Cybercriminals have an insatiable thirst for credit card data. There are multiple ways to steal this information on-line, but Point of Sales are the most tempting target. An estimated 60 percent of purchases at retailers’ Point of Sale (POS) are paid for using a credit or debit card. Given that large retailers may process thousands of transactions daily though their POS, it stands to reason that POS terminals have come into the crosshairs of cybercriminals seeking large volumes of credit card data. Download our Attacks on Point of Sales Systems whitepaper for details on how POS attacks are carried out, and how to protect against them.

Right now, there are a number of internet forums openly selling credit and debit card data in various formats. The most common is “CVV2” where the seller provides the credit card number, along with the additional CVV2 security code which is typically on the back of the card. This data is enough to facilitate online purchases. However some sellers also offer the more lucrative “Track 2” data. This is shorthand for the data saved on a card’s magnetic strip. This data is more lucrative as it allows criminals to clone cards, meaning they can be used in brick-and-mortar stores or even ATMs if the PIN is available. The value of the data is reflected in the online sale price and these prices vary widely. CVV2 data is sold for as little as $0.1 to $5 per card while Track 2 data may cost up to $100 per card.

Figure. Credit card data for sale on Internet forums

So how do criminals get this data? Skimming is one of the more popular methods. This involves installing additional hardware onto the POS terminal which is then used to read track 2 data from cards. However as it requires physical access to the POS, and expensive additional equipment, it’s difficult for criminals to carry this out on a large scale. To address this problem criminals have turned to software solutions in the form of POS malware. By targeting major retailers with this malware criminals can accrue data for millions of cards in a single campaign.

POS malware exploits a gap in the security of how card data is handled. While card data is encrypted as it’s sent for payment authorization, it’s not encrypted while the payment is actually being processed, i.e. the moment when you swipe the card at the POS to pay for your goods. Criminals first exploited this security gap in 2005 when a campaign orchestrated by Albert Gonzalez lead to the theft of data for 170 million cards.

Since then a market has grown in the supply and sale of malware, which reads Track 2 data from the memory of the POS terminal. Most POS systems are Windows-based, making it relatively easy to create malware to run on them. This malware is known as memory-scraping malware as it looks in memory for data, which matches the pattern of the Track 2 data. Once it finds this data in memory, which occurs as soon as a card is swiped, it saves it in a file on the POS, which the attacker can later retrieve. The most well-known piece of POS malware is BlackPOS which is sold on cybercrime forums. Symantec detects this malware as Infostealer.Reedum.B.

Armed with POS malware, the next challenge for attackers is to get the malware onto the POS terminals. POS terminals are not typically connected to the Internet but will have some connectivity to the corporate network. Attackers will therefore attempt to infiltrate the corporate network first. They may do this by exploiting weaknesses in external facing systems, such as using an SQL injection on a Web server, or finding a periphery device that still uses the default manufacturer password. Once in the network, they will use various hacking tools to gain access to the network segment hosting the POS systems. After the POS malware is installed, attackers will take steps to make sure their activity goes unnoticed. These steps could include scrubbing log files or tampering with security software, which all ensures that the attack can persist and gather as much data as possible.

Unfortunately, card data theft of this nature is likely to continue in the near term. Stolen card data has a limited shelf-life. Credit card companies are quick to spot anomalous spending patterns, as are observant card owners. This means that criminals need a steady supply of “fresh” card numbers.

The good news is that retailers will learn lessons from these recent attacks and take steps to prevent the re-occurrence of this type of attack. Payment technology will also change. Many US retailers are now expediting the transition to EMV, or “chip and pin” payment technologies. Chip and Pin cards are much more difficult to clone, making them less attractive to attackers. And of course new payment models may take over. Smart-phones may become the new credit cards as mobile, or NFC, payment technology becomes more widely adopted.

There’s no doubt that cybercriminals will respond to these changes. But as retailers adopt newer technologies and security companies continue to monitor the attackers, large-scale POS thefts will become more difficult and certainly less profitable.

For more details on how POS attacks are carried out and how to protect against them, see our whitepaper: Attacks on Point of Sales Systems.

For more insights, be sure to read:

Underground black market: Thriving trade in stolen data, malware, and attack services

POS malware: Potent threat remains for retailers

(Editor's note: This article was originally published on 2/03/14 and has been updated with new findings.)