Data breach sparks security concerns in payment industry

The lack of details surrounding the potentially massive data breach that Heartland Payment Systems Inc. disclosed this week is fueling questions and concerns within the payment processing industry about the exact nature of the security compromise.

The concerns also are being driven by the fact that Princeton, N.J-based Heartland is one of the largest processors of credit and debit card transactions in the U.S. It handles more than 100 million card transactions per month for 250,000 clients; that a company so large could have its systems be compromised by intruders for what appears to have been an extended period of time is prompting more than the usual curiosity about how the breach took place.

In addition, Heartland, as a large processor of card transactions, has been required to be compliant with the Payment Card Industry Data Security Standard - a set of security controls mandated by the major credit card companies - for a considerably longer time than retailers have been. As a result, Heartland was generally expected to have stronger controls in place for preventing, detecting and responding to system intrusions than many other entities covered by the PCI rules do.

To continue reading, register here and become an Insider. You'll get free access to premium content from CIO, Computerworld, CSO, InfoWorld, and Network World. See more Insider content or sign in.

The lack of details surrounding the potentially massive data breach that Heartland Payment Systems Inc. disclosed this week is fueling questions and concerns within the payment processing industry about the exact nature of the security compromise.

The concerns also are being driven by the fact that Princeton, N.J-based Heartland is one of the largest processors of credit and debit card transactions in the U.S. It handles more than 100 million card transactions per month for 250,000 clients; that a company so large could have its systems be compromised by intruders for what appears to have been an extended period of time is prompting more than the usual curiosity about how the breach took place.

In addition, Heartland, as a large processor of card transactions, has been required to be compliant with the Payment Card Industry Data Security Standard - a set of security controls mandated by the major credit card companies - for a considerably longer time than retailers have been. As a result, Heartland was generally expected to have stronger controls in place for preventing, detecting and responding to system intrusions than many other entities covered by the PCI rules do.

"We're dying for information on this one, said Henry Helgeson, president and co-CEO of Merchant Warehouse Inc., a Boston-based provider of payment card processing services and software. "Everybody who processes card information is dying to know how exactly this happened."

For the time being, Helgeson added, he and other Merchant Warehouse officials are "scratching [our] heads" about the breach at Heartland. "One of our frustrations right now is, if this is a new attack, we need to know about it," he said. "We need to know if what happened to Heartland can happen to [other payment processors]."

Heartland disclosed the breach on Tuesday, saying that unknown intruders had broken into its networks sometime last year and stolen payment card transaction data. Although Heartland didn't disclose the number of card accounts that might have been compromised, some outside estimates from analysts and people within payment industry have pegged the number at more than 100 million, which would make it by far the biggest payment card breach to date - surpassing the 45.6 million card numbers that The TJX Companies Inc. said were stolen in a breach that the retailer disclosed in January 2007.

From the small amount of information that Heartland has released so far, the hackers appear to have planted some sort of malware capable of sniffing out payment card data as it moved across the company's network, and then to have spirited it out of Heartland's systems in encrypted data streams.

The fact that Heartland didn't detect the malicious activity until being alerted to it by Visa Inc. and MasterCard International Inc. suggests that the company hadn't implemented, or wasn't using, all of the security controls called for by the PCI standard, analysts said.

For instance, Heartland's ignorance of the malware on its network indicates that it wasn't doing file integrity monitoring on a routine basis, Gartner Inc. analyst Avivah Litan said. That is a PCI requirement designed to enable companies to detect unauthorized content in files and directories on servers, as well as changes in or additions to permission privileges.

For more enterprise computing news, visit Computerworld. Story copyright Computerworld, Inc.