Archive for the 'PCI SSC' Category


The Council Gets A Clue

Late this week the PCI Security Standards Council issued a new information supplement titled ‘Multi-Factor Authentication’ after the brew-ha-ha that occurred last fall at the Community Meeting in Las Vegas.  For once, the Council has issued an excellent reference regarding the issues of multi-factor authentication (MFA).  Although I still have a couple of minor bones to pick about this document, but more on that later.

If you understand the concepts of MFA, you can skip through the document to the end where the Council presents four scenarios on good and bad MFA.  These are well documented and explain the thought process behind why the scenario works or does not work for MFA.  The key takeaway of all of this is the independence of the MFA solution from the logon process.  The Council is getting in front of the curve here and stopping people from creating insecure situations where they believe they are using MFA that minimizes or stops breaches through administrators or users with access to bulk card data.

Now for a few things that I do not necessarily agree with in this document.

The first involves the Council’s continued belief that hardware security modules (HSM) are actually only hardware.  On page four, the following statement is made.

“Hardware cryptographic modules are preferred over software due to their immutability, smaller attack surfaces, and more reliable behavior; as such, they can provide a higher degree of assurance that they can be relied upon to perform their trusted function or functions.”

The Council has made similar statements over the years in the mistaken assumption that HSMs are only hardware.  HSMs are hardware that use software to manage keys.  There are standards that are followed (e.g., FIPS 140) to ensure that the HSM remains secure, but these devices are predominately software driven.  That is not to say that just any device can serve as an HSM, but a lot of us in the security community are concerned that the Council continues to perpetuate a myth that HSMs are only hardware which is patently false.

My other issue comes on page six as part of the discussion regarding the use of SMS for MFA.

“PCI DSS relies on industry standards—such as NIST, ISO, and ANSI—that cover all industries, not just the payments industry. While NIST currently permits the use of SMS, they have advised that out-of-band authentication using SMS or voice has been deprecated and may be removed from future releases of their publication.”

While everything in this statement is accurate, it gives the uninitiated the impression that SMS or voice is no longer a valid MFA solution.  I know this to be true because I have fielded some questions from clients and prospects on this subject, particularly about SMS.  The key is that this is not SSL and early TLS where NIST called them out as insecure and to no longer be used.  This is a “heads up” from NIST to everyone that there is an issue that makes SMS and voice not secure enough for MFA.

But while there is a risk, a lot of us in the security community question the viability of that risk when matched against merchant risk versus a bank or a government agency.  While I would not want any bank or government agency to use SMS or voice for MFA, a small business may not have a choice given their solution.  The reason is that the risk of an attack on SMS or voice is such that only a high-value target such as a bank or government agency would be worth such an effort.  In my very humble opinion, while a total ban is the easy solution, this is an instance where the Council should take a more nuanced approach toward the use of SMS and voice for MFA.  The bottom line to me is that small merchants using any MFA solution, even if flawed, is better than using no MFA solution.

I would recommend the following approach to manage this risk.

  • Level 4 merchants can be allowed to use SMS or voice for MFA.
  • Level 1, 2 and 3 merchants would be allowed to transition away from SMS and voice to a more secure MFA solution within one year of NIST stating that they are no longer acceptable.
  • All service providers would not be allowed to use SMS or voice for MFA once NIST states that both are no longer acceptable. This means service providers should start transitioning now if they use either.

Those are my thoughts on the subject.  I look forward to the comments I am sure to receive.


An Update On Multi-Factor Authentication

In the November 2016 Assessor Newsletter there is an update to the Council’s statements at the 2016 Community Meeting’s QSA Forum discussion regarding multi-factor authentication (MFA).

“We had a moment of excitement at the North America Community Meeting in September when we responded to a question in the Assessor Session about MFA. As several of us from the Council pointed out, some techniques historically in use are falling out of favor as acceptable approaches to MFA because, as they are becoming used, they fail to meet the basic requirements of MFA. A recent NIST announcement associated with a proposed revision to NIST Special Publication 800-63 series raised the potential of a sunset date for use of SMS as an out-of-band mechanism for a factor in MFA. Based on the questions asked, we felt a refresher on MFA would be of value.

Assessors should understand that multifactor authentication requires two or more independent factors used in such a way that the presenter of the factors gains no knowledge of whether any factor is valid until all factors have been presented. For example, if the first factor is submitted and results in an indication to the user that it is valid before the second factor is requested, then what you actually have is two, single-factor authentications. The critical issue is not when the validation is actually done; rather it is when feedback to the user is provided. If the user can’t tell which factor failed to grant access, then you have MFA. This common practice is illustrated in Figure 1. Figure 2 illustrates the better practice.


Figure 1 is sometimes referred to as a multistep authentication. Figure 2 unifies authentication into a single step. By doing the validation of both factors before providing an indication of authorization success or failure, no information is leaked about either factor.

MFA also requires that the factors be different in type. That is, at least two of the usual three types given below are required:

  • Something you know (e.g., password, PIN, security question challenge)
  • Something you possess (e.g., ICC card, physical token, cryptographic token or private key)
  • Something you are (e.g., physical biometric or behavioral biometric)

The factors must also be independent. Access to one should not grant access to the other. For example, if I use my mobile phone as my device for logging into a system and the system can validate my device with a high-degree of assurance, then it might be the something I possess. However, if it is also where I store my password (or the device to which a one-time-password (OTP) or password reset would be sent), then possession of the device may grant access to both factors. NIST acknowledges this as a risk in its DRAFT NIST Special Publication 800-63B Digital Authentication Guideline: Authentication and Lifecycle Management (5.1.3. Out-of-Band Devices).

Other circumstances may also result in loss of independence, for example, relying on a digital certificate as one factor if it is on the same device into which you are entering your password. If compromise of the device equates to having both the digital certificate and your password, then independence is lost. A similar issue exists when one factor gives access to more than one of the factors used in MFA. This is common with mobile devices that use a single factor to unlock (whether it be a passcode or a biometric) that then gains you access to other authenticators, e.g., stored passwords, the device’s identity, private keys, or software tokens. The assessor should carefully examine any method alleged to be multifactor to verify that it meets all of the requirements. For more information on this subject, consider the following publications:

  • DRAFT NIST Special Publication 800-63-3 Digital Authentication Guideline
  • DRAFT NIST Special Publication 800-63B Digital Authentication Guideline: Authentication and Lifecycle Management
  • DRAFT NIST Special Publication 800-63C Digital Authentication Guideline: Federation and Assertions
  • ISO 19092:2008 Financial Services Biometrics Security Framework
  • ISO/IEC 27040:2015 Information technology — Security techniques — Storage security

[1] Per our current PCI DSS FAQ, multistep authentication may also qualify as multifactor, as long as at least two types of factors are used and the first step is not sufficient to gain knowledge of (or constructive use of) the second authentication factor. Note that an updated version of this FAQ will be published shortly.”

So let us discuss what we probably agree with the Council on in their statements above because that is the easier discussion.

I think most security professionals would agree with the discussion that the factors must be independent of the device being used to log onto the systems.  As a result, if you have the RSA SecurID Software Token or Symantec VIP apps on a cell phone or tablet, that device should also not be able to log onto the systems you are trying to protect.  The same holds true with the practice of putting a certificate on a device for MFA.  The rationale being that if an attacker has the device and the device owner’s credentials, MFA is doing nothing because the second factor will either already be on the device or will be displayed there.

However, the “moment of excitement” occurred because that was not the discussion that occurred at the QSA session.  What was stated at that session was that ALL out-of-band MFA to anything other than a traditional fob was no longer allowed.  I know that was what I heard and I was not the only one that interpreted the statements made that way.  So it was not like I was the only one that heard something wrong as there were a lot of people in that ballroom that heard the exact same thing.  That is what we all heard and why there was a “moment of excitement”.  And rightly so, as that would have put about 90% of MFA solutions as totally non-compliant.

There has been a lot of back channel discussion between QSAs regarding the Community Meeting MFA discussion.  One of the first discussions was about the risk involved.  While we mostly agree with the Council’s position on the independence issue, we have concerns about full adoption of all of NIST’s recommendations regarding MFA.  The Council has acted like SMS and Voice MFA was killed by NIST but that is not the case.  What NIST is saying is:

“Note: Out-of-band authentication using the PSTN (SMS or voice) is deprecated, and is being considered for removal in future editions of this guideline.”

Deprecated means that it is not recommended, but is still allowed.  Why?

Because there is a risk of SMS being intercepted, but to do that is not necessarily an easy task as say a man-in-the-middle attack of Wi-Fi.  During the back channel discussions, it was questioned whether or not the Council truly realizes the real world risk of intercepting SMS and how that plays against a government entity or a bank versus your run of the mill organization.  It is not a risk that has a “one size fits all” rating because of the complexity of the task.  And that is what has the security community up in arms about is that NIST’s recommendation is probably a good thing for the government or a bank to follow, but might still be acceptable for small business versus no MFA or even worse, lying to their bank that they have MFA.

Keep in mind that this is interception, so the target will not receive the message, only the attacker will receive it.  If you want to pass something else along, that further adds to the complexity.  In order to intercept SMS, one has to accomplish one of the following.

  • Infect the target’s smartphone with a virus.
  • Reissue the target’s SIM.
  • Hack the PSTN.
  • Intercept the target’s cell service via a Stingray type of device.

It is relatively easy to infect smartphones on a large scale.  However it is very hard to infect a particular smartphone or group of smartphones without the attacker physically getting their hands on the phone(s).  Given the prevalence of using fingerprints and patterns to log onto phones, even physically having the phone makes infecting it not a quick task and requires equipment to break in and infect the device.  Doing that without the target(s) being suspicious is probably very low.

Reissuing a target’s SIM is relatively easy but creates a huge timing issue.  Because it works only once, that means the attacker must reissue the SIM right at the time the target is receiving the SMS MFA or they will miss the code.  The risk of that timing happening is very, very low even for employees of government entities.

So this leaves us with hacking the PSTN and using a Stingray device.  Hacking the PSTN is also supposedly relatively easy.  Here are the steps required to intercept SMS.

  • The attacker must create their own fake call processing capability (MSC).
  • The attacker must then get the real MSC to release the target’s phone to the fake MSC.
  • The attacker must then point his fake MSC to their own device for the SMS MFA message.
  • The attacker must then wait for the target to logon to generate an SMS MFA request.
  • The attacker must then use the SMS MFA before the target generates a new SMS MFA because they did not receive the original SMS MFA.

The first problem is creating a fake MSC.  This is not as easy as you might think for your run of the mill attacker.  Governments have them, criminal organizations have them, but your average hacker going after credit cards is not going to have such capability unless they are extremely serious about their craft as there are much easier ways to go after cardholder data (CHD).

But assuming we have someone that is truly determined and has such a capability, they must then intercept the SMS MFA message and use it before the target gets wise that their SMS is being intercepted.  This means the attacker has to hope that their target is not a heavy user of SMS.  Portio Research estimates that there are around 16 million SMS messages sent every minute in the world.  Given there are approximately 6.8 billion phones in the world, that means that your target will, on average, receive just over three messages in a day via SMS.  One of those likely to be the MFA message you are trying to intercept probably the first message of the day.  So predictability is on the side of the attacker.

That said, most users of SMS MFA are going to likely only try twice to get their SMS MFA message before they call the help desk to find out what the problem is with the MFA solution.  It will likely be at that point that any attacker will likely be found out because the help desk will discover that the user complaining is already logged onto the systems.  So just because the attacker has access does not necessarily mean they are home free and can do as they please.

As a result, hacking SMS through the PSTN, while possible, is probably only a risk at a very high value target will likely have to face.

So in this discussion of SMS MFA risk, what we have left is using a Stingray device to intercept the target’s mobile service.  This will be like drinking water through a firehose because you will not only have to grab your target’s service, but everyone else that is nearby your Stingray device.  Which brings up the next issue which is that your Stingray device will have to stay in near proximity to your target in order to grab the information you desire.  If you target is truly mobile, that could be very problematic unless you have the resources to install Stingray devices like the FBI or CIA on every cell tower in town.  Again, I would say the likelihood of such an attack is relatively low for all but the most determined attackers which will stop at nothing to get into an organization.

At the end of this mental exercise, we again question the Council adopting NIST’s recommendation regarding SMS MFA without considering the actual real world risk.  Just because a threat exists, does mean the risk is automatically high because NIST is getting ready to deprecate it.  Again, NIST is securing the government and is sharing the results of their research with the rest of us because we, as taxpayers, have paid for it and deserve the results of their research.  That said, that does not mean that everything they produce is always relevant to every organization outside of the government.  Most of it is, but not everything.  This SMS MFA deprecation is probably relevant at some point, but for the current timeframe, SMS MFA is better than no MFA.

But that brings us to the fact that NIST did not say that SMS MFA cannot be used as they did with SSL and Early TLS.  All NIST did say was that they do not recommend it and that sometime in the future they may not allow it.  As a result, if an organization is using SMS MFA, it is still allowed to be used.  NIST has only put organizations on notice that at some point, SMS MFA will no longer be allowed.

But by their statements, the Council has taken NIST’s future deprecation comment to mean that SMS MFA is dead now and that is false.  Yes, organizations should probably look at any SMS MFA solution skeptically from here on out, but SMS MFA is still allowed by NIST just not recommended because of the risk.  That said and as has been discussed, we question if the risk presented is realistic for all organizations given the effort required.

So let us bring this back to the real world.  The vast majority of large retailers have or are in the process of implementing P2PE/E2EE solutions with tokenization.  Those implementations that are in process will likely be done by the end of 2017.  Those remaining 98% of the rest of retailers will likely never ever encounter it because of the effort required to tap SMS just does not justify the reward.

There is a tremendous MFA infrastructure installation and the Council by their statements threatened the vast majority of that install base with their statements that did not match what NIST was stating.  That is what we are arguing over and what drew the “moment of excitement” at the Community Meeting.

In the end, while it is good to know that NIST believes SMS MFA to be a bad solution going forward, exactly what is the Council protecting with their statements?  With CHD no longer stored by large retailers, the risk is at the small retailers, transaction gateways, transaction processors and banks.  So the Council’s and NIST’s recommendations should be focused at those entities that actually pose a risk and not painted with a broad brush against all organizations.

The Council has chastised us all over the years for not focusing on the risk presented in our assessments.  It is time for the Council to take some of that same medicine and recognize that not every NIST pronouncement needs to be tossed out to the PCI community as though it is gold.  The Council also needs to recognize the risk presented and act accordingly.  It is no longer 2008 and organizations are not protecting SAD/CHD.

A lot has changed in the decade since the Council was founded.


The Council Speaks On A Number Of Topics

The Council had a Webinar session for QSAs and ISAs on Thursday, December 15. It was a great session, but at only an hour, there were a lot of questions that went unanswered.  The following were the more notable discussion topics.

Not Tested

The Council got the message and they are working on new wording for the AOCs as well as some guidance for “Not Tested” and how it can be used and not impact PCI compliance.  They expect to have something issued in the first quarter of 2017.

Network Segmentation and Scoping

This was a very hot topic and drew a lot of questions and some useful answers as well as generating a slew of new questions.

We got a definition of “purpose-built controls”.  There really is not any change here in what the Council has told QSAs and ISAs in the past regarding segmentation.  The bottom line is that “purpose-built controls” are those controls that segment one network from another network.  That can be firewall rules, access control lists (ACL) or any other controls that control or limit the communications from one network to another network.  I posed a question regarding encryption such as TLS and IPSec as still being a valid segmentation control, but it did not get answered.  I am assuming that it still is a valid control given the Council’s statement that nothing has changed, but until we have explicit confirmation, that still is an assumption, not a fact.

The Council answered a number of questions regarding whether or not in-scope devices can be on the same network segment as out of scope devices can co-exist.  As usual, we go the “it depends” discussion.  The bottom line is that it depends on the threat presented by the out of scope devices to those in-scope.  If an organization has lax security controls over all of their networks and devices, then I would be hesitant to allow out of scope devices to be on the same network segment as in-scope devices.

One of the most amazing discussions on this topic was an answer given regarding whether or not a device that has only an outbound connection from the cardholder data environment (CDE) can be considered out of scope.  Under the Open PCI Scoping Toolkit, this would be categorized as a 2C system.  The Council started out with their stock answer of “it depends” and then clarified that answer.  The answer given was that while the system would be in scope because it is connected to the CDE, what requirements it would need to comply with would depend on the risk presented by the system to the CDE.  This seemed to give organizations an opportunity to argue a minimization of requirements.  I am sure this will result in a lot of arguments between QSAs, ISAs and their assessees in the future.

As a funny aside, the Council mentioned the “three hop rule” and then feigned ignorance as to where it came from.  As I pointed out in my post, it was from the 2014 Community Meeting in Orlando.

Not-Listed Encryption Solutions

This guidance is a train wreck and just seems to keep getting worse.  The Council gave a lot of answers to questions, but it just seemed like they were digging an ever deeper hole, not filling it in.

The biggest news is that the Non-Listed Encrypted Solution Assessment (NESA) document should be available for review in the first quarter of 2017.

The next biggest news was the Council reconfirming that this is only guidance/recommendations and not some new process that is mandatory.  They even made sure to tell everyone attending that QSAs are NOT to hold up an organization’s ROC/SAQ over not having a NESA for their E2EE solution.  So if an E2EE solution does not have a NESA, then the fallback based on a lack of guidance from the Council is to preform whatever procedures that the merchant’s acquiring bank recommends.

The purpose of this Information Supplement the Council stated was to provide QSAs, merchants, service providers and banks with the Council’s acceptable way to deal with assessing E2EE solutions.  While on its face this statement and rationale makes sense, it does not make sense from the standpoint that the organizations driving the E2EE solutions are the banks and processors that have partnered with the E2EE solution providers.  Given that the banks and processors are the same organizations driving PCI compliance of the merchants that consume those E2EE solutions it seems rather odd that they would be questioning what is acceptable for PCI compliance of their approved E2EE solutions.

At the end of the day, it just seems that this NESA process is a solution looking for a problem and that the only problem the process really solves is getting more E2EE solutions to just finish the NESA and validate as a P2PE solution.

Until the banks and processors get behind the NESA process, I see this effort as dead on arrival.

So it sounds like it will be a busy first quarter for the Council.

The Council stated that the slide deck for this session will be posted to the Portal sometime after the first of the year.


The Council Releases Draft Scope And Network Segmentation Information Supplement

Quietly on Friday, December 9, 2016, the PCI SSC released the draft Information Supplement titled ‘Guidance for PCI DSS Scoping and Network Segmentation’.  As with all Information Supplements, the information documented in these does not replace any of the requirements in the PCI standards.  These documents contain only guidance and suggestions as to how organizations can comply with the PCI standards.

Overall this Information Supplement does not break much new ground regarding the clarifications that have been given over the years on these two subjects.  The Council has taken a much simpler approach to defining categories of systems than did the Open PCI DSS Scoping Toolkit (OPDST).  The Council only has three categories:

  • CDE Systems (Category 1A/B in the OPDST)
  • Connected-to and/or Security-Impacting Systems (Category 2A/B/C/X in the OPDST)
  • Out-of-scope Systems (Category 3 in the OPDST)

One thing the Council has done is provide some good examples for how to prove systems are out of scope.  If a system meets ALL of the following criteria, then it is considered out of scope.

  • System component does NOT store, process, or transmit CHD/SAD.
  • System component is NOT on the same network segment or in the same subnet or VLAN as systems that store, process, or transmit CHD.
  • System component cannot connect to or access any system in the CDE.
  • System component cannot gain access to the CDE nor impact a security control for CDE via an in-scope system.
  • System component does not meet any criteria described for connected-to or security-impacting systems, per above.

The Council goes on further to say that even though these systems are out of scope for PCI compliance, they still need to be secured and patched regularly to ensure the overall security of the organization.

However, there are two points I noted that will likely require some additional clarification from the Council as they are going to potentially cause issues with a lot of organizations.

On page 7, the second paragraph, the document states:

“The existence of separate network segments alone does not automatically create PCI DSS segmentation. Segmentation is achieved via purpose-built controls that specifically create and enforce separation and to prevent compromises originating from the out-of-scope network(s) from reaching CHD.”

The paragraph taken as a whole seems to imply that the Council is taking the conservative position that only firewalls can be considered as network segmentation controls.  It is the phrase “purpose-built controls” that needs to be further defined by the Council.  Earlier in the document there is an example provided using firewalls which the paragraph would definitely lend itself.

In the past, the Council has said that access control lists (ACL) and encrypted tunnels also constituted valid network segmentation.  However this paragraph calls into question whether those are now considered “purpose-built controls” or not.  One would assume so, but as we have all learned in the past, one should never assume with the Council.  As a result, it would be great if the Council could provide clarification on what exactly they mean by “purpose-built controls” in the final release of this document.

The next point of concern is on page 11 in the Connected-to and/or Security-Impacting Systems table.  The third bullet down in the list of criteria states:

“System component can impact configuration or security of the CDE, or how CHD/SAD is handled—for example, a web redirection server or name resolution server.”

It would appear from this statement that the Council has brought Web servers that perform a redirect into scope for PCI compliance as they are considered ‘connected to’ systems.  That will be a huge blow to merchants using redirects to keep their Web servers from having to be ASV scanned and meeting all of the other PCI requirements contained in SAQ A-EP.

The only remaining question is if those Web sites using iFrames will also now be in-scope for SAQ A-EP compliance as well?  Time will tell.

I have no idea when the final version of this document may be released.  But if the Non-Listed Encryption Solutions Information Supplement is any indication, it could be released on this coming Monday to the public.


Not Tested Clarification

In the November 2016 Assessor Newsletter from the PCI SSC, there is a clarification on what ‘Not Tested’ actually means and implies.  I am sure this will really get some service providers whipped up as it will create some issues with work they perform on behalf of their customers.

The following is taken directly from that newsletter.

“Recently, AQM has received some questions about the impact of using “Not Tested” as a response within a completed ROC. This article is intended to address a few points briefly, with published documentation to follow.

  1. Due to an oversight, the option for “Not Tested” was not included in the summary findings table within the summary overview when that table was introduced with the ROC Reporting Template for use with PCI DSS v3.2. We will publish an errata for the ROC Reporting Template shortly.
  2. Some have asked whether one can have a compliant AOC in instances where “Not Tested” was used. While PCI SSC is not able to comment on matters of compliance, we would direct you to read the verbiage at Part 3 PCI DSS Validation of the Attestation of Compliance below:aoc-part-3

How to achieve “all questions answered affirmatively” is the question. PCI SSC does not consider “Not Tested” to be an affirmative statement. The difference between “Not Tested” and “Not Applicable” is that no testing at all is performed for “Not Tested” whereas for “Not Applicable” some testing is performed to confirm a given control is truly not applicable. As such, between “Not Tested” and “Not Applicable,” only “Not Applicable” can be considered an affirmative response.

The intent in introducing “Not Tested” was to achieve a better level of transparency as to the level of compliance and this clarification supports that intent. If you have questions or suggestions, please reach out to the QSA Program Manager.”

It is that second to the last paragraph that will likely send most people off of the deep end.  Their comment that the “PCI SSC does not consider “Not Tested” to be an affirmative statement” really got me going.  What exactly then was the point of using ‘Not Tested’ if you did not consider it an affirmative statement?  Which by the way, when using affirmative as an adjective, means “asserting the truth, validity, or fact of something.”  Last I checked, ‘Not Tested’ would be considered a truth or fact.

There are a number of options for the Council to take here.

  1. Change the wording in the ‘Compliant’ box in Part 3 to reflect that an entity is compliant with all of the requirements tested.
  2. Give us a box in Part 3 that says ‘Compliant with Exceptions’ or something of that ilk which would allow those entities not testing certain requirements to still be judged compliant with what was tested.
  3. Tell QSAs that an AOC cannot be filled out for assessments that mark any requirements as ‘Not Tested’ because an AOC is not relevant.

I remember at a number of past Community Meetings various Council representatives repeatedly and emphatically told those of us from the Accounting community that PCI assessments were not SAS 70 (now SSAE 16) engagements when we would invoke SAS 70 like rules for sampling, testing and the like.  Well, I hate to say it, but the Council is sure turning them into one with all of these pronouncements.

UPDATE: On the Council’s Webinar on Thursday, December 15, it was announced that the Council will be making changes to the AOC and will issue new guidance on this topic sometime in the first Quarter of 2017.  So stay tuned for an update.


The Council’s Take On Non-Listed Encryption Solutions

On Monday, November 21, the PCI SSC posted a blog entry discussing their new Information Supplement titled ‘Assessment Guidance for Non-listed Encryption Solutions’.  After reading their post, I had a few comments of my own.

Mike Thompson, chair of the P2PE Working Group, states that:

“We are encouraged by the significant growth of the PCI P2PE Program in the last two years and the increasing number of PCI P2PE Solutions listed on our website.”

Yes, you have gotten up to 23 listed solutions, but you are still missing First Data TransArmor, Shift 4 True P2PE and Verifone VeriShield who probably comprise the vast majority of E2EE solutions used by merchants.  And most of those solutions that are validated were validated to v1.x of the standard, not the latest version.  Yes, vendors are slowly moving over to v2.x but only slowly.  Some of that due to the pace at which they can get through the Council’s QA process.  But probably the larger reason is that the original cost of getting validated (large) and what that was actually worth in sales (small) has made them question the value of getting revalidated.

“The Council recognizes this creates a challenge for Qualified Security Assessors (QSA) in how to complete PCI DSS assessments for these merchants and that guidance is needed.”

It creates a challenge?  There has been a documented and agreed upon approach in place for E2EE solutions for years.  If QSAs are unaware of this approach it is only because the Council has neglected to explain that approach to them in their training.  As a result, the fact that the Council now believes that guidance is needed is only the fault of the Council.

That said, the guidance the Council is providing in the Information Supplement is in the best interests of the Council because it effectively recommends the solution be P2PE assessed by a P2PE QSA.

It means a few more P2PE QSAs will be needed.  There will not need to be a significant increase in P2PE QSAs because there really are not that many E2EE solutions out there that would drive the training of masses of P2PE QSAs like we have with PCI QSAs.  Let alone the fact that most solution vendors will likely ignore this recommendation unless the card brands force the issue.

But better yet, if a solution vendor has to effectively go through a P2PE assessment, why not just pay the money and have the solution listed on the Council’s Web site?  What better way to drive revenue for a standard that has attracted only a few providers because the assessment process is just as onerous and costly as the PA-DSS which is also in trouble.

Never mind the fact that getting through the Council’s QA process has been a tremendous nightmare.  Most P2PE QSAs equate the QA process to the PA-DSS QA process which has become a huge problem for payment application providers.  Since the PCI SSC is legally on the hook for validated solutions listed on their Web site, the Council is going to be extremely diligent in their review of all validated solutions.

In the end, E2EE providers are not convinced that going through the process is worth the initial and ongoing effort and costs.  They are still selling their solutions without validation in higher volumes than those vendors that have gone through the P2PE validation process.  And those vendors that have been through the validation process are questioning the value of the process since it has not resulted in high sales volumes.

“PCI P2PE Solutions provide the strongest protection for payment card data and simplify PCI DSS compliance efforts.”

I have to say that this is the most hilarious statement made in this post.  There are a number of P2PE validated solutions that allow for the use of 168-bit triple DES (3DES) as the encryption algorithm to protect data.  While 3DES is still considered “strong” by the US National Institute of Standards and Technology (NIST), they only considered it barely strong.  NIST has been advising organizations for years to migrate away from using 168-bit 3DES because it is only a matter of time before it too is broken like its 56-bit and 112-bit versions.  In fact they issued a new warning on 3DES late in 2015 when a researcher broke 168-bit 3DES with keys less than 6 characters in length earlier that year.

E2EE solutions being used these days are relying on the advanced encryption standard (AES) which is much stronger than 3DES and has yet to be broken in any of its variants.

“We want to make it easier for assessors, acquirers, and merchants to get the information they need to make decisions about risk and PCI DSS responsibilities when using non-listed account data encryption solutions.”

As I said earlier, there has been a process in place for years as to how to handle such solutions.  It involves conducting a review of the implementation of the E2EE solution and ensuring that it is implemented properly.  Then submitting the results of that assessment to the acquiring bank for their approval for scope reduction.

In the vast majority of cases, the acquiring bank or a subsidiary of the bank is also the provider of the solution, so in a lot of cases the QSA is just ensuring that the merchant implemented the solution properly and the bank signs off on the reduction in scope.

However on some occasions, the QSA must go through a bit more rigorous process to prove that the solution does in fact encrypt the data and that the data stream cannot be decrypted anywhere but at the payment processor or gateway.  While this can take a bit more time, it typically is not as time consuming as the Council makes it out to be.  Again, in every case, the processor or gateway has recommended the vendors involved so the process is straight forward and easily accomplished and it is only the acquiring bank that would have questions or concerns.

It is not that the P2PE approach is a bad thing.  It is just that the Council over reached when they created it.  The original process was messy, complex, non-modular and did not allow large merchants to continue their operations as they existed.  As a result, it was not seen as necessary by the stakeholders of the standard.  Without their support, there was little reason for adoption.  And as it turned out, the existing E2EE solutions in the marketplace dominated it without validation.

At the end of the day, the Council is trying to force E2EE solution vendors to validate their solutions to the P2PE standard and make that standard relevant.  However without the force of the card brands and banks behind it, the P2PE standard will continue to be dead on arrival.

The good news is that this is only an Information Supplement, so it only needs to be obeyed if merchants and solution vendors choose to obey it.  Which based on the prevalence of E2EE solution implementations, I would expect that things will continue to go “as is”.

UPDATE: On Tuesday, December 6, 2016, the Council issued an FAQ on this subject as well as announced a Webinar for Thursday, December 15, at 11AM ET to give QSAs and ISAs an update on this topic. However in reading the FAQ, it still appears that the whole purpose of this Information Supplement is just to drive vendors to validate their solutions to P2PE since the recommendation is to have a P2PE-QSA validate the vendor’s solution to the P2PE standard(s) and then issue some sort of report for the merchants to use.


Revenue Generation Or Payment Security?

Late on Friday, November 18, the PCI Security Standards Council issued a draft Information Supplement titled ‘Assessment Guidance for Non-Listed Encryption Solutions’.  For those of you that follow my blog, these solutions would be what I refer to as end-to-end encryption (E2EE) solutions.  This is a draft document, but I would bet there will be a lot of discussion regarding it.  The good news is that it is a draft and an Information Supplement, so it is not yet official and is only offering a suggestion of how organizations should proceed.

The biggest recommendation that comes from this Information Supplement is the one that will cause the most heartburn and the most discussion.  The Council is recommending that a P2PE QSA assess a vendor’s E2EE solution and issue a non-listed encryption solution assessment (NESA).  As you read further into the document, the NESA is just a different name for a P2PE assessment.  So essentially, what the Council is recommending is a P2PE assessment without the QA review and listing by the Council of the solution on their Web site.

All I can think of is that the Council is taking this approach so that First Data, Verifone and others will be forced to get their E2EE solutions P2PE validated.  After all, if you have to go through a P2PE assessment to allow merchants to use your solution, why stop there?  Why not just get it validated and listed on the Web site?

But the next thing that is troublesome is the implication that regular QSAs are not capable of adequately assessing an E2EE solution.  That somehow the mystical P2PE QSA training process imbues some sort of encryption omnipotence on those that attend and pass the test.  If you have ever looked at the P2PE Report On Validation (ROV), I think most QSAs could easily execute it.

But I think the real reason behind this Information Supplement is revenue.  The Council is driving revenue to their bottom line with these recommendations.  There will likely have to be more P2PE QSAs and those non-listed solutions will likely end up as P2PE validated.  All of those activities generate revenue for the Council.  Revenue that is needed since the card brands have limited their funding of the Council.

Another big reason to believe this is just a revenue generator for the Council is the fact that, unlike a lot of other Information Supplements, this one was not developed by a committee of card brands, Participating Organizations, QSAs or other stakeholders.  In the 14 pages that comprise this Information Supplement, there is no page that lists any outside contributors.

So other than the Council, who could be driving this Information Supplement?

The acquiring banks?  I just completed an assessment of a merchant using an E2EE solution recommended to the merchant by their acquiring bank.  The acquiring bank is major player in the payment processing industry, so you would assume they would have pointed me to the P2PE ROV for the testing of the E2EE solution but they did not.

First Data, TrustCommerce and Verifone have never pointed me to the P2PE ROV for assessing their E2EE solutions.  So the payment processors are not demanding this sort of assessment.

One would think that the card brands would have each issued a press release announcing this draft, but they did not.

That only leaves us with a unilateral decision made by the Council that this was necessary.

But the real question is, how does this Information Supplement improve the security of the payment process?

Have there been a huge number of E2EE solutions that have been breached and this is a response?  I have not heard of any nor have I seen anything in the media indicating that E2EE solutions are a problem.

Are there “fly by night” vendors of E2EE solutions running rampant in the industry?  Not that I have encountered but it would not surprise me if there were a few.  That said, the merchants I have worked with in implementing E2EE solutions only worked with vendors recommended by their acquiring bank, payment processor or payment gateway.  In most of these cases, the solutions were from First Data and Verifone who are widely trusted in the industry.

I suppose this could be a proactive step to get ahead of things getting out of control with E2EE solutions.  But if that were the case, one would think that the card brands and acquiring banks would have been on board and pushing this effort as well as the Council and explaining that they were being proactive.  Nothing on that front either.

That leaves us with the only purpose of this Information Supplement is to generate revenue for the Council at the expense of merchants, E2EE vendors and ultimately consumers.

The P2PE standard has been a big flop in the industry because, surprise, surprise, it is doing nothing to help the industry.  If it had been adopted by the big players such as First Data and Verifone, then we would probably be in a different place.  But there is a reason those big players and others never got on board, because the standard is too cumbersome, time consuming and onerous just like the now failing PA-DSS process.

Do not get me wrong, every organization has to make money to subsidize its existence.  But I am troubled that the Council now appears to be generating requirements for the purposes of revenue generation rather than the securing of the payment process.

It appears that we have turned a corner and that it may not be a good corner to have turned.


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If your organization has a PCI opportunity, is in need of assistance with a PCI issue or if you would like the PCI Guru to speak at your meeting, you can contact the PCI Guru at pciguru AT gmail DOT com.

I do allow vendors to post potential solutions in response to issues that I bring up in posts. However, the PCI Guru does not endorse any specific products, so "Caveat Emptor" - let the buyer beware. Also, if I feel that the response is too "sales-ee", I reserve the right to edit or not even authorize the response.


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