Tokenization: Use Cases, Part 2

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:

Read Post

Friday Summary: August 6th, 2010

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.

Read Post

Totally Transparent Research is the embodiment of how we work at Securosis. It’s our core operating philosophy, our research policy, and a specific process. We initially developed it to help maintain objectivity while producing licensed research, but its benefits extend to all aspects of our business.

Going beyond Open Source Research, and a far cry from the traditional syndicated research model, we think it’s the best way to produce independent, objective, quality research.

Here’s how it works:

  • Content is developed ‘live’ on the blog. Primary research is generally released in pieces, as a series of posts, so we can digest and integrate feedback, making the end results much stronger than traditional “ivory tower” research.
  • Comments are enabled for posts. All comments are kept except for spam, personal insults of a clearly inflammatory nature, and completely off-topic content that distracts from the discussion. We welcome comments critical of the work, even if somewhat insulting to the authors. Really.
  • Anyone can comment, and no registration is required. Vendors or consultants with a relevant product or offering must properly identify themselves. While their comments won’t be deleted, the writer/moderator will “call out”, identify, and possibly ridicule vendors who fail to do so.
  • Vendors considering licensing the content are welcome to provide feedback, but it must be posted in the comments - just like everyone else. There is no back channel influence on the research findings or posts.
    Analysts must reply to comments and defend the research position, or agree to modify the content.
  • At the end of the post series, the analyst compiles the posts into a paper, presentation, or other delivery vehicle. Public comments/input factors into the research, where appropriate.
  • If the research is distributed as a paper, significant commenters/contributors are acknowledged in the opening of the report. If they did not post their real names, handles used for comments are listed. Commenters do not retain any rights to the report, but their contributions will be recognized.
  • All primary research will be released under a Creative Commons license. The current license is Non-Commercial, Attribution. The analyst, at their discretion, may add a Derivative Works or Share Alike condition.
  • Securosis primary research does not discuss specific vendors or specific products/offerings, unless used to provide context, contrast or to make a point (which is very very rare).
    Although quotes from published primary research (and published primary research only) may be used in press releases, said quotes may never mention a specific vendor, even if the vendor is mentioned in the source report. Securosis must approve any quote to appear in any vendor marketing collateral.
  • Final primary research will be posted on the blog with open comments.
  • Research will be updated periodically to reflect market realities, based on the discretion of the primary analyst. Updated research will be dated and given a version number.
    For research that cannot be developed using this model, such as complex principles or models that are unsuited for a series of blog posts, the content will be chunked up and posted at or before release of the paper to solicit public feedback, and provide an open venue for comments and criticisms.
  • In rare cases Securosis may write papers outside of the primary research agenda, but only if the end result can be non-biased and valuable to the user community to supplement industry-wide efforts or advances. A “Radically Transparent Research” process will be followed in developing these papers, where absolutely all materials are public at all stages of development, including communications (email, call notes).
    Only the free primary research released on our site can be licensed. We will not accept licensing fees on research we charge users to access.
  • All licensed research will be clearly labeled with the licensees. No licensed research will be released without indicating the sources of licensing fees. Again, there will be no back channel influence. We’re open and transparent about our revenue sources.

In essence, we develop all of our research out in the open, and not only seek public comments, but keep those comments indefinitely as a record of the research creation process. If you believe we are biased or not doing our homework, you can call us out on it and it will be there in the record. Our philosophy involves cracking open the research process, and using our readers to eliminate bias and enhance the quality of the work.

On the back end, here’s how we handle this approach with licensees:

  • Licensees may propose paper topics. The topic may be accepted if it is consistent with the Securosis research agenda and goals, but only if it can be covered without bias and will be valuable to the end user community.
  • Analysts produce research according to their own research agendas, and may offer licensing under the same objectivity requirements.
  • The potential licensee will be provided an outline of our research positions and the potential research product so they can determine if it is likely to meet their objectives.
  • Once the licensee agrees, development of the primary research content begins, following the Totally Transparent Research process as outlined above. At this point, there is no money exchanged.
  • Upon completion of the paper, the licensee will receive a release candidate to determine whether the final result still meets their needs.
  • If the content does not meet their needs, the licensee is not required to pay, and the research will be released without licensing or with alternate licensees.
  • Licensees may host and reuse the content for the length of the license (typically one year). This includes placing the content behind a registration process, posting on white paper networks, or translation into other languages. The research will always be hosted at Securosis for free without registration.

Here is the language we currently place in our research project agreements:

Content will be created independently of LICENSEE with no obligations for payment. Once content is complete, LICENSEE will have a 3 day review period to determine if the content meets corporate objectives. If the content is unsuitable, LICENSEE will not be obligated for any payment and Securosis is free to distribute the whitepaper without branding or with alternate licensees, and will not complete any associated webcasts for the declining LICENSEE. Content licensing, webcasts and payment are contingent on the content being acceptable to LICENSEE. This maintains objectivity while limiting the risk to LICENSEE. Securosis maintains all rights to the content and to include Securosis branding in addition to any licensee branding.

Even this process itself is open to criticism. If you have questions or comments, you can email us or comment on the blog.