, and issued their ROC. I've used all my security, hacking and pentesting experience to consider all the attack angles. Could have missed something? Absolutely, and there is always room for improvement. 

Throw your concerns, questions and doubts my way, and I'll be happy to address them all. Challenge me, and I'll meet it. We're still in the early stages here, remember. Our money will be going through these solutions, and they need to be challenged (read: hacked) to ensure they are as strong as they should be.

Global Payments Breach

Update:

Welcome InfoSec Daily Podcast listeners! I'm going to address a few items related to this story that were discussed on last night's show.

• To the best of my knowledge, participation in VISA's Service Provider Registry is required for all service providers potentially storing VISA cardholder data. Based on my experience, this is primarily a way to track service providers and a marketing tool. Even though Global has been booted off the list, they can still continue to do business, process VISA cards, and sign up new merchants. If anyone has more direct experience or corrections, please comment below.
• PCI is applied different to service providers like processors. However, it is in the opposite direction from what you were thinking. Service providers actually have more requirements to comply with than a merchant would. They do the full PCI DSS plus a few additional requirements that apply only to service providers. They also have to perform level 1 compliance (full Report on Compliance annually, third party annual audit required) with much fewer annual transactions than a merchant would. I think where this misunderstanding came from is the fact that, traditionally, issuers haven't needed to be PCI compliant. That's changed in recent years.
• YES, the requirement not to store track data applies equally to processors as it does to merchants. Issuers (financial institutions that actually brand and send out credit cards) are the only ones with a good chance of getting an exception for storing track data, as they are the original source for producing/creating that data.

Here's the original post:

It isn’t so much the size of this breach that is significant, but the fact that one of the largest global payment processors got popped. Visa has allowed them to continue processing credit cards, but dropped them off their service provider registry (which is a BIG deal). The breach only affects North American merchants and cardholders. To give you an idea of how bad a breach at a large credit card processor can be, if a month’s worth of the transactions they handle were exposed, it is entirely possible that over 90% of all cardholders in the US would need new credit/debit cards.

This doesn’t happen often. I only know of two other cases where a processor was hit by a breach. CardSystems Services, as a business, was literally destroyed by their breach. VISA and AMEX revoked processing rights, forcing CardSystems to have to shut down operations and sell off assets almost overnight. Heartland Payment Systems is the most recent case, and the second largest breach ever at 130 million. They were also stripped from the registry, but managed to recover, regain PCI compliance, and get back onto the registry within a year.

Global Payments had a public conference call at 8AM this morning that I didn’t have time to listen to, but has resulted in an explosion of news stories on the breach.

The worst thing I've been able to determine from the details so far, is that it seems Global Payments was storing Track Data. The PCI DSS explicitly forbids storing track data (requirement 3.2.1), and PCI considers the storage of sensitive data to be one of the most serious PCI violations. CardSystems was effectively shut down for a lesser violation, though their breach was much larger.

It will be interesting to see if any of the details of the breach are released. These details are essential for the rest of the industry to learn from Global's mistakes. I'd like to see:

• The attack vectors used, and the level of sophistication necessary to breach Global.
• How long the attackers had access to systems
• If track data really was stored, and what Global's excuse for such a violation is
• Why the breach was limited to only 1.5 million accounts in North America. A large processor like Global might process 1.5 million transactions in just a few days. Why weren't more accounts stolen? Why only North America? Perhaps some effective segmentation was in place? That would be good news the PCI Council would be happy to point out.
• And of course, we'll hopefully eventually find out who the perps were, and their level of hacking expertise

Time will tell.

PCI Meetup #8: When is a PCI Penetration Test Good Enough?

In the latest PCI Meetup, the sole agenda was again the PCI penetration test, and pentest quality/standards in general. In my last post, I pointed out a few existing standards and some that are currently in development. The general consensus in the meetup is that existing standards are insufficient, and that any hope of creating a baseline for pentest quality rests on future efforts to draft an industry standard.

For a moment, let us hypothesize that a robust pentest standard has been created, and the PCI council is willing to incorporate it into the PCI DSS. What else do we need? With any standard, we will still need parameters specific to PCI for it to be useful. With the wrong parameters, the very best standard won't achieve our goal of determining whether or not cardholder data is reasonably safe, and we can't assume the pentester will assume the correct parameters. In addition to requiring a penetration testing standard, the PCI DSS should also detail how the test should be executed, in order to maximize effectiveness and ensure the test represents real-world scenarios as closely as possible.

• Scope: The PCI scope defines an island, or islands within the enterprise where cardholder data is (allegedly) protected by the PCI DSS requirements, and is segregated from the rest of the network. The penetration test should not be limited to the PCI scope. In fact, one of the goals of the penetration test should be to test the effectiveness of cardholder DMZs from the outside, and determine whether weaknesses outside the cardholder network can be used to penetrate it.
• Goals: Obtaining cardholder data should be the primary goal. Testing the effectiveness of segregation and attempting to penetrate the cardholder network defenses should also be a primary goal.
• Level/Strength of the Test: It is unreasonable to expect the basic, annual PCI penetration test to include custom, unreleased 0-day exploits. It just isn't feasible, given the cost and the number of pentesting companies/individuals capable of providing this level of testing. The penetration test should represent the skill of a fairly technical attacker with commonly available tools (e.g. Metasploit). Ideally, the penetration testing standard would use a tiered approach, similar to the OWASP Web App Standard mentioned in my last post. The PCI council could then choose the minimum tier, or baseline for merchants to be tested against.
• Attack vectors: Currently, PCI requires the penetration test to include internal, external and webapp tests. This is not sufficient. In the future, social engineering must be a requirement, and for good reason as this example shows: An administrator recently gave out the root password for rootkit.com, allegedly to a teenager. If a teenager could similarly penetrate your cardholder environment with a spoofed email or phone call, the value of the $4.5 million you spent on PCI compliance goes to $0. Instantly.

I look forward to your responses, opinions and the next meetup!

PCI Meetup #7: Penetration Test Quality

We had an interesting group for the last PCI Meetup . The majority of individuals participating in the conversation were professional penetration testers. Netragard's PCI Compliance challenge sparked some good discussion on Twitter, and ended up driving the agenda for the seventh PCI Meetup in the same direction. We spent the majority of the Meetup discussing the need for a penetration test standard, especially in the PCI DSS.

Illustrating the Need

Netragard uses an analogy, pointing out that the quality of some penetration tests is akin to testing "the effectiveness of a bullet-proof vest with a squirt gun". I'm sure they're quite skilled, as no security services company would issue such a challenge unless they are:

1. Currently occupying a place of honor here, or

2. Very good at what they do.

That got me thinking though - if company A's pentest is equivalent to a squirt gun, how do I know how Netragard, or any other pentesting company for that matter, stack up against their competition? To continue the analogy, are company B's efforts equivalent to a pressure washer? A 9mm handgun? A rocket launcher? Let us examine the problem from a different point-of-view with two hypothetical proposals.

	Company A	Company B
Work Description:	Int/Ext Pentest	Int/Ext Pentest
Hours:	40	40
Price:	$8000	$8000

In this example, it appears that both companies are offering to perform the same work for the same price, with the same level of effort. Company A, however, is handing off a glorified vulnerability scan as a penetration test, whereas Company B is fuzzing and coding custom exploits as they perform what most in the industry would consider to be an A-rate penetration test. How can a customer tell the difference? Those of us in the business might suggest requesting a list of pentester credentials from each company, or a high-level synopsis of their internal pentesting methodology. Both of these are great, but they get us no closer to being able to measure Company A or Company B's ability to perform a quality penetration test.

This line of thinking brought me to two conclusions. First, we need some sort of standard, or set of standards to measure penetration test quality against, and second, that PCI should require a minimum standard for the required annual penetration test. Currently, what passes for a penetration test in PCI is entirely up to the QSA. The QSA could let Company A's pentest pass as sufficient, or they could go to the other extreme and require something that far exceeds the intent of the requirement. Without a standard, anything could conceivably be passed off as a penetration test - thus Netragard's desire to challenge the status quo.

Consider also that not all PCI requirements are equal. The PCI requirement for an annual penetration test is just one of over 200 requirements spread across 12 categories, sure, but is not on the same level of importance as say, ensuring network diagrams are up-to-date. It is, in fact, the only PCI requirement that can actually test whether or not the other requirements are likely to succeed in preventing a potential breach! The standard of quality this single requirement is held to stands between determining the effectiveness of compliance work performed, and having no clue.

The PCI DSS was likely designed so that the annual penetration test would act as a built-in test for effectiveness. If some sort of standard for quality can be assured, then PCI in general could become significantly more effective.

Standards

I realized that I am far from the first person to recognize the need for penetration testing standards. After a bit of research, I realized there was more out there than I realized.

• ISECOM's OSSTMM manual is a well-known set of security testing guidelines.
• OWASP maintains a guide for testing web-based applications and a multi-level security standard.
• There appears to be an ANSI standard now for penetration testing specifically within the financial services industry (I have not yet forked out $100 to check it out though - let me know if you have, and what your impressions are)
• The NBISE is gathering information to put together a penetration testing standard
• ...and just last night, I listened to Chris Nickerson discussing this very problem on the InfoSec Daily Podcast, and it seems he is collaborating an industry solution as well (bookmark and check back later)

I think all of these have potential to help weed out the "fakers" in the industry, but should one of these be included as part of PCI's annual penetration test requirement, or does the PCI data security standard need its own custom penetration test standard?

Conclusion

I've gone as far in the Meetups as to suggest that a good quality pentest could replace the entire PCI DSS. If the pentester gets their hands on cardholder data, you fail. If they don't, you're compliant. Is that not the bottom line? The pentest becomes, at least, a partial measure of the likelihood that a breach may occur at a given company. This has many benefits, like protecting businesses who are adequately protecting cardholder data from wasting millions unnecessarily. The major problem is that everything rests on the quality of that single annual penetration test.

If there is enough interest, we may discuss this again in the eighth PCI Meetup, which will take place this Thursday, February 10th, 2011 at 8PM EST. If you want to join the discussion, drop me a note here or on Twitter with your SkypeID, and I'll make sure to include you in the discussion!