Method and system for transmission of financial data

Abstract

An improved system for transmission financial data includes, in preferred embodiments, an encryption key stored on a bank card and used to encrypt preselected data prior to transmission. Encrypted data is then transmitted through all intermediate computers without decryption and reencryption. Decryption occurs only at the final destination, where the encryption key has been stored. In preferred embodiments, the encryption key is combined with a terminal identification valve to provide further security.

Claims

I claim:

1. A method of securing electronic data relating to a customer-initiated financial transaction or the like for transmission from a transaction location to a remote receiving location, comprising:

issuing the customer a financial transaction identification card having an issuer security key encoded thereon, the issuer security key corresponding to the remote receiving location;

storing the issuer security key at the remote receiving location;

at the time of a financial transaction, reading the issuer security key at the transaction location from the financial transaction identification card;

at the transaction location, encrypting preselected data relating to the financial transaction using an encryption algorithm and the issuer security key as the encryption key;

transmitting data relating to the financial transaction, including the encrypted data, to the remote receiving location; and

decrypting the encrypted data at the remote location using the issuer security key stored at the remote location.

2. The method of claim 1 wherein the financial transaction identification card is manufactured in accordance with the ISO 7811/2 and ISO 7318 standards, as published in ISO documents having reference numbers ISO 7811/2-1985(E) and ISO 7813-1985(E), respectively, and the issuer security key is encoded on the card at the location formerly used for clock bits, thereby enabling the key to be encoded without modification of existing data formats for data encoded on the financial transaction identification card.

3. The method of claim 1 wherein the transaction location is assigned a unique value, and the issuer security key is combined with the transaction location value and the resulting value is used as the encryption key to encrypt the preselected data at the transaction location and decrypt the preselected data at the remote location.

4. The method of claim 3 wherein the issuer security key is logically exclusive OR'd with the transaction location value.

5. A method of securing electronic data relating to a customer-initiated financial transaction or the like for transmission from a transaction location to a remote receiving location, comprising:

issuing the customer a financial transaction identification card having an issuer security key encoded thereon, the issuer security key corresponding to the remote receiving location;

storing the issuer security key at the remote receiving location;

at the time of a financial transaction, reading the issuer security key at the transaction location from the financial transaction identification card;

at the transaction location, encrypting preselected data relating to the financial transaction using an encryption algorithm and the issuer security key as the encryption key;

transmitting data relating to the financial transaction, including the encrypted data, to the remote receiving location through one or more intermediate nodes; and

decrypting the encrypted data at the remote location using the issuer security key stored at the remote location.

Description

TECHNICAL FIELD

This invention relates to financial transaction methods and systems, more particularly to an improved method and system for encrypting electronic data for secure transmission during financial transactions.

BACKGROUND ART

When sensitive data relating to financial transactions is transmitted or stored in electronic form, it is often desirable to secure the data in some manner. In electronic funds transfers, debits or credits, security is presently accomplished by encrypting sensitive portions of the data using a data encryption algorithm known as the Data Encryption Standard, or DES. DES was formally adopted by the United States National Bureau of Standards in 1983 and is described in Federal Information Processing Standards Publication FIBS PUB 46 dated Jan. 15, 1977, which is hereby incorporated by reference. DES operates using a 64 bit key that is used to encrypt and decrypt data.

In modern financial transactions, customers use point of service machines, such as automatic teller machines (ATMs) or point of sale (POS) terminals, to conduct financial transactions at locations remote from the customer's bank or other financial institution. Data relating to such transactions must be transferred electronically to the customer's financial institution to verify and record the transaction. Data is typically transmitted back to the ATM or POS terminal to authorize or deny the transaction.

To enable an ATM or POS transaction, a customer is typically issued a financial transaction identification card, or bank card, and a corresponding personal identification number (PIN) by the customer's financial institution. The bank card includes at least one magnetic stripe on which information relating to the customer and issuing institution is stored. To conduct a transaction, the ATM or POS terminal must read preselected information from the magnetic stripe and transmit it to the issuing institution along with the customer's PIN which is entered by the customer at the time of the transaction. The PIN is designed to act as a primary security measure as it is necessary to have the bank card and know the PIN in order to complete a transaction.

Because of the sensitive nature of the data transmitted back and forth during an ATM or POS transaction, at least some of the data is normally encrypted using DES to reduce the risk of interception and compromise. At present, this is accomplished by encrypting the PIN, for example, using a DES key secured within the POS terminal. The DES key itself is often encrypted using additional DES keys to provide further layers of security, and keys are preferably stored in secure hardware devices to avoid compromise. Encrypted data from a POS terminal will then be transmitted to a computer controlling a number of POS terminals where the appropriate DES keys are stored and the data will be decrypted.

In order to arrive at issuing institution's computer to verify and record the transaction, the data will normally be transmitted through a chain of multiple computers, with data encryption and decryption occurring at each node or link in the chain. Each encryption and decryption operation introduces expense in associated hardware needs and ongoing security measures to maintain and periodically change DES keys. Decryption and reencryption at numerous intermediate locations also results in multiple periods during the transmission when the data is not secure. Further, multiple encryption and decryption operations slow down data transmission, an especially undesirable result in a POS environment where merchants want minimum delays in processing customer transactions. As such, the current methods and systems for securing electronic data in financial transactions are undesirable in that they are relatively expensive, leave the data unsecured at various times during transmission, and introduce delays into the transmission process.

Existing documents describing known data encryption techniques and financial institution standards include the following which are hereby incorporated by reference:

Reference documents from International Organization for Standardization:

(1) ISO 7811/2, Identification cards - Recording technique - Part 2: Magnetic stripe.

(2) ISO 7813, Identification cards - Financial transaction cards.

(3) ISO TC68/SC2 Working draft N177 and N178, Banking - Personal Identification Number Management and Security - Part 1: PIN protection principles and technique.

(4) ISO 4909, Bank Cards - Magnetic stripe data content for track 3.

Reference documents from American National Standards Committee, X9-Financial Services:

(1) ANSI X3.92 Data Encryption Algorithm (DEA

(2) ANSI X9.8, American National Standard for PIN Management and Security.

(3) ANSI X9.19, Financial Institution Retail Message Authentication.

(4) ANSI X9.24, Draft 5.0, Financial services - Retail Key Management.

Reference documents from U.S. Department of Commerce/National Bureau of Standards:

(1) FIPS PUB 46, Federal Information Processing Standards publication - Data Encryption Standard.

DISCLOSURE OF THE INVENTION

It is an object of the present invention to provide an improved method and system for securing electronic data for financial transactions or the like.

It is another object of the invention to provide such a method and system that will not require extensive security hardware.

It is another object of the invention to provide such a method and system that will keep data secure throughout transmission of the data.

It is another object of the invention to provide such a method and system that will minimize delays in the transmission process.

These and other objects of the invention, which will become more apparent as the invention is more fully described below, are obtained by providing an improved method and system for encrypting data for financial transactions or the like. In preferred embodiments of the invention, an encryption key is stored on a bank card and used to encrypt preselected data prior to transmission. Encrypted data is then transmitted through all intermediate computers without decryption and reencryption. Decryption occurs only at the final destination, where the encryption key has been stored. In preferred embodiments, the encryption key is combined with a terminal identification valve to provide further security.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a schematic diagram illustrating the operation of a preferred embodiment of the present invention.

FIG. 2 is a plan view of a financial transaction identification card illustrating the location where the DES key is preferably encoded in accordance with a preferred embodiment of the present invention.

BEST MODE FOR CARRYING OUT THE INVENTION

In preferred embodiments, the present invention operates by assigning each financial institution or each financial transaction identification card an Issuer Security Key comprising a 4 to 64 bit value to be used as all or part of an encryption key to the Data Encryption Algorithm (DEA) implemented by the DES. The Issuer Security Key is encoded on one or all magnetic stripe tracks on a financial institution identification card. The value recorded on the card is also retained by the card issuing financial institution. When the card is used in a point-of-service device, the encoded Issuer Security Key is used to encrypt data such as the cardholder-entered Personal Identification Number (PIN), for communication transmission from the point-of-service device to the card issuer, or it agent, for decryption.

A schematic illustration of the preferred embodiment of the present invention, implemented on a point-of-sale (POS) terminal is illustrated in FIG. 1. A customer (not shown) presents a financial transaction identification card 12 to the POS terminal which reads information, including the issuer security key 16, from the card. The customer or merchant enters information about the transaction into the POS. The POS terminal, preferably logically exclusive, OR's the key value with a terminal identification number to produce a 64-bit DEA encryption key. If necessary, the least significant bits are assembled as necessary to produce a 64-bit key. The DEA key is used to encrypt the customer's PIN 18 and the encrypted PIN is transmitted along with other transaction data 20 including the terminal identification number. The transaction data and encrypted PIN are transmitted through intermediate computers or nodes 22, 24 26 until arrival at the issuer's computer 28. At the issuer's computer, the encrypted PIN is decrypted using the key 30 stored at the issuer's computer and the terminal identification number included in the transaction data.

The issuing financial institution may select a single Issuer Security Key for all customers, multiple Issue Security Keys shared by groups of customers, or unique Issue Security Keys for each customer, depending on the security needs of the issuing institution.

Using known DEA key security practices, the Issuer Security Key retained by the card issuer is secured from easy disclosure. This may be accomplished by storing the Issuer Security Key as a cryptogram by encrypting it under the D(A using an issuer master key retained in a hardware security unit, such as those currently available from ATTLA of San Jose, Calif. and Quadstar of Dallas, Tex. The method used to secure the Issuer Security Key at the card issuer's site is selected at the card issuer's discretion, since the liability and risk of compromise is with the card-issuing organization.

The Issuer Security Key is recorded in the clear (i.e., in unencrypted form) on a magnetic stripe encoded track of the financial transaction identification card. The actual risk of exposure is no greater than the use of key management systems as described in ANSI X9.19 and ANSI X9.24. This is true since the compromise of the Issuer Security Key requires having the actual financial transaction identification card with the key recorded on it. Fraud can only take place if the actual card is obtained which exposes only that card. Under other key management systems, the compromise of a DEA encryption key can expose all financial transaction identification cards and related secured data (e.g. a cardholder-entered personal Identification Number) processed under that key before a new key can be established.

Also, the financial transaction identification card exposure of the Issuer Security Key has no direct relationship with the data being secured under a DEA process using this key. If the key was compromised by fraudulently obtaining the card, the related cardholder Personal Identification Code (PIN), for example, could not be derived. PIN disclosure could only be obtained from the cardholder who obtained the PIN from the card issuer or established the PIN with the card issuer.

Application of the Issuer Security Key for use as an encryption and decryption DEA key eliminates the need for DEA key management systems between each node in a communications network supporting financial transaction identification cards. This eliminates cost and processing overhead to support related hardware security units, related application security software and personnel procedures in creating and storing keys or key parts in the implementation and maintenance of a DEA key management system.

MAGNETIC STRIPE RECORDING TECHNIQUE

The Issuer Security Key is a series of 4-bit characters encoded on a magnetic stripe 8, such as either Track 1, Track 2 or Track 3, or encoded on any combination of the tracks in a key region 14 following the track's Longitudinal Redundancy Check (LRC) character 10 on a financial transaction identification card 12. The key region is currently unused, or used only for clock bits as described below. Each 4-bit character can be any of the following values:

    ______________________________________
    4-Bit     Hexadecimal
                         4-Bit      Hexadecimal
    Series    Character  Series     Character
    ______________________________________
    0000      0          1000       8
    0001      1          1001       9
    0010      2          1010       A
    0011      3          1011       B
    0100      4          1100       C
    0101      5          1101       D
    0110      6          1110       E
    0111      7          1111       F
    ______________________________________

    ______________________________________
    Start sentinel        1
    Primary Account Number
                          16
    Separator             1
    Expiration date       4
    Interchange designator
                          1
    Service code          2
    Discretionary data    1
    End sentinel          1
    LRC                   1
    Recorded Length       28    Characters
    ______________________________________

    ______________________________________
    Place of Process
                Description
    ______________________________________
    Card Issuer 1.    Card issuer manufactures a finan-
                      cial transaction identification
                      card and encodes an Issuer Secur-
                      ity Key on Tracks 1 and 2.
    Card Issuer 2.    The card issuer stores the Issuer
                      Security Key on a Primary Account
                      File for the Primary Account Num-
                      ber recorded on the card.
    Card Issuer 3.    Before storing the Issuer Secur-
                      ity Key, the card issuer creates
                      a cryptogram for actual storage.
                      The cryptogram is created by
                      using the Data Encryption Algo-
                      rithm encrypt function usng the
                      issuer Security Key as the input
                      block and an issuer masterkey for
                      the DEA key.
    Card Issuer 4.    To ensure security, the card
                      issuer performs the cryptogram
                      process in a hardware security
                      module to protect the issuer's
                      master key and not compromise the
                      Issuer Security Key within the
                      card issuer's facility.
    Card Issuer 5.    The most ideal situation would be
                      a hardware security module that
                      randomly creates Issuer Security
                      Keys and provides the clear
                      Issuer Security Key directly to
                      the card manufacturing process
                      and creates the key cryptogram
                      for file storage.
    Card Issuer 6.    As part of the card manufacturing
                      process, the card issuer also
                      creates a Personal Identification
                      Number (PIN) to be used with the
                      card.
    Card Issuer 7.    Through common card issuance and
                      PIN issuance, both are supplied
                      separately to the cardholder.
    Point-of-Service
                8.    The cardholder uses a point-
    Device            of-service device (e.g., POS
                      terminal) by swiping the finan-
                      cial transaction identification
                      card and entering the card-
                      holder's PIN.
    Point-of-Service
                9.    The magnetic stripe reader of the
    Device            terminal reads Track 1 and cap-
                      tures the encoded Issuer Security
                      Key.
    Point-of-Service
                10.   The Issuer Security Key is
    Device            exclusive OR'd to the terminal
                      identification number to create a
                      DEA key.
    Point-of-Serivce
                11.   The cardho1der-entered PIN is
    Device            exclusive OR'd to the Primary
                      Account Number per the ANSI X9.8
                      and ISO TC68/SC2 working draft
                      N177 standards procedure to
                      create the DEA input block.
    Point-of-Servce
                12.   The result of the DEA encrypton
    Device            process is then sent in a finan-
                      cial transaction request message
                      to the card issuer for PIN
                      validation.
    Point-of-Service
                13.   The terminal identification
    Device            number is also sent to the card
                      issuer in the same message in the
                      clear. The use of the terminal
                      identification number had been
                      previously agreed to by the card
                      acquirer and card issuer in a
                      network operating rule business
                      agreement.
    Card Issuer 14.   The card issuer receives
                      theencrypted PIN in the financial
                      transaction request message.
    Card Issuer 15.   To verify the cardholder-entered
                      PIN, the card issuer passes the
                      encrypted PIN, Primary Account
                      File stored issuer Security Key
                      cryptogram, the terminal identifi-
                      cation number received in the
                      request message and PIN valida-
                      tion data to a hardware security
                      module for PIN validation.
    Card Issuer 16.   The hardware security module
                      decrypts the Issuer Security Key
                      cryptogram and exclusive OR's the
                      terminal identification number to
                      the now clear key to recreate the
                      same DEA key used by the point-of-
                      service device.
    Card Issuer 17.   Next, the hardware security
                      module decrypts the received
                      customer-entered PIN following
                      ANSI X9.8 and ISO standard proce-
                      dure to verify 1:1 to the card
                      issuer's recalculated PIN also
                      created in the hardware security
                      module.
    Card Issuer 18.   The PIN verification process
                      can be speeded up by the card
                      issuer if, during the card
                      issuance process, the originally
                      created PIN had been stored
                      encrypted under the card issuer's
                      master key on the Primary Account
                      Fi1e. The entire PIN
                      verification process is at the
                      option of the card issuer. The
                      card issuer could have also
                      chosen not to use hardware
                      security modules and perform all
                      DEA decryption and PIN
                      verification in a security
                      software routine.
    ______________________________________

• Inventors
  LaBounty, Jack;
• Assignee
  The Exchange System (Bellevue, WA)
• Published
  Jan-8-1991
• Current US Classes:
  380/43
  705/71
  705/72
  705/73
  713/185
• Application #
  064169
• International Classes
  H04K 001/00
• Field of Search
  380/24 380/23 380/25 380/43
• Examiner
  Tarcza; Thomas H.
• Agent
  Seed and Berry
• US Patent References:
  4317957
  4423287
  4578530