Chip and pin not all that secure

Retail chip and pin devices can be easily attacked, exposing banks, retailers, and customers to serious fraud around the world, a British security company has revealed at the Black Hat Security Conference in Las Vegas.

Researchers from British IT security company, MWR InfoSecurity, have demonstrated at the conference that it is possible to attack chip and pin devices using a specially prepared chip based credit card.

Ian Shaw, Managing Director of the company said: “What our researchers have found reveals huge potential for fraud around the world and demonstrates that the software being used in these machines is not up to the job.”

Shaw added: “In fact we have found the same sort of vulnerabilities in the major chip and pin machines, used throughout Britain and around the world, that were found in computers 10 to 15 years ago. There is no excuse for this and lessons should have been learnt then. This lack of security is putting millions of businesses around the globe at potential risk.”

In scenario 1: researchers demonstrated how a specially prepared chip credit card is used by an attacker to pay for an item. The Pin Pad device produces a receipt and appears to authorise the payment without the payment ever actually be being processed.

In scenario 2: researchers showed how a specially prepared card containing malware is inserted into the Pin Pad device installing code that will harvest all card numbers and PINs from subsequent users of the terminal. The attacker can then return at a later date and insert another malicious card that will collect the harvested Numbers and PINs, cleaning up the malware and leaving the Pin Pad in its original state.

The first scenario exposes merchants to fraud and potential loss as they may find it very difficult to demonstrate the attack ever took place. It will effectively be their word against the payment process and will be very difficult to prove without CCTV or other means to verify the event took place at a certain time. The second scenario is even more worrying as it could be used to clone the magnetic stripe on the card and be used to withdraw cash in countries where chips on debit and credit cards have not yet been rolled out.

The scenarios above are just some examples of the issues discovered. MWR InfoSecurity also found examples of network and interface attacks - very similar to those reported by German researchers SR labs on other devices recently.

MWR’s research team discovered the issues as part of its ongoing research programme into secure payment technologies. Companies use MWR to understand how they may be vulnerable to fraud and attack by criminals using advance and sophisticated attacks.

Ian Shaw added: “Whilst criminal attacks are unlikely to be happening on a widespread basis currently, the vulnerabilities exist and previous patterns suggest that attacks like this are only a matter of time. We test a lot of technology used in sensitive banking and retail payment environments and were surprised at how vulnerable many Pin Pads are to these kinds of attacks.

“We have shown that this can be done and there is no doubt in our minds that criminals are constantly testing these systems. It is surprising that the manufacturers of these machines have done little to safeguard retailers and chip and pin card users.”

MWR have notified the vendors involved and have assisted with the relevant information needed to address the identified issues. They are obviously unable to provide any specific details on the issues found as the devices concerned are currently being used at thousands of retail outlets in the UK and around the world

MWR believes that the industry needs to examine the security of the devices and the software used as a matter of high urgency. The security standards set for these devices are currently clearly below the required standards many would expect given the sensitive nature of such devices. 

MWR InfoSecurity supplies services, which support clients in identifying, managing and mitigating their Information security risks.

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