2. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Electronic Payment Systems 20-763 Lecture 9 Smart and Stored-Value Cards

3. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS ePayment by Smart Card 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

4. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Memory Cards Magnetic stripe –140 bytes Vanilla memory cards –1-4 KB memory, no processor Optical memory cards –4 megabytes read-only (CD-like) 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 –Intelligent, active devices with defenses

5. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Smart Card Costs NEW: RW Optical 500 MB 32-bit $15 Reader: $200

6. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Card Taxonomy SOURCE: BURGER, CAROLL & ASSOCIATESBURGER, CAROLL & ASSOCIATES

7. Micropayments SOURCE: SMARTCARDCENTRAL.COMSMARTCARDCENTRAL.COM

8. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Multi-Application Smart Card Digital Certificates Private Key(s) ACE (Active Customer Enrollment) Authentication Biometric Data Employee Data Magnetic Stripe or RF Door Access Employee Picture Encryption Key Password Cache S/Mime Secure Mail SSL Secure Web Customer PKI Application Single Sign-On Local File Encrypt Secure Screen Saver BiometricAuthentication Application Login SOURCE: SECURITY DYNAMICS

9. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Smart Card Structure Contacts (8) SOURCE: SMART CARD FORUM Epoxy Microprocessor Contacts Card (Upside-down) Contacts:

10. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Old Smart Card Architecture SOURCE: SMART CARD FORUM EEPROM: Electrically Erasable Programmable Read-Only Memory

11. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 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 OPERATING SYSTEM MICROPROCESSOR JAVA VIRTUAL MACHINE 1 2 3 CARDLETS

12. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 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

13. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS OpenCard Framework (OCF) SOURCE: OPENCARD.ORGOPENCARD.ORG CardService Layer CardTerminal Layer (TALKS TO CARD) (TALKS TO READER)

14. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS MULTOS Administration SOURCE: MULTOSMULTOS 14-COMPANY SMART CARD CONSORTIUM

15. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Open Platform Card Specification SOURCE: GAMMAGAMMA

16. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS OP Security Assumptions OP card is merely a component Need to trust: –back-office systems –cryptographic key management –card/chip operating environment (COE) –off-card security procedures (actors and roles) There are vulnerabilities the OP card cannot protect itself against SOURCE: GAMMAGAMMA

17. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS OP Card Security Threats Group 1 Group 2 Group 4 Group 5 Group 6 Group 7 CAD Clone Future Past Current Group 3 DIRECT ATTACKS ON CHIP CIRCUITRY INDIRECT ATTACKS ON CHIP CIRCUITRY ATTACKS USING CARDS NOT YET ISSUED, OLD CARDS, CLONES ATTACKS ON CARD’S INTERFACE TO THE OUTSIDE, E.G. PREMATURE REMOVAL ATTACKS ON THE RUN-TIME ENVIRONMENT THROUGH THE CARD ACCEPTANCE DEVICE (CAD) THREATS FROM CARD APPS AND NEED TO SHARE RESOURCES THREATS BASED ON RTE IMPLEMENTATION SOURCE: GAMMAGAMMA

18. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Smart Card Security Observers Active defenses Attacks: Microprobing, microscopy Differential fault analysis –(Boneh et al. 1997) –Induce errors, observe output differences Differential power analysis SOURCE: cryptography.com SOURCE: Kömmerling et al.

19. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 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 SMART CARD POWER CONSUMPTION DURING DES ENCRYPTION SOURCE: cryptography.com 16 DES ROUNDS INITIAL PERMUTATION FINAL PERMUTATION EXPANDED VIEW OF ROUNDS 2 & 3

20. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Smart Card Applications Ticketless travel: Seoul bus system –4M cards, 1B transactions since 1996 Authentication, ID Medical records Ecash Store loyalty programs Personal profiles Government –Licenses Mall parking...

21. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Hong Kong Smart Cards Octopus –8 million cards, 9000 readers –7 million transactions/day Visacash ComPass Visa (VME) Mondex GSM SIM ePark

22. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Octopus Transaction time < 300 milliseconds Transaction fees: HK$0.02 + 0.75% –$10 transaction costs $0.095 (0.95%) Applications –Transit –Telephones –Road tolls –Point-of-sale –Access control Anonymous / personalized How does money get to service providers? –Net settlement system operated by Creative Star

23. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Octopus System SOURCE: WORLD BANKWORLD BANK

24. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Smart Card Sales Leaders (2000) VENDOR # OF CARDS SHARE Gemplus185,000,00029% Schlumberger152,000,000 24% Oberthur Smart Cards 85,000,000 14% Giesecke & Devrient 76,000,00012% Orga Card Systems 53,000,000 8% TOTAL628,000,000 SOURCE: CARDWEB.COMCARDWEB.COM

25. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Mondex Subsidiary of MasterCard Smart-card-based, stored-value card (SVC) NatWest (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

26. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Mondex Overview SOURCES: OKI, MONDEX USA

27. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Mondex Security Active and dormant security software –Security methods constantly changing –ITSEC E6 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

28. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Payment Cards 8-128 Kb Data rate 115 Kb/sec ISO 7816 compliant Visa-certified PIN management and verification 3DES algorithm for authentication, secure messaging Epurse with payment command set (debit, credit, balance, floor limit management) SOURCE: GEMPLUSGEMPLUS EMV = EUROPAY INT’L, MASTERCARD, VISA MPCOS = MULTI PAYMENT CHIP OPERATING SYSTEM

29. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Contactless Cards 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: GEMPLUSGEMPLUS

30. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Wireless Card Authorization SOURCE: SAMSUNGSAMSUNG

31. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Comparison of Payment Methods PAYMENT TYPE ADVANTAGESDISADVANTAGES CashAnonymous, universal, free Risk of theft/loss, bulky Credit CardAlmost universalHigh transaction cost, fraud/forgery EFTPOSDirect access to cashMust be online, security only moderate Disposable smart card Fast, privateRisk of loss, limited to small amounts Personalized smart card Long useful life, security, like eCash Not anonymous, lack of international standards

32. 20-763 ELECTRONIC PAYMENT SYSTEMSFALL 2001COPYRIGHT © 2001 MICHAEL I. SHAMOS Q A &