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In our last use case we presented an architecture for securely managing credit card numbers in-house. But in response to a mix of breaches and PCI requirements, some payment processors now offer tokenization as a service. Merchants can subscribe in order to avoid any need to store credit cards in their environment – instead the payment processor provides them with tokens as part of the transaction process. It’s an interesting approach, which can almost completely remove the PAN (Primary Account Number) from your environment. The trade-off is that this closely ties you to your processor, and requires you to use only their approved (and usually provided) hardware and software. You reduce risk by removing credit card data entirely from your organization, at a cost in flexibility and (probably) higher switching costs. Many major processors have built end-to-end solutions using tokenization, encryption, or a combination the two. For our example we will focus on tokenization within a fairly standard Point of Sale (PoS) terminal architecture, such as we see in many retail environments. First a little bit on the merchant architecture, which includes three components: Point of Sale terminals for swiping credit cards. A processing application for managing transactions. A database for storing transaction information. Traditionally, a customer swipes a credit card at the PoS terminal, which then communicates with an on-premise server, that then connects either to a central processing server (for payment authorization or batch clearing) in the merchant’s environment, or directly to the payment processor. Transaction information, including the PAN, is stored on the on-premise and/or central server. PCI-compliant configurations encrypt the PAN data in the local and central databases, as well as all communications. When tokenization is implement by the payment processor, the process changes to: Retail customer swipes the credit card at the PoS. The PoS encrypts the PAN with the public key of the payment processor’s tokenization server. The transaction information (including the PAN, other magnetic stripe data, the transaction amount, and the merchant ID) are transmitted to the payment processor (encrypted). The payment processor’s tokenization server decrypts the PAN and generates a token. If this PAN is already in the token database, they can either reuse the existing token (multi-use), or generate a new token specific to this transaction (single-use). Multi-use tokens may be shared amongst different vendors. The token, PAN data, and possibly merchant ID are stored in the tokenization database. The PAN is used by the payment processor’s transaction systems for authorization and charge submission to the issuing bank. The token is returned to the merchant’s local and/or central payment systems, as is the transaction approval/denial, which hands it off to the PoS terminal. The merchant stores the token with the transaction information in their systems/databases. For the subscribing merchant, future requests for settlement and reconciliation to the payment processor reference the token. The key here is that the PAN is encrypted at the point of collection, and in a properly-implemented system is never again in the merchant’s environment. The merchant never again has the PAN – they simply use the token in any case where the PAN would have been used previously, such as processing refunds.This is a fairly new approach and different providers use different options, but the fundamental architecture is fairly consistent.In our next example we’ll move beyond credit cards and show how to use tokenization to protect other private data within your environment. Share:

I started running when I was 10. I started because my mom was talking a college PE class, so I used to tag along and no one seemed to care. We ran laps three nights a week. I loved doing it and by twelve I was lapping the field in the 20 minutes allotted. I lived 6 miles from my junior high and high school so I used to run home. I could have walked, ridden a bike, or taken rides from friends who offered, but I chose to run. I was on the track team and I ran cross country – the latter had us running 10 miles a day before I ran home. And until I discovered weight lifting, and added some 45 lbs of upper body weight, I was pretty fast. I used to run 6 days week, every week. Run one evening, next day mid-afternoon, then morning; and repeat the cycle, taking the 7th day off. That way I ran with less than 24 hours rest four days days, but it still felt like I got two days off. And I would play all sorts of mental games with myself to keep getting better, and to keep it interesting. Coming off a hill I would see how long I could hold the faster speed on the flat. Running uphill backwards. Going two miles doing that cross-over side step they teach you in martial arts. When I hit a plateau I would take a day and run wind sprints up the steepest local hill I could find. The sandy one. As fast as I could run up, then trot back down, repeating until my legs were too rubbery to feel. Or maybe run speed intervals, trying to get myself in and out of oxygen deprivation several times during the workout. If I was really dragging I would allow myself to go slower, but run with very heavy ‘cross-training’ shoes. That was the worst. I have no idea why, I just wanted to run, and I wanted to push myself. I used to train with guys who were way faster that me, which was another great way to motivate. We would put obscene amounts of weight on the leg press machine and see how many reps we could do, knee cartilage be damned, to get stronger. We used to jump picnic tables, lengthwise, just to gain explosion. One friend like to heckle campus security and mall cops just to get them to chase us because it was fun, but also because being pursued by a guy with a club is highly motivating. But I must admit I did it mainly because there are few things quite as funny as the “oomph-ugghh” sound rent-a-guards make when they hit the fence you just casually hopped over. For many years after college, while I never really trained to run races or compete at any level, I continued to push myself as much as I could. I liked the way I felt after a run, and I liked the fact that I can eat whatever I want … as long as I get a good run in. Over the last couple years, due to a combination of age and the freakish Arizona summers, all that stopped. Now the battle is just getting out of the house: I play mental games just to get myself out the door to run in 112 degrees. I have one speed, which I affectionately call “granny gear”. I call it that because I go exactly the same speed up hill as I do on the flat: slow. Guys rolling baby strollers pass me. And in some form of karmic revenge I can just picture myself as the mall cop, getting toasted and slamming into chain link fence because I lack the explosion and leg strength to hop much more than the curb. But I still love it as it clears my head and I still feel great afterwards … gasping for air and blotchy red skin notwithstanding. Or at least that is what I am telling myself as I am lacing up my shoes, drinking a whole bunch of water, and looking at the thermometer that reads 112. Sigh Time to go … On to the Summary: Webcasts, Podcasts, Outside Writing, and Conferences Adrian’s Dark Reading post on What You Should Know About Tokenization. Rich’s The Five Things You Need to Know About Social Networking Security, on the Websense blog. Chris’s Beware Bluetooth Keyboards with iOS Devices, starring Mike – belated, as we forgot to include it last time. Favorite Securosis Posts Rich: NSO Quant: Firewall Management Process Map (UPDATED). Mike Rothman: What Do We Learn at Black Hat/DefCon? Adrian Lane: Incite 8/4/2010: Letters for Everyone. Other Securosis Posts Tokenization: Use Cases, Part 1. GSM Cell Phones to Be Intercepted in Defcon Demonstration. Tokenization: Series Index. Tokenization: Token Servers, Part 3, Deployment Models. Tokenization: Token Servers, Part 2 (Architecture, Integration, and Management). Death, Irrelevance, and a Pig Roast. Favorite Outside Posts Mike Rothman: Website Vulnerability Assessments: Good, Fast or Cheap – Pick Two. Great post from Jeremiah on the reality of trade-offs. Adrian Lane: How Microsoft’s Team Approach Improves Security. What is it they say about two drunks holding each other up? David Mortman: Taking Back the DNS. Vixie & ISC plan to build reputation APIs directly into BIND. Rich Mogull: 2010 Data Breach Investigations Report Released. VZ Business continues to raise the bar for data and breach analysis. 2010 version adds data from the US Secret Service. Cool stuff. Chris Pepper: DefCon Ninja Badges Let Hackers Do Battle. I hope Rich is having fun at DefCon – this sounds pretty good, at least. Project Quant Posts NSO Quant: Manage Firewall Policy Review Sub-Processes. NSO Quant: Firewall Management Process Map (UPDATED). NSO Quant: Monitor Process Revisited. NSO Quant: Monitoring Health Maintenance Subprocesses. NSO Quant: Validate and Escalate Sub-Processes. NSO Quant: Analyze Sub-Process. NSO Quant: Collect and Store SubProcesses. Research Reports and Presentations White Paper: Endpoint Security Fundamentals.