EMV is the dominant protocol used for smart card payments worldwide, with over 730 million cards in circulation. Known to bank customers as “Chip and PIN”, it is used in Europe; it is being introduced in Canada; and there is pressure from banks to introduce it in the USA too. EMV secures credit and debit card transactions by authenticating both the card and the customer presenting it through a combination of cryptographic authentication codes, digital signatures, and the entry of a PIN. In this paper we describe and demonstrate a protocol flaw which allows criminals to use a genuine card to make a payment without knowing the card’s PIN, and to remain undetected even when the merchant has an online connection to the banking network. The fraudster performs a man-in-the-middle attack to trick the terminal into believing the PIN verified correctly, while telling the issuing bank that no PIN was entered at all. The paper considers how the flaws arose, why they remained unknown despite EMV’s wide deployment for the best part of a decade, and how they might be fixed. Because we have found and validated a practical attack against the core functionality of EMV, we conclude that the protocol is broken. This failure is significant in the field of protocol design, and also has important public policy implications, in light of growing reports of fraud on stolen EMV cards. Frequently, banks deny such fraud victims a refund, asserting that a card cannot be used without the correct PIN, and concluding that the customer must be grossly negligent or lying. Our attack can explain a number of these cases, and exposes the need for further research to bridge the gap between the theoretical and practical security of bank payment systems. Smart cards have gradually replaced magnetic strip cards for point-of-sale and ATM transactions in many countries. The leading system, EMV (named after Europay, MasterCard, and Visa), has been deployed throughout most of Europe, and is currently being rolled out in Canada. As of early 2008, there were over 730 million EMV compliant smart cards in circulation worldwide. In EMV, customers authorize a credit or debit card transaction by inserting their card and entering a PIN into a point-of-sale terminal; the PIN is typically verified by the smart card chip, which is in turn authenticated to the terminal by a digital certificate. The transaction details are also authenticated by a cryptographic message authentication code (MAC), using a symmetric key shared between the payment card and the bank that issued the card to the customer (the issuer). EMV was heavily promoted under the “Chip and PIN” brand during its national rollout in the UK. The technology was advertised as a solution to increasing card fraud: a chip to prevent card counterfeiting, and a PIN to prevent abuse of stolen cards. Since its introduction in the UK the fraud landscape has changed significantly: lost and stolen card fraud is down, and counterfeit card fraud experienced a two year lull. But no type of fraud has been eliminated, and the overall fraud levels have actually risen (see Figure 1). The likely explanation for this is that EMV has simply moved fraud, not eliminated it. One goal of EMV was to externalise the costs of dispute from the issuing bank, in that if a disputed transaction has been authorised by a manuscript signature, it would be charged to the merchant, while if it had been authorised by a PIN then it would be charged to the customer. The net effect is that the banking industry, which was responsible for the design of the system, carries less liability for the fraud. The industry describes this as a ‘liability shift’. In the past few years, the UK media have reported numerous cases where cardholders’ complaints have been rejected by their bank and by government-approved mediators such as the Financial Ombudsman Service, using stock excuses such as ‘Your card was CHIP read and a PIN was used so you must have been negligent.’ Interestingly, an increasing number of complaints from believable witnesses indicate that their EMV cards were fraudulently used shortly after being stolen, despite there having been no possibility that the thief could have learned the PIN. In this paper, we describe a potential explanation. We have demonstrated how criminals can use stolen “Chip and PIN” (EMV) smart cards without knowing the PIN. Since “verified by PIN” – the essence of the system – does not work, we declare the Chip and PIN system to be broken.
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