Author: David Froud

According to Business Insider, approximately $4 TRILLION worth of merchandise will be abandoned in online shopping carts this year, of which only 63% is recoverable for those retailers with the necessary “savvy”.

The reasons behind this abandonment are as myriad as the individuals making the purchases, but to truly understand the root cause, you must examine the people themselves. From an online purchasing perspective, they fall roughly into these 5 categories:

  1. Mind-Changers – People change their minds all the time, which is much easier when you’re online than when you’re face-to-face with a sales rep. The longer the purchase process, the more time retailers are leaving open for this category to have second thoughts;
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  2. Distractors – For those who don’t really care about their purchase, the slightest distraction will cause them move on. Long and complicated check-out processes will see these folks following the next shiny thing;
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  3. Impatient – Again, long check-out processes will see the impatient group give up fairly quickly even though it means starting again. The issue is that they will undoubtedly start again on a competitor’s site;
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  4. Private – Asking a significant number of questions unrelated to the transaction itself, or forcing them to create an account first is not an option for this category.; and
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  5. Frustrated – Too many steps and customers become frustrated and lose interest in purchasing the item.

Other reasons include hidden fees, unreasonable shipping & handling cost, loss of bandwidth and a multitude of others, but these are mostly issues with the merchant, not with the buyer.

The simplest and quickest checkout process helps mitigate these all-too-common behavioural flaws. However, it’s just not that easy when both the merchant and their underpinning acquiring bank(s) have responsibilities that go far beyond customer convenience.

Anti-fraud, anti-money laundering, and significant numbers of industry specific regulations mean that sellers must be reasonably sure that the purchaser is who they say they are. Currently this is performed by authentication; payment card details including the Card Verification Value (CVV) etc.

However, as a direct result of increasing online fraud rates banks now require digital shoppers to prove who they are with more than just their card details. For example, 3D Secure was introduced in 2005 to help combat this fraud by adding another layer of authentication, but the oft-quoted “significant abandonment rates” experienced as a direct result have forced many e-commerce retailers to turn the service off during peak seasons (e.g. Christmas), or even cancel the service altogether.

So far the uncertain balance between convenience and security has only been good for the bad guys.

The Holy Grail of digital commerce is a frictionless checkout. This is only possible if the many disparate inputs are seamlessly integrated and made invisible to the consumer. The only device that has a chance to combine all of this into a process that basically mirrors the every-day behaviour of the consumer is the mobile device. It also just happens to be the one thing that can combine many forms of authentication that far exceed every regulation in the industry.

No-one doubts that e-commerce and m-commerce will continue to enjoy enormous growth, but it is only by getting the convenience vs. security balance right that the full potential of these markets can be reached.

Only authentication holds all the cards.

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[Ed. Written in collaboration with www.myPINpad.com]

Readers of my blog know I am opinionated, which I why I have so many non-readers I suspect. I find myself now with something of a mission, and that is to either train providers of PCI-related services to perform 12.9 correctly, or I will make available a responsibility mapping matrix of their Attestation of Compliance (AoC)-defined services. Merchants need to perform appropriate due diligence, without full disclosure and guidance from Service Providers (SPs), this is all but impossible for the majority of non-PCI experts.

I  am not saying the SPs are doing anything nefarious,[mostly] they are not, it’s just clear that neither they, nor it would appear their QSAs, have taken the time to produce a responsibility mapping that makes sense.

I will not be posting names, but if you contact me on david@coreconceptsecurity.com and ask about a specific provider, I will tell you whether I have the mapping or not (just started this, so it’s unlikely, but stay tuned…). I am also happy to accept AoCs for your provider if you want a mapping done. Finally, I am also happy to help SPs directly if they would like to get ahead of this.

For Merchants: Regardless of the SAQ you complete, you are responsible for EVERY requirement in the PCI DSS, so any mapping and contract you have in place must be at that requirements level, not that of the SAQ, so if all you get is an AoC, there’s a very good chance your residual responsibility is significantly higher that you would like, and perhaps been led to believe.

At a minimum, your mapping will have 3 columns:

  1. AoC Mapping – This is the only ‘official’ recognition of the requirement numbers included that you have to go by, anything else the SP may say is irrelevant. If it’s not on the AoC, you cannot point your RoC/SAQ to it, and the requirements must still be assessed on your behalf. Note: Be VERY careful re: sub-requirements, if they are not SPECIFICALLY addressed, they are not included (Listing Req. 1.1.5 on the AoC does not necessarily mean Reqs. 1.1.5.a AND 1.1.5.b for example).
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  2. Services YOU Require – This is where you specify EVERY requirement you’re looking to outsource, but you need to be reasonable. There are surprisingly few requirements you can fully outsource (depending on the service), and you must detail what partial responsibility must remain with you. For example; you can outsource the changes to your rule-set, but you will usually retain ownership of it (which is the majority of Reqs. 1.X).
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  3. Residual Responsibility – This is what’s left for you to cover, and will represent an agreement between you, your service provider, and your QSA (if applicable). Anything NOT handled by your SP, is yours.

The above is not to say that an SP cannot provide significant support outside of their officially assessed services, but whatever they are doing needs to be noted, and included in your report.

For example; regardless of the services provided, EVERY policy requirement is owned by you, and followed by your SP. They may have their own policies, and even have them listed on their AoC, but those policies do not cover you as a merchant from a RoC/SAQ perspective.

Once complete and agreed by both sides, this mapping should form the basis of your contract. It does not matter if it’s an annex, addendum or in the main contract body, but the actual PCI DSS v3.0 requirement numbers must be part of any binding agreement. Whether or not you put SLAs around the services, or require full compliance on an ongoing basis, is a business decision, tying your SP to the DSS requirements they cover on your behalf is a PCI obligation.

I have uploaded an example of a Service Provider Responsibility Mapping that I recently provided to a client – help yourself. Hopefully it makes sense, but you are free to contact me if you would like more guidance.

This is actually a very simple process, as is everything else in security, it’s only not knowing yourself what to do that makes it difficult. So ask for help.

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Each day we are bombarded with headlines about successful attacks against mobile payments and the massive rise in mobile payments fraud in general. Yet none of this should be a surprise, and the reasons are simple.

First, we need to understand that the reason we read so much about the losses in the press is that negativity is often the only thing that makes the news. When was the last time you saw the headline; “Mobile Applications Work, Hackers Thwarted!”

The fact remains that for every transaction lost, thousands or even millions of transactions work just fine. However, this sells neither newspapers nor security products.

That said, mobile applications are notoriously insecure. Some of the weaknesses are entirely avoidable and others will be resolved only with a significant shift in both payment methods and the capability of authentication and identity mechanisms.

Avoidable challenges include:

  1. Poor Business Needs Analysis: Too many Fintech organisations follow the latest trends and buzz-phrases without performing both a proper business needs analysis and its subsequent risk assessment. The implementation of every new process or function must meet established business goals, and not be a result of competitive fear or a CEO’s desire for shiny things and ‘game changers’.
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  2. Swiss Army Approach: The second symptom of poorly defined business needs is the desire to build in as much functionality as possible, hoping that the ‘feature rich’ app will become some kind of de facto standard. The vulnerabilities in an application are directly proportional to the complexity of it, and simple is almost always better.
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  3. Insecure Coding: Often a follow-on from 1., if the business needs aren’t properly defined, it’s unlikely that the application’s function(s) will be either. When the race to market is the number one priority, things like robust software development life cycles and secure coding techniques tend to fall by the wayside.
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  4. Acceptance of Payment Details: The ‘more’ secure mobile payment apps never actually touch the payment details. However, it’s still very common for apps to accept full cardholder data (credit card number, etc.) through the app itself. The better apps will only process a transaction when an e-wallet or equivalent is available in the back-end.

Unavoidable challenges include:

  1. Older Payment Technologies: There’s no getting away from this one any time soon, we have had these technologies for decades and they will be around for a while longer. The only thing to be done is to ease the transition from these technologies into the innovations of the present slowly and securely. There is little room for total disruption in the payments space.
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  2. Inadequate Authentication of Identity: Last, but certainly not least, Identity Management and Authentication represents not only the limiting factor in almost all current mobile payment methods, but holds the key to supporting everything to come. There is no silver bullet, no single-function remedy, the only way to resolve this challenge is to build as many authentication factors into every transaction as possible, ideally without creating friction in the payment process.

Secure authentication of identity is the key to reducing mobile fraud, but no solution will be accepted that gets in the way of people actually using it. Only by ‘bridging’ the established with the new, implementing new technologies seamlessly behind/alongside old ones, and making room for everything to come can we stay ahead of the thieves.

[Ed. Written in collaboration with www.myPINpad.com]

The time will come when you will be able to walk into any shop, chose what you want, pay for it where you are standing, and walk out with it without having to go through the nonsense of lining up. The same will apply to getting through airport security/immigration, into a concert, onto public transportation and so on. Each of these ‘transactions’ will happen in the background.

The time will also come when whom you are is enough to make all of these transactions happen almost seamlessly, and biometrics will be an enormous part of that. However, WHAT you are does not equal WHO you are, and that’s where biometrics vendors miss the point. No form of static authentication (of which biometrics is one, same as passwords) can encompass your entire identity. Your likes, dislikes, hopes, fears, ambitions, friends & family interactions, even your reputation. The things that make you human, and 100% unique.

Also, what biometrics cannot do is replace every other form of authentication in the near term. Certainly not the authentication of payments for example when you consider that all payment card schemes globally are united behind the PIN.

“But that’s already happening!” you may say, and you’re right, you can authenticate payments with a fingerprint via your mobile device (Apple Pay for example). Then again, I can spend £20 (£30 from this September) at a time with my Visa / MasterCard contactless card with typically no authentication at all.

Ultimately, what we’re trying to get to is the universal demonstration of the one thing upon which all the transactions above rely; trust.

No single form of authentication (biometrics included) is going to get you a car loan, or a mortgage, but it WILL get you a cup of coffee, because authentication is just a sub-set of the overarching principle related to the demonstration of trust; Identity Management. The who you are, or more to the point, who you have been, is what gets you the mortgage, all your face is going to do is give the lender reasonable assurance that they are talking to the right person.

Authentication is not the answer that addresses the trust challenges we face today in a distributed world. Trust is not built on how you authenticate, it’s built on a irrefutable representation of your life; your credit history, criminal record, work history, references, social media profile, public statements of opinion (blogs, etc.) and so on. You are not going to place trust in someone you will likely never meet in person until you are reasonably satisfied that they will keep their end of the bargain.

Even multi-factor authentication is only going to give more certainty that the person you’re dealing with is the person you expect, it does nothing to ensure that your transaction will go as planned. Only identity can give you that kind of assurance.

Every transaction in the future will be a combination of identity management and authentication, and how much you need of each will be agreed by both sides, up front. This is a complete departure from today where trust is mostly one way, and should address the majority of the current challenges we have related to fraud.

[Ed. Written in collaboration with www.myPINpad.com]

There are some things in life that you assume everyone must know by now; give a firm handshake, never accept credit for someone else’s efforts, never be rude to waiters and so on. Yet so many vendors in the information security industry fall foul of an offence far worse than these.

They use phrases like:

  • 100% secure
  • Unbreakable
  • Completely safe
  • Fraud-proof
  • Hack-proof
  • and so on…

The fact remains that NOTHING in information technology is 100% secure. Nothing. If someone wants it badly enough, and they have the necessary skill-set/support, they are going to get it, and anyone who espouses differently should find another line of work before they cause any[more] damage.

And it’s all so unnecessary. You don’t need 100% security even if it was possible, what you need is security ENOUGH. The bad guys are lazy, and if you’re too difficult to breach they will move on, so just ‘build your fence higher than your neighbour’s’ From what I’ve seen in the 15 years I’ve been consulting across the globe, this should not be too difficult.

The calculation you have to make is this;

If the Cost of Security > Value of Data = do what you can afford and no more, OR, if the Cost of Security < Value of Data = do it, but do only what makes sense.

So what process magically gives you the answers to this equation? Easy, the Risk Assessment. One of the most basic tenets of a security program done well, and one of the most under-utilised business tools in every organisation I’ve helped. A risk assessment process performed appropriately will tell you what you’re not doing well, how to fix it, AND how much to spend on doing so.

But I digress.

I can actually empathise with organisations and individuals trying to sell security. It’s tough, but that’s no excuse for lying about your products, and that’s exactly what you’re doing if you claim 100% security. Lying. You have a responsibility to your customers, and whether you like it or not, and whether you ARE or not, you are the usually the expert in the room (if you know 1% more than the other person you are the expert). Your client came to you for help, it’s up to you to provide what they NEED, not necessarily what they asked for.

Your credibility as a provider of information security services or products goes hand-in-hand with your integrity as an organisation and/or individual. Think of your integrity as a form of currency; you can either invest it in your credibility, or spend it on quick wins. Only one of these has a long-term future.

I will note however that if you’re a buyer of security services, you have as much responsibility as the seller to buy only what you need. YOU must ask the right questions, and the only way you can do that is to either do your homework, or hire someone to do it for you. Never expect a salesperson to think twice about giving you what you ask for, then charging you again for providing what you should have asked for in the first place. This scope creep is your fault as much as theirs.

This white paper is not how to sell, I can’t do that, this is how I think you sell with integrity; How to Sell Security