Finding the right way to keep payments secure is crucial.
In achieving this, point-to-point encryption — commonly referred to as P2PE — is a global standard. P2PE is an encryption method used widely by merchants, merchant aggregators, and other businesses handling payment data that is regarded as the most secure means of encryption for protecting payment information.
In the race to make ecommerce transacting as secure as card-present, technologies like Network Tokenization are emerging an added dimension of protection, especially in the realm of Card Not Present (CNP) transactions. This guide will examine how P2PE works and how innovations today are creating more swift, secure transacting within a PCI-compliant framework.
What is Point-to-Point Encryption (P2PE)?
Point-to-Point Encryption (P2PE) is a security standard set by the PCI Security Standards Council (SSC) that outlines the encryption standards for cardholder information. This standard applies specifically to the providers of P2PE solutions.
Developed in its current form in the early 2010s, the P2PE requirement standard defines the exact requirements for encrypting cardholder information during transactional processes. The primary goal of the P2PE standard is to ensure cardholder information is encrypted and protected at every point of a transaction, from start to finish.
In summary, the security standard stipulates that all cardholder information must be encrypted immediately after being read by a payment terminal.
This encryption must be upheld from point to point in the payment process until it is successfully transmitted to a payment processor, who decrypts the information to approve or deny a transaction.
P2PE vs. E2EE: What’s the Difference?
When a P2PE solution meets the standard requirements, it is a PCI-validated P2PE solution. However, P2PE solutions are not always PCI-validated nor do they legally have to be. Non-validated P2PE solutions are commonly known as End-to-End Encryption (E2EE).
Compared to PCI-validated P2PE solutions, E2EE solutions involve additional systems in between a payment’s journey from the starting point of a transaction to the processor. As a result, since E2EE solutions may have more stages and parties, they can be more vulnerable to hacks and data breaches.
In general, it is best to opt for a P2PE solution over the E2EE alternatives. What makes the P2PE solutions more dependable is the rigorous inspection and validation processes involved in PCI compliance — for a P2PE solution to be PCI-validated, it must be verified by an official assessor.
What are the P2PE PCI Requirements?
The P2PE standard applies to third-party providers offering P2PE solutions.
To meet the PCI requirements for P2PE, a provider must have the necessary software and hardware components in place to ensure a payment remains protected from endpoint to endpoint. Since its initial release in 2011, the P2PE has undergone a few different updates and iterations.
The most recent update to the standard occurred in September 2021, when version 3.1 of the standard was officially published by the PCI SSC. P2PE is divided into five main domains — the core areas in need of security controls — each of which has its own set of validation requirements.
Here is an overview of the most recent P2PE domains and requirements:
Domain 1: Encryption Device and Application Management
Domain 1 deals with the secure management of P2PE devices and software. Any software or hardware used in the P2PE process must be part of a PCI-approved point-of-interaction (POI) device.
Domain 2: Application Security
The P2PE process involves a variety of different applications, making it a necessity to ensure these applications are thoroughly secure. Domain 2 is designed to ensure the secure development of payment applications with access to clear-text account data. These applications should be installed solely on PCI-approved POI devices.
Domain 3: P2PE Solution Management
A P2PE solution provider must do more than supply the solution alone — they must also oversee the management of the solution, including any third-party relationships and incident response needs. Additionally, solution providers must deliver a P2PE Instruction Manual to customers.
Domain 4: Decryption Environment
The endpoint in the P2PE process is known as the decryption environment, where the encrypted payment and account data is received and ultimately decrypted.
Domain 5: P2PE Cryptographic Key Operations and Device Management
The fifth and final domain of P2PE validation deals with the cryptographic key processes involved in P2PE solutions. Specifically, Domain 5 defines the standards for establishing and administering key-management operations for account data encryption POI devices, as well as decryption hardware security modules (or HSMs for short).
To view the entire in-depth explanation of these requirements, check out the PCI SSC’s official document on P2PE v4.0 Security Requirements and Testing Procedures.
How is CNP Transacting Becoming More Secure?
Due to recent events, the payment landscape is undergoing significant shifts. With "Card Not Present" (CNP) transactions capturing an increasingly larger market share, it has become for businesses to understand and implement the most effective security protocols. Let's trace the timeline and evolution of Point-to-Point Encryption (P2PE) and the development of secure Network Tokenization technology to enhance CNP security.
P2PE's Inception: In 2011, the PCI Security Standards Council (SSC) introduced the P2PE standard. Designed to counteract increasing payment card breaches, P2PE ensured that cardholder information remained encrypted from the point of capture up to the decryption endpoint, usually at the payment processor's end.
The Surge in CNP Transactions: As e-commerce boomed, CNP transactions—where the cardholder doesn't physically present the card for a transaction—grew exponentially. This rapid growth brought forth new challenges, especially in ensuring the security of sensitive payment data in digital transactions.
Enter Network Tokenization: While P2PE offers robust encryption during a transaction's lifecycle, CNP transactions require an additional layer of security. This is where Network Tokenization shines. Instead of transmitting actual card details during an online transaction, Network Tokenization replaces sensitive data with unique tokens. These tokens are useless if intercepted, thereby adding an additional layer of protection to CNP transactions.
Recent Market Dynamics: With events like the COVID-19 pandemic accelerating the shift towards digital and contactless payment methods, CNP transactions began claiming an even larger slice of the market. To keep pace with evolving threats and challenges, payment security standards also had to adapt and grow, as evidenced by the release of P2PE v3.1 in September 2021 and PCI 4.0 just recently.
Spreedly & Modern Payment Security: Platforms like Spreedly come into play as businesses navigate these complexities. With a comprehensive payment infrastructure that emphasizes tokenization, Spreedly not only aids in reducing PCI scope but also ensures robust protection for both data at rest and in transit in the age of CNP transactions.
Making Transacting More Secure
In the continually evolving digital payment landscape, new technologies emerge that cater to the specific challenges posed by different transaction environments. One of these promising technologies is Network Tokenization, which has shown particular prowess in securing Card Not Present (CNP) transactions.
Differences Between P2PE and Network Tokenization: While P2PE focuses on encrypting data from the point of capture until it reaches its destination, Network Tokenization involves replacing sensitive card data with a unique digital identifier or token. These tokens retain the essential information without exposing the card's actual details. Network Tokens are provisioned with the networks and issuing banks, not just with the processor, like processor or merchant tokens. While this increases cohesion among the parties in the payments chain, it also has an added security layer in a single-use cryptogram that accompanies the transaction request.
Advantages of Network Tokenization:
Suited for Card Not Present Transactions: CNP transactions, which dominate online sales and digital transactions, are particularly vulnerable to breaches because the card isn't physically present. Network Tokenization, designed with such transactions in mind, offers a layer of protection by ensuring that the actual card details never traverse the network. Instead, tokens, which hold no value if intercepted, are sent.
Reduction in PCI Scope: Just like P2PE, Network Tokenization can drastically reduce the PCI DSS scope. Since actual cardholder data isn't stored, the risks and associated compliance burdens diminish.
Enhanced Security Over Card Vaulting: Traditional card vaulting stores card details in encrypted forms, which, if decrypted, can expose the actual card information. Network Tokenization, in contrast, eliminates this risk. Even if tokens were accessed, they cannot be reverse-engineered to retrieve the original card details.
Dynamic Nature: Many network tokens can be domain-restricted, meaning they are only usable within specific environments or merchants. This ensures that even if a token is misappropriated, its usability is highly limited.
Economic Advantages: Card-present transactions are fundamentally more secure than CNP. Network Tokens, by adding security to CNP transactions, offer lower pricing and higher acceptance rates due to their more secure nature.
In Comparison to P2PE and E2EE: While P2PE and E2EE offer end-to-end encryption, they still transmit actual card details, albeit in encrypted form. Network Tokenization does away with this entirely by ensuring only tokens, which are devoid of intrinsic value, are in transit. This creates an added layer of protection for businesses, especially in the CNP environment.
While P2PE remains a gold standard for many physical transaction environments, Network Tokenization is paving the way for secure, efficient, and compliant CNP transactions. As e-commerce and digital transactions continue to grow, the role of Network Tokenization in ensuring payment security will only become more paramount.
Explore Network Tokenization With Spreedly
To navigate the complex terrain of payment security you need a blend of knowledge, vigilance, and the right tools. Both P2PE and Network Tokenization offer robust defenses against potential breaches, each catering to specific transaction environments. While P2PE is the gold standard of security in many physical transaction scenarios, Network Tokenization is fast becoming the leader for card not present transactions. With Spreedly, businesses can seamlessly integrate network tokenization, ensuring maximum security while minimizing PCI compliance burdens. As digital payments continue to evolve, staying ahead of the curve in payment security remains the cornerstone of successful business operations.
Get in touch with Spreedly today to discover the full scope of our PCI capabilities for your business.
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