security issues in_mobile_payment

Security Issues In Mobile Payment

Prof. K. Adisesha, BE, M.Sc. M.Tech, NET



HOD, Dept., of Computer Science

Bangalore City College

Bangalore.

E-mail: [email protected]

Phone No.:9449081542

Abstract:

Mobile e-commerce (or m-commerce) is considered a natural extension of e-commerce

and represents a new way for conducting commerce. M-commerce refers to e-commerce

transactions conducted through a mobile device via wireless networks. The electronic payment

performed in wireless environments leads to the term mobile payment (or m-payment), which is

defined as any payment transaction involving the purchase of goods or services that is completed

with a wireless device. M-payments facilitate m-commerce because they let users make online

purchases from their mobile devices remotely at any time. A key challenge with gaining user

adoption of mobile banking and payments is the customer’s lack of confidence in security of the

services. Understanding the mobile banking and payments market and ecosystem is critical in

addressing the security challenges. There are new security risks introduced with mobile banking

and payments that must be identified and mitigated. There are risks that have both an existing

mitigation method as well as those that do not have a clear risk mitigation solution. We also here

present the major security issues that must be taken into consideration when designing,

implementing, and deploying secure m-payment systems. In particular, we focus on threats,

vulnerabilities, and risks associated with such systems as well as corresponding protection

solutions to mitigate these risks. We also discuss some of the challenges that need to be addressed

in the future as m-payment systems become fully integrated with other emerging technologies

such as fifth-generation mobile networks (5G) and cloud computing.

Keywords: m-commerce, m-payment systems, m-payment Threats, Security

1. Introduction

There doesn’t seem to be a week that something relative to mobile and/or mobile payments is not

in the news. Mobile and everything mobile is the current hot area where new investments and new

ideas are blossoming in the hopes of being part of the next “big thing” that generates healthy

returns and wealth. Consumers are embracing mobile in their day to day lives and are more likely

to forget their wallet at home than their mobile phone. With all this energy and momentum around

mobile, as with any new next big thing, there are some areas of concern to consider. A key area of

concern for consumers and financial service providers is the security of mobile banking and

payments. There are new technologies and new entrants as well as a complex supply chain that will

increase the security risks. There is no real standard for technology that has captured the market

and regulations relative some of the new entrants are non-existent. Customers have increased

control of their device in terms of application downloads, OS updates and personalization of their

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devices. This will lead to new challenges relative to privacy and will take some time before the

younger generation realizes the implications of privacy violations. Compounding the challenge is

the fact that traditional security controls such as AV, firewalls, and encryption have not reached

the level of maturity needed in the mobile space. As with any emerging market area, these

challenges will resolve over time. Until this are matures, there are measures that can be taken

relative to customer education, service process rigor, payments technology and fraud preventive

and detective controls that can mitigate the security risks.

2. Definition of Mobile Payment System

A mobile payment system (MPS) can be defined as any payment system that enables financial

transactions to be made securely from one organization or individual to another over a mobile

network (using a mobile device).

While the key phases of the generic mobile payment procedure is applicable to almost all

transactions, they can be categorized into several different groups or procedures based. Mobile

payment procedures are categorized as location-based(remote and proximity Transactions),

value-based (micro-payments, mini-payments and macro-payments), charge-based (post-paid,

pre-paid and pay-now), validation-based (online mobile payment, offline mobile payment) and

technology-based (single chip, dual chip, dual slot), token-based (eco in) and account-based

(wireless wallets). .

3. Key Technologies

3.1. Mobile Elements

In understanding the security risks of mobile banking, it is useful to understand the general

hardware and system software of a mobile device. The most prevalent technology relative to

mobile devices and the associate wireless carriers today is based on 2G technology (GSM/EDGE)

and 3G technology (UMTS/HSPA) standards. The latest technology currently being rolled out by

major carriers is Long Term Evolution (LTE) which doesn’t currently meet the requirements to be

considered 4G (speeds of up to 100Mbps for a moving user and 1Gbps for a stationary user) but is

being marketed as 4G.

The basic components of a wireless network include the spectrum for the wireless interface, the

antennas and radio processing equipment located at the base station or cell sites, and the

connectivity (T1, microwave) from the cell site back to the mobile switching center that contains

the voice and data processing equipment. The security elements for 3G technology include

encryption on the air interface and mutual authentication between the user and the network

(involving the HLR and USIM).

3.2. GSM AND GPRS SECURITY ARCHITECTURE

Global System for Mobile Communications (GSM) is the most popular standard for mobile

phones in the world. Figure 1 shows the basic structure of the GSM architecture; GSM provides

SMS and GPRS (General Packet Radio Service) services.



Figure 1. GSM Architecture

The GPRS Core network is an integrated part of the GSM network; it is layered over the

underlying GSM network, with added nodes to cater for packet switching. GPRS also uses some of

the existing GSM network elements; some of these include existing Base Station Subsystems

(BSS), Mobile Switching Centers (MSC), Authentication Centers (AUC), and Home Location

Registers (HLR). Some of the added GPRS network elements to the existing GSM network

include; GPRS Support Nodes (GSN), GPRS tunneling protocol (GTP), Access points, and the

(Packet Data Protocol) PDP Context.

3.2.1 Security mechanisms in the GSM network

The GSM network has some security mechanism to prevent activities like Subscriber Interface

Module (SIM) cloning, and stop illegally used handsets. GSM has methods to authenticate and

encrypt data exchanged on the network.

The GSM authentication center is used to authenticate each SIM card that attempts to connect to



the GSM network. The SIM card authentication takes place when a mobile station initially

attempts to connect to the network, i.e. when a terminal is switched on. If authentication fails then

no services are offered by the network operator, otherwise the (Serving GPRS Support Node)

SGSN and HLR is allowed to manage the services associated with the SIM card.

The authentication of the SIM depends on a shared secret key between SIM card and the AUC

called Ki. This secret key is embedded into the SIM card during manufacture, and it is also

securely replicated into the AUC.

When the AUC authenticates a SIM, it generates a random number known as the RAND. It sends

this RAND number to the subscriber. Both the AUC and SIM feed the Ki and RAND values into

the A3/A8 (or operator proprietary algorithm (COMP128)) and a number known as Signed

RESponse (SRES) is generated by both parties. If the SIM SRES matches the AUC SRES the SIM

is successfully authenticated. Both the AUC and SIM can calculate a second secret key called Kc

by feeding the Ki and the RAND value into the A5 algorithm.

This would be used to encrypt and decrypt the session communications. After the SIM

authentication the SGSN or HLR requests the mobile identity, this is done to make sure that the

mobile station being used by the user is not black listed. The mobile returns the IMEI

(International Mobile Equipment Identity) number; this number is forwarded to the EIR

(Equipment Identity Register). The EIR authorizes the subscriber and responds back to the SIM

with the status, if the mobile is authorized the SGSN informs the HLR and PDP Context activation

begins.

3.2.3 Problems with GSM Network

Problems with the A3/A8 authentication algorithm -A3 and A8 are not actually encryption

algorithms, but placeholders used in algorithm COMP128 [2].COMP128 was broken by Wagner

and Goldberg in less than a day.

Problems with A5 algorithm: The A5 algorithm is used to prevent casual eavesdropping by

encrypting communications between mobile station (handset) and BSS. Kc is the Ki and RAND

value fed into the A5 algorithm. This Kc value is the secret key used with the A5 algorithm for

encryption between the mobile station and BSS. There are at least three flavours of the A5

algorithm. These include A5/1 which is commonly used in western countries. The A5/1 is deemed

strong encryption [3] but it was reverse engineered some time ago. A5/2 has been cracked by

Wagner and Goldberg, the methodology they used required five clock cycles making A5/2 almost

useless. Finally A5/0 is a form of A5 that does not encrypt data at all. All these problems with the

A5 encryption algorithms prove that eavesdropping between mobile station and BSS is still

possible, making GPRS over the GSM core network very insecure for mobile banking.

Attack on the RAND value: When the AUC attempts to authenticate a SIM card, the RAND value

sent to the SIM card can be modified by an intruder failing the authentication. This may cause a

denial of service attack.

3.3 Short Message Service

This service allows mobile systems and other networked devices to exchange short text messages

with a maximum length of 160 characters. SMS uses the popular text-messaging standard to

enable mobile application based banking. The way this works is that the customer requests for

information by sending an SMS containing a service command to a pre-specified number. The



bank responds with a reply SMS containing the specific information. One of the major reasons that

transaction based services have not taken off on SMS is because of concerns about security.

3.3.1 Security Problems with SMS

The initial idea for SMS usage was intended for the subscribers to send non-sensitive messages

across the open GSM network. Mutual authentication, text encryption, end-to-end security,

nonrepudiation were omitted during the design of GSM architecture. In this section we discuss

some of the security problems of using SMS.

Forging Originators Address: SMS spoofing is an attack that involves a third party sending out

SMS messages that appear to be from a legal sender. It is possible to alter the originator s address

field in the SMS header to another alpha-numerical string. It hides the original senders address and

the sender can send out hoax messages and performs masquerading attacks.

SMS Encryption: The default data format for SMS messages is in plaintext. The only encryption

involved during transmission is the encryption between the base transceiver station and the mobile

station. End-to- end encryption is currently not available. The encryption algorithm used is A5

which is proven to be vulnerable. Therefore a more secure algorithm is needed.

3.4 Wireless application protocol/GPRS.

GPRS is a mobile data service available to GSM users that enables WAP-enabled devices such as

mobile phones to support services such as Internet browsing, multimedia messaging service, and

Internet based communication services such as email and World Wide Web access. Mobile phones

or terminals can access the internet using WAP browsers; WAP browsers can only access WAP

sites. Instead of the traditional HTML, XML or XHTML, WAP sites are written in WML

(Wireless Markup Language). The WAP protocol is only persistent from the client to the WAP

gateway, the connection from the WAP Gateway to the Bank Server is secured by either SSL or

TLS.

WAP provides security of communications using the WTLS (WAP Transport Layer Security)

protocol and the WIM (WAP Identity Module). WTLS provides a public-key based security

mechanism similar to TLS and the WIM stores the secret keys. In order to allow the

interoperability of WAP equipment and software with many different technologies WAP uses the

WAP protocol suite. Figure 2 illustrates the different layers of the WAP protocol.

Figure 2. WAP Protocol Suite Source from [6]



3.4.1 Security problems with Current GPRS Implementations

Security issues with present implementations that use WAP:

The present mobile banking implementations that are using WAP have proven to be very secure,

but there exist some loopholes which could lead to insecure communications. Some of these

loopholes include:

There is no end-to-end encryption between client and bank server.

There is end-to-end to encryption between the client and the Gateway and between the

Gateway and the Bank server.

To resolve this, the bank server could have its own Access Point Name (APN) in any of the

GPRS networks. This APN would serve as the WAP Gateway for the bank. Therefore the

client would be connected directly to the bank without third parties in the middle of the

communication.

Public key cryptosystems key sizes offered by the WTLS standard are not strong enough to

meet today’s WAP applications security requirements. Considering the low processing

power of the handheld devices, the key sizes have been restricted.

Anonymous key exchange suites offered by the WTLS handshake are not considered

secure. Neither client nor the server is authenticated. Banks should provide functionality to

disallow this option of handshaking.

Security issues associated with using the plain GPRS network:

The GPRS core network is too general; it does not cater for some banking security requirements.

Some of these requirements include:

Lack of account holder or bank authentication. The Bank can provide a unique APN to

access the Bank server, but without this or some other authentication mechanism anyone

can masquerade as the Bank. All these issues raise concerns of fabrication of either bank

information or account holder information Provision of functions to avoid modification of

data and ensure the integrity of data for both the account holder and the Bank.

The methods to cater for confidentiality of data between the mobile station and the bank

server have proven to be weak, and the network operator can view account holder s

information. This raises security issues for both the bank and account holder.

The bank cannot prove that the account holder performed a specific action and the account

holder cannot prove that the bank performed a specific action.

GPRS provides session handling facilities, but does not handle Bank specific sessions; this

may cause inconsistencies on the banks side raising security issues.

3.5 Other Technologies

Phone-based application. The m-payment client application (residing on the consumer’s mobile

phone) can be developed using the Java 2 Platform, Micro Edition for GSM-based mobile phones

and the Binary Runtime Environment for Wireless for mobile phones based on code division

multiple access.

SIM-based application. The Subscriber Identity Module (SIM) used in GSM mobile phones is a

smart card whose information can be protected using cryptographic algorithms and keys. (Smart



cards are microcomputers small enough to fit in a wallet or even a mobile phone. They have their

own processors and memory for storage.) SIM applications are relatively more secure than client

applications that reside on the mobile phone.

RFID. This technology uses radio frequency (RF) signals to exchange data between a reader and

an electronic tag attached to an object, for the purpose of ID and tracking.

Voice-based payment transactions. These can be done by making a phone call to a special

number and providing a credit card number.

Dual chip. Dual-chip phones have two slots: one for a SIM card (telephony) and another for a

payment chip card. This solution allows an m-payment application provider to develop an

m-payment application in the payment chip card without collaborating with the

telecommunications operator (the owner of the SIM card).

Near-field communication. This short-range wireless communication standard results from the

fusion of the contactless smart card (RFID) and the mobile phone. NFC does not have native

encryption capabilities and therefore is vulnerable to security exploits if not properly

implemented. RF signal which NFC works from has the potential to be read or intercepted up to

several meters away with the proper equipment without needing line of sight. Appropriate

encryption will provide adequate protection against eavesdropping.

Mobile wallet. This m-payment application software on the mobile phone contains details of the

customer (including bank account details and/or credit card information) that enable the customer

to make payments using the mobile phone. A possible drawback to the mobile wallet and secure

element solution is that a single pin unlocks all of the accounts stored in the wallet. This is in

contrast to plastic cards, where each card can be set to use a different pin. Mobile wallets could

thus present greater exposure to loss in the event that a mobile wallet device and its single pin are

compromised

3.5.1. Security Vulnerabilities and Solutions

As mentioned earlier, m-payment systems rely on underlying communication technologies (such

as GSM, Bluetooth, and RFID) whose security vulnerabilities are often ignored when the security

aspects of the m-payment systems are analyzed. Therefore, m-payment system designers should

take a holistic view when performing a security analysis during design and implementation.18 In

general, to counter potential threats, a secure m-payment system must satisfy the following

transaction security properties: authentication, confidentiality, integrity, authorization,

availability, nonrepudiation (ensuring that users can’t claim that a transaction occurred without

their knowledge), and accountability (defined as the ability to show that the parties who engage in

the system are responsible for the transaction related to them).

Table 1 summarizes the types of vulnerabilities and threats and their corresponding risks in an

m-payment system environment together with relevant protection solutions.



Table 1. Vulnerabilities, threats, risks, and protection solutions in m-payment systems.[1]

4. 4G Transmission in security of mobile payment.

4G fourth-generation wireless defines the stage of broadband mobile communications that

supersede the third generation 3G, 4G used orthogonal frequency-division multiplexing - OFDM

instead of time division multiple access - TDMA or code division multiple access – CDMA. ISP’s

are increasingly marketing their services as being 4G, even when their data speeds are not as fast as

the International Telecommunication Union (ITU) specifies. According to the ITU, a 4G network

requires a mobile device to be able to exchange data at 100 Mbit/sec. A 3G network, on the other

hand, can offer data speeds as slow as 3.84 Mbit/sec. OFDM is a type of digital modulation in

which a signal is split into several narrowband channels at different frequencies. This is more



competent than TDMA, which divides channels into time slots and has multiple users take turns

transmitting CDMA, which simultaneously transmits multiple signals on the same channel.

Thus it pays way to support efficient encryption mechanisms in securing the mobile payment.

4.1 Cryptography – Vulnerabilities in Mobile Payment

Cryptography techniques play an important role in satisfying the transaction security properties

mentioned earlier. They’re essential in securing m-payments over open networks that have little or

no physical security. Symmetric cryptography shares a secret between two parties (a sender and a

receiver) who want to communicate safely without revealing details of the message. Symmetric

cryptographic methods are suitable because of their low computational requirements. However,

key management in symmetric-key operations is complex. To solve this complexity, public-key

cryptography uses a pair of keys for every party: a public key (that is published) and a private key

(that remains secret). Thus, it is not necessary to share a secret key between the sender and the

receiver before communicating securely. However, traditional asymmetric signature schemes

make the signature computations expensive and aren’t suitable or mobile devices. Moreover, to

avoid impersonation attacks, for every public key, a certificate is required and must be verified by

a certification authority, causing an additional information exchange (and increased delays) during

each transaction.

5. Upcoming Opportunities and Challenges

Mobile communication continues to evolve and improve, and new technologies offering attractive

business opportunities are emerging. Solutions provided by m-payment vendors must evolve in

order to support increasingly sophisticated client applications running on mobile devices. At the

same time, designers must continuously adapt existing m-payment systems to allow clients to take

advantage of the benefits associated with emerging technologies while simultaneously ensuring

secure and reliable payment transactions. We have identified several upcoming opportunities that

may provide an effective solution to the existing security issues in m-payment.

5.1 5G Technology

The 5G mobile communications technology is the next generation of the existing 4G Long-Term

Evolution network technology. It will enable users to transmit massive data files including

high-quality digital movies practically without limitation, allowing subscribers to enjoy a wide

range of services, such as 3D movies and games, real-time streaming of ultra-high-definition

content, and remote medical services. 5G will enable software-defined radio and flexibility in

encryption method used. Furthermore, 5G will improve latency, battery consumption, cost, and

reliability, which will reduce the cost of communications over wireless networks when performing

payment transactions. Heterogeneous wireless networking technologies will continue to play a

fundamental role in the deployment of 5G networks. However, the disparity of security solutions

used by different wireless, mobile, cellular networks makes end-to-end security solutions still a

significant challenge that must be addressed to support future secure m-payment systems and

applications.



5.2 Cloud Computing

A cloud-based m-payment system is a type of proximity payment that stores payment credentials

(used to authenticate the payment transaction) on a remote server rather than at the mobile device.

To use this solution, both the consumer and the merchant must download the cloud-based

application and subscribe to the service. The physical mobile phone might not be needed to

complete the payment, depending on the exact solution. Consumers can access their account

information in the cloud via mobile devices. In addition, payment notification can be

communicated via email or SMS text messages once a cloud payment is completed. Despite the

benefits offered by cloud-based m-payment systems, some security issues remain unsolved. For

example, payment data and stored payment credentials in the cloud could be compromised if the

cloud server is attacked. Also, payment data should not be transmitted via SMS or email because

cloud platforms aren’t encrypted. Finally, data privacy remains a key concern for payment data

stored in the cloud, which could share this information with other businesses without the

consumer’s explicit approval.

5.3Encryption Technology

Elliptic curve cryptography (ECC) is an alternative approach to public-key cryptography. It relies

on the elliptic curve logarithm, which dramatically decreases the key size needed to achieve the

same level of security offered in conventional public key cryptographic schemes. This allows ECC

to provide similar security as RSA but using much smaller key sizes (approximately one-eighth of

the key size used by RSA), which in turn significantly reduces processing overhead. Therefore,

faster computations, lower power consumption and memory, and bandwidth savings are properties

offered by ECC that are useful for implementing encryption on resource-constrained mobile

devices. In the future, system designers should explore the possibility of incorporating ECC

algorithms in existing or new m-payment systems to reap many of the benefits of ECC in mobile

devices. Self-certified public-key schemes (where public-key authentication can be achieved

implicitly with signature verification) are an alternative security solution for m-payment systems

based on restricted communication scenarios, where an engaging party has connectivity

restrictions that prevent communication with a certification authority for validating a certificate

during a transaction. In those schemes, the user’s public key is derived from the signature of his or

her secret key along with his or her identity, and is signed by the system authority using the

system’s secret key. However, the expiration of this kind of certificate isn’t defined in all the

schemes proposed in the literature and is an open problem that still must be solved.

6. Conclusion

The aim of this paper is to focus on mobile payments to analyze the different factors as Negative

and Positive that impact adoption of mobile payments, and to introduce the mobile payment

emerging technologies and services. The key finding based on the analysis is while consumers

continue to express concern over using their mobile phone to conduct banking and financial

services transactions, it is a fear born more of perception than reality. There are threats, but the

security controls available to mitigate risk at this level are substantial and effective. However,

security practices will need to continue to evolve as more and more smart phones and technologies



enter the market running more and more applications, creating an ever growing opportunity for

security threats.

References

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www.isaca.org/Groups/Professional-English/pci-compliance/GroupDocuments/MobilePayments

WP.pdf.

[2] Systematic Literature Review: Security Challenges of Mobile Banking and Payments System.

Md. Shoriful Islam International Journal of u- and e- Service, Science and Technology Vol. 7, No.

6 (2014), pp. 107-116 http://dx.doi.org/10.14257/ijunesst.

[3] 4G and Its Future Impact: Indian Scenario -Butchi Babu Muvva, Rajkumar Maipaksana, and

M. Narasimha Reddy International Journal of Information and Electronics Engineering, Vol. 2,

No. 4, July 2012

[4] Determining New Security Challenges for Mobile Banking- Dr. Syed Nisar Osman

International Journal of Research in Advent Technology (E-ISSN: 2321-9637) Special Issue1st

International Conference on Advent Trends in Engineering, Science and Technology“ICATEST

2015”, 08 March 2015

[5]http://warse.org/pdfs/ijatcse03122012.pdf

[6] A Secure Cloud-Based Nfc Mobile Payment Protocol.

(IJACSA) International Journal of Advanced Computer Science and Applications, Vol. 5, No. 10,

2014

[7] Cloud Backup: Cloud Backup - FAQs, April 2010, Version 1.6,

https://backup.eu.businessitondemand.com

[8] Security of Mobile Banking-Kelvin Chikomo, Ming Ki Chong, Alapan Arnab, Andrew

Hutchison

http://www.isaca.org/Groups/Professional-English/pci-compliance/GroupDocuments/MobilePaymentsWP.pdf

http://www.isaca.org/Groups/Professional-English/pci-compliance/GroupDocuments/MobilePaymentsWP.pdf

http://dx.doi.org/10.14257/ijunesst

http://warse.org/pdfs/ijatcse03122012.pdf