Today we have published a new paper: “Chip and Skim: cloning EMV cards with the pre-play attack”, presented at the 2014 IEEE Symposium on Security and Privacy. The paper analyses the EMV protocol, the leading smart card payment system with 1.62 billion cards in circulation, and known as “Chip and PIN” in English-speaking countries. As a result of the Target data breach, banks in the US (which have lagged behind in Chip and PIN deployment compared to the rest of the world) have accelerated their efforts to roll out Chip and PIN capable cards to their customers.

However, our paper shows that Chip and PIN, as currently implemented, still has serious vulnerabilities, which might leave customers at risk of fraud. Previously we have shown how cards can be used without knowing the correct PIN, and that card details can be intercepted as a result of flawed tamper-protection. Our new paper shows that it is possible to create clone chip cards which normal bank procedures will not be able to distinguish from the real card.

When a Chip and PIN transaction is performed, the terminal requests that the card produces an authentication code for the transaction. Part of this transaction is a number that is supposed to be random, so as to stop an authentication code being generated in advance. However, there are two ways in which the protection can by bypassed: the first requires that the Chip and PIN terminal has a poorly designed random generation (which we have observed in the wild); the second requires that the Chip and PIN terminal or its communications back to the bank can be tampered with (which again, we have observed in the wild).

To carry out the attack, the criminal arranges that the targeted terminal will generate a particular “random” number in the future (either by predicting which number will be generated by a poorly designed random number generator, by tampering with the random number generator, or by tampering with the random number sent to the bank). Then the criminal gains temporary access to the card (for example by tampering with a Chip and PIN terminal) and requests authentication codes corresponding to the “random” number(s) that will later occur. Finally, the attacker loads the authentication codes on to the clone card, and uses this card in the targeted terminal. Because the authentication codes that the clone card provides match those which the real card would have provided, the bank cannot distinguish between the clone card and the real one.

Because the transactions look legitimate, banks may refuse to refund victims of fraud. So in the paper we discuss how bank procedures could be improved to detect whether this attack has occurred. We also describe how the Chip and PIN system could be improved. As a result of our research, work has started on mitigating one of the vulnerabilities we identified; the certification requirements for random number generators in Chip and PIN terminals have been improved, though old terminals may still be vulnerable. Attacks making use of tampered random number generators or communications are more challenging to prevent and have yet to be addressed.

Update (2014-05-20): There is press coverage of this paper in The Register, SC Magazine UK and Schneier on Security.
Update (2014-05-21): Also now covered in The Hacker News.