Electronic Payment Systems 20 763 Lecture 8 StoredValue

Electronic Payment Systems 20 -763 Lecture 8: Stored-Value Cards

Outline • • Smart card types Operating systems Wireless cards Card manufacture and issuance Security Octopus Geldkarte ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Applications E-Government Mobile Telecommunications Banking Mass Transit W-LAN Access. SYSTEMS control 20 -763 ELECTRONIC PAYMENT Enterprise Security SPRING 2004 Public Telephony Retail Digital Rights Management COPYRIGHT © 2004 MICHAEL I. SHAMOS SOURCE: JEAN-JACQUES VANDEWALLE

e. Payment by Smart Card • Objective: replace cash • Cash is expensive to make and use – – Printing, replacement Anti-counterfeiting measures Transportation Security • Cash is inconvenient – not machine-readable – humans carry limited amount – risk of loss, theft • Additional smart card benefits ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Cards • Magnetic stripe – 3 tracks, ~140 bytes, cost $0. 20 -0. 75 • Memory cards – 1 -4 KB memory, no processor, cost $1. 00 -2. 50 • Optical memory cards – 4 megabytes read-only (CD-like), $7 -12 • Microprocessor cards – Imbedded microprocessor • (OLD) 8 -bit processor, 16 KB ROM, 512 bytes RAM • Equivalent power to IBM XT PC • 32 -bit processors now available ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Magnetic Stripe Cards • • Three tracks: 1 & 3 at 210 bits/inch; 2 at 75 bpi Start sentinel (1 char): % Format code (1 char): B for bank/financial PAN, Primary Account Number (19 char) – Major industry identifier (1 or 2 char): 4, 5 for credit cards – Issuer (up to 5 char) – Individual account number (up to 12 char) • • • Field separator (1 char): ^ Name Field separator Expiration date (4 char): YYMM Proprietary fields, including Pin Verification Value (P V V) ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Other Smart Card Types SIM card Crypto card USB token Java card Memory card ELECTRONIC PAYMENT SYSTEMS 20 -763 SOURCE: ANDREAS STEFFEN SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Laser Optical Memory Card Capacity: 1 MB - 1 GB ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Hong Kong Smart ID ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Microprocessor Card Adoption MILLIONS OF CARDS WORLDWIDE 1999: 500 M microprocessor cards 2004: 1750 M microprocessor cards ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 SOURCE: DATAQUEST (10/2000) COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Structure Contacts: Microprocessor Card (Upside-down) Contacts Epoxy Contacts (8) SOURCE: SMART CARD FORUM ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Old (8 -bit) Smart Card Architecture EEPROM: Electrically Erasable Programmable Read-Only Memory SOURCE: SMART CARD FORUM ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Components Processors • 8 -bit, typical clock speed: 5 MHz (8 -bit) • Optional cryptographic processor • 32 -bit, clock speed 300 MHz • 64 -bit, 600 MHz SOURCE: SUMIT DHAR ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Components ROM: Read Only Memory • Used for storing fixed programs. Holds the operating system • Typically varies from 2 KB to around 16 KB • Once written, cannot be changed • Occupies the least area PROM: Programmable Read Only Memory • Used for loading card serial number • Very small, typically just 32 bytes SOURCE: SUMIT DHAR ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Components EEPROM: Electrically Erasable Read Only Memory • Stores variable data • Holds various applications and their data. • Can be read or written to subject to permissions. • Typically 2 - 32 KB RAM: Random Access Memory • Used as temporary storage. • Erased on power off. • Typically 128 -512 bytes SOURCE: SUMIT DHAR ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Cyberflex™ Java Smart Card • Complete 32 -bit Java run-time environment on a card • Utilities for compiling and loading cardlets onto the card from a PC CARDLETS 2 1 3 JAVA VIRTUAL MACHINE OPERATING SYSTEM MICROPROCESSOR ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Smart Card Architecture • File structure (ISO 7816 -4) – Cyclic files • Database management on a card – SCQL (Structured Card Query Language) – Provides standardized interface – No need to know file formatting details ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Cyclic File byte number 1 2 3 4 5 6 7 8 9 m record 1 number 2 3 4 n – – n+1 st record READ gives the most recently written record Maximum number of records: 254 When maximum is reached, first record is overwritten Record length: 1. . 254 bytes ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 SOURCE: ANDREAS STEFFEN COPYRIGHT © 2004 MICHAEL I. SHAMOS

ATM and Debit Card Cryptography • PIN cannot be stored anywhere in plaintext • PIN cannot be reverse-engineered from the card or any database • Generate a random 4 -digit number (the PIN) • Combine PIN with other data (account number) to form a data block • Encrypt the data block using 3 DES and secret bank keys • Select several digits from the encrypted data to use as the Pin Verification Value (P V V) ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Forming the Pin Verification Value ACCOUNT 4 -DIGIT NUMBER PIN SECRET BANK KEYS 3 DES ENCRYPTED DATA BLOCK SELECT 4 -6 DIGITS FROM ENCRYPTED DATA BLOCK TO FORM P V V PIN VERIFICATION VALUE (P V V) CARD HAS ACCOUNT NUMBER AND P V V ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Using the Card CARD HAS ACCOUNT NUMBER AND PVV P V Vs MATCH? USER IS AUTHENTIC ATM MACHINE READS ACCOUNT NUMBER AND P V Vs DIFFERENT? USER IS REJECTED USER TYPES PIN MACHINE NOW HAS: ACCOUNT 4 -DIGIT NUMBER PIN PVV COMPARE CARD P V V WITH COMPUTED P V V MACHINE HAS BANK KEYS IN HARDWARE: SECRET BANK KEYS 3 DES DECRYPTED DATA BLOCK PVV COMPUTE P V V ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Open. Card Framework (OCF) Card. Service Layer (TALKS TO CARD) Card. Terminal Layer (TALKS TO READER) SOURCE: OPENCARD. ORG ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Card Security Threats Group 5 Group 6 ATTACKS ON THE RUN-TIME ENVIRONMENT THROUGH THE CARD ACCEPTANCE DEVICE (CAD) THREATS FROM CARD APPS AND NEED TO SHARE RESOURCES Clone Future Group 7 Past Group 3 Current ATTACKS USING CARDS NOT YET ISSUED, OLD CARDS, CLONES THREATS BASED ON RTE IMPLEMENTATION CAD Group 4 Group 1 DIRECT ATTACKS ON CHIP CIRCUITRY ATTACKS ON CARD’S INTERFACE TO THE OUTSIDE, E. G. PREMATURE REMOVAL Group 2 INDIRECT ATTACKS ON CHIP CIRCUITRY SOURCE: GAMMA ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Power and Timing Analysis NOP (no operation) MUL (multiplication) JMP (jump) power consumption time Source: Rankl and Effing, "Handbuch der Chipkarten", 2002 ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Differential Power Analysis • Send different inputs to the Smart Card to learn details of its encryption key • When a correct key value is tried, the algorithm responds • Incorrect keys have zero average response INITIAL PERMUTATION SMART CARD POWER CONSUMPTION DURING DES ENCRYPTION 16 DES ROUNDS FINAL PERMUTATION EXPANDED VIEW OF ROUNDS 2 & 3 SOURCE: cryptography. com ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Reverse engineering

Probing with Needles

Contactless Card • Communicates by radio – Power supplied by reader – Data rate 106 Kb/sec – Read 2. 5 ms, write 9 ms – 8 Kb EEPROM, unlimited read, 100, 000 writes – Effective range: 10 cm, signals encrypted – Lifetime: 2 years (data retention 10 years) – Two-way authentication, nonces, secret keys – Anticollision mechanism for multiple cards – Unique card serial number SOURCE: GEMPLUS ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

RFID Tags IC Chip 32 mm and 23 mm capsule transponder Antenna ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

How RFID Works • • Antenna Tag enters RF field RF signal powers tag Tag transmits ID, plus data Reader captures data Reader sends data to computer Computer determines action Computer instructs reader Reader transmits data to tag Tag Computer RFID Reader SOURCE: PHILIPS ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Euro Banknotes • European Central Bank has announced plans to implant RFID tags in banknotes by 2005 • Uses – Anti-counterfeiting – Tracking money flows ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

PAYMENT ON A KEYCHAIN SMALL AND CHEAP ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Automated Toll Collection ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Hong Kong Smart Cards • Octopus – 12 million cards, 15, 000 readers – 7 million transactions/day – $48 M HKD per day • • Visacash Com. Pass Visa (VME) Mondex GSM SIM, e. Park ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Octopus Card Features • • • Hong Kong RFID payment card Operating distance: 15 cm Bandwidth: 211 Kb/sec Triple DES in 70 sec EEPROM 1536 bytes 128 -byte data backup area 16 -byte manufacturer ID; 16 -byte issue ID Processing time: 50 msec on card, 300 msec overall Random access and cyclic files Anti-collision protocol SOURCE: MITSUBISHI ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Octopus Card Security SOURCE: MITSUBISHI ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Octopus SONY RC-S 833 CONTACTLESS SMART CARD SONY READER/WRITER I/O SPEED: 211 Kbps SOURCE: SONY ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Octopus Expansion • Identity card • Access control • Hotel room key • Credit card • Mc. Donalds • Mobile phone • Home readers SOURCE: CREATIVE STAR ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Octopus Clearing CENTRAL CLEARING HOUSE SYSTEM SERVICE PROVIDER CENTRAL COMPUTER LOCAL DATA PROCESSOR SOURCE: ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS SOURCE: SAMMY KAM

Octopus Settlement • CONSOLIDATE DATA • PRINT REPORTS • ROUTE DATA TO CCHS • DISTRIBUTE SOFTWARE • COLLECT TRANSACTIONS • PRINT REPORTS • SEND DATA TO SPCC MTR CENTRAL COMPUTER SERVICE PROVIDER CENTRAL COMPUTERS (SPCC) LOAD AGENT CENTRAL COMPUTER STATION COMPUTER CCHS SETTLE MENT HSBC HEXAGON • MUTUAL AUTHENTICATION • CHECK BLACKLIST • UPDATE CARD • STORE TRANSACTIONS FARE PROCESSORS ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 MTR’S BANK LOAD AGENT’S BANK CENTRAL CLEARING HOUSE SYSTEM • VALIDATE DATA • NET ACCOUNTING OCTOPUS BANK REGULAR ACCT BUFFER ACCT RESERVE ACCT COPYRIGHT © 2004 MICHAEL I. SHAMOS

Major Ideas • Smart cards replace cash • Potential of cards is unexplored; new uses every day • Powerful microprocessors allow – cryptography – certificates, authentication – secure purses • Wireless (contactless) cards enable new business models • Smart card security is not perfect ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Q&A ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Mondex • • • Subsidiary of Master. Card Smart-card-based, stored-value card (SVC) Nat. West (National Westminister Bank, UK) et al. Secret chip-to-chip transfer protocol Value is not in strings alone; must be on Mondex card Loaded through ATM – ATM does not know transfer protocol; connects with secure device at bank • Spending at merchants having a Mondex value transfer terminal ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Mondex Overview SOURCES: OKI, MONDEX USA ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS

Mondex Security • Active and dormant security software – Security methods constantly changing – ITSEC E 6 level (military) • VTP (Value Transfer Protocol) – – Globally unique card numbers Globally unique transaction numbers Challenge-response user identification Digital signatures • MULTOS operating system – firewalls on the chip ELECTRONIC PAYMENT SYSTEMS 20 -763 SPRING 2004 COPYRIGHT © 2004 MICHAEL I. SHAMOS