Common payment processing protocols found to be full of flaws
Credit card users could have their PINs stolen, and merchants could have their bank accounts pillaged, in a set of attacks demonstrated by researchers Karsten Nohl and Fabian Bräunlein at the Chaos Computing Club security conference.
Much research has been done into the chips found on credit cards and the readers and number pads used with these cards, but Nohl decided to take a different approach, looking instead at the communications protocols used by those card readers. There are two that are significant; the first, ZVT, is used between point of sale systems and the card readers. The second, Poseidon, is used between the card reader and the merchant's bank. Nohl found that both had important flaws.
The ZVT protocol was originally designed for serial port connections, but nowadays is used over Ethernet, both wired and wireless. The protocol has no authentication, meaning that if an attacker can put themselves on the same network, they can act as a man-in-the-middle between the point-of-sale system and the card reader. The attacker can then read the magnetic stripe data from the card, and can also request a PIN.