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Yes the EMV standard has offline card payments baked into it, and most banks in the EU and UK used to use offline transactions for contactless. Your experience

Yes the EMV standard has offline card payments baked into it, and most banks in the EU and UK used to use offline transactions for contactless. Your experiences in the UK are almost certainly linked to the card issuer you were using (was it a Monzo card by any chance), and nothing to do with it being the UK. The vast majority of the legacy banks have always used offline transactions for contactless. However there has been a bit of shift towards online transactions, driven by EU rules likes strong customer authentication, which requires regular pin entries determined by cumulative spending and duration limits (which ever is hit first). It’s a lot easier to reliably meet the requirements of SCA using online transactions. As for how offline transactions work. It’s reasonable simply. The terminal asks the card to sign the transaction using the cards private key. Now there is an extremely complicated set of rules around how liability shifts in the event of a fraud claim, depending on many factors like the type of transaction, if a pin was entered and validated by the card, if the card ask to go online and the terminal ignored the request, they type of merchant, the exact region your in etc etc. But regardless of all that nonsense. The technical process is very simple. The terminal has the transaction cryptographically signed using symmetric encryption with a private key that is only known to the card and the issuer of the card. That signed transaction can later be presented to the issuer so the merchant gets paid. Given it’s a symmetric key, you may wonder what happens in the event of a dispute between the issuer and the merchant, where the issuer claims they received a forged transaction. To which the answer is, the issuer sends a signed and sealed letter to card network operator saying they have double checked the transaction signature, and believe it to be forged. And if anyone doesn’t believe them, they can sue em (this is not at all a joke, it’s literally the documented and contractual process used by the major banks and card networks).

quacksilver 1y ago
I used to have an online maestro card (was solo and now known as debit mastercard) and an offline card (was switch, now also known as debit mastercard) from a UK bank, due to having two current accounts there. The offline card was from a current account with an overdraft and also worked as a cheque guarantee card, for cheques up to £250 under the (discontinued ~2011) cheque guarantee scheme[0] and had a special hologram on the back. The retailer would watch you sign the cheque and write details about you, the card and any CCTV etc. on the back of the cheque. I imagine the offline behavior of the card was similar, and was a carry over from that. The online card was from a basic account with no overdraft facility and acted a bit like a prepaid debit card. [0] https://en.wikipedia.org/wiki/Cheque_guarantee_card https://en.wikipedia.org/wiki/Cheque_guarantee_card
lxgr 1y ago
> However there has been a bit of shift towards online transactions Not just a bit of a shift: Offline-preferred transactions are basically a thing of the past. EU rules have nothing to do with it (offline EMV is fully SCA compliant as well, as the chip can keep count, although it's a bit annoying to keep counters in sync if there's more than one); it's mostly for risk management and simplification reasons, I believe. > The terminal has the transaction cryptographically signed using symmetric encryption with a private key Offline transactions essentially always require card authentication as well, which requires asymmetric cryptography. (Otherwise, you could trivially forge valid-looking cards and offline terminals would be none the wise since they obviously don't hold the symmetric keys for every card issued; that would be way too risky).
- avianlyric 1y ago
  > EU rules have nothing to do with it (offline EMV is fully SCA compliant as well, as the chip can keep count, although it's a bit annoying to keep counters in sync if there's more than one); EU rules have everything to do with it. Meeting EMV with offline counters is tricky to get right. The reason I can confidently claim the SCA drove the migration of online transactions is because I was responsible for the technical implementation of SCA for a bank, and was part of the industry wide conversations that happened as banks figured out who they would comply with the rules, and tried to figure out what wiggle room existed. So I know SCA was a driver, because I talked to the people making this decisions. > which requires asymmetric cryptography. (Otherwise, you could trivially forge valid-looking cards and offline terminals would be none the wise since they obviously don't hold the symmetric keys for every card issued; that would be way too risky). This is where you are simply wrong. Again speaking as someone with actual experience working on this stuff, and having dealt with actual forged offline transactions as well. I can tell you the card uses symmetric encryption, the terminals themselves have zero ability to validate the signature a card produces. The terminals include some data that allows them to validate if a card number is routable, and also a hot list of card numbers to always reject, and thus reject transactions that can never be fulfilled, but they have no way of validating that a specific card or transaction hasn’t been forged. The entire system depends on the physical security of the chips in cards to make key extraction extremely hard, and to also make the correct mimicking of cards extremely hard. But it’s hardly impossible, and there’s plenty of demonstrated EMV attacks out there in the wild. It’s just that they all hard to replicate, require special equipment, and generally make you look very dodge in the moment because you have to have a weird card with wires running your shelves so you can intercept the card comms. The manufacturer and distribution of the chips in cards is extremely tightly controlled, so you can’t just buy them. In theory anyone with a million dollars and ASIC contract could manufacture their own ICs, but there simply easier ways to steal money. Ultimately EMV only needs provide enough security to make other methods of stealing more palatable. Cards are used for pretty low value transactions, so breaking EMV isn’t a very scalable way to steal money. You would be better off stealing products from merchants using decent pair of running shoes, rather than creating crazy ways to trick their payment terminals. Running shoes are cheaper and much more accessible than ASIC production.
madaxe_again 1y ago
The tech is fundamentally fine - where the problem arises is human behaviour. When offline contactless payments first emerged in the U.K., there was a significant spike in unplanned overdraft usage and disputed transactions, as people rapidly realised it essentially worked as a free line of credit, up to £100 or £250 depending on your issuer. This quite quickly caused issuers to push up prices on offline transactions, which made them less appealing to merchants - add to that that people were talking about them being a hotbed of fraud, and merchants err away from offering them, PCNs start dropping the capability due to lack of demand, and here we are today.

quacksilver 1y ago

I used to have an online maestro card (was solo and now known as debit mastercard) and an offline card (was switch, now also known as debit mastercard) from a UK bank, due to having two current accounts there. The offline card was from a current account with an overdraft and also worked as a cheque guarantee card, for cheques up to £250 under the (discontinued ~2011) cheque guarantee scheme[0] and had a special hologram on the back. The retailer would watch you sign the cheque and write details about you, the card and any CCTV etc. on the back of the cheque. I imagine the offline behavior of the card was similar, and was a carry over from that. The online card was from a basic account with no overdraft facility and acted a bit like a prepaid debit card. [0] https://en.wikipedia.org/wiki/Cheque_guarantee_card https://en.wikipedia.org/wiki/Cheque_guarantee_card

lxgr 1y ago

> However there has been a bit of shift towards online transactions Not just a bit of a shift: Offline-preferred transactions are basically a thing of the past. EU rules have nothing to do with it (offline EMV is fully SCA compliant as well, as the chip can keep count, although it's a bit annoying to keep counters in sync if there's more than one); it's mostly for risk management and simplification reasons, I believe. > The terminal has the transaction cryptographically signed using symmetric encryption with a private key Offline transactions essentially always require card authentication as well, which requires asymmetric cryptography. (Otherwise, you could trivially forge valid-looking cards and offline terminals would be none the wise since they obviously don't hold the symmetric keys for every card issued; that would be way too risky).

avianlyric 1y ago
> EU rules have nothing to do with it (offline EMV is fully SCA compliant as well, as the chip can keep count, although it's a bit annoying to keep counters in sync if there's more than one); EU rules have everything to do with it. Meeting EMV with offline counters is tricky to get right. The reason I can confidently claim the SCA drove the migration of online transactions is because I was responsible for the technical implementation of SCA for a bank, and was part of the industry wide conversations that happened as banks figured out who they would comply with the rules, and tried to figure out what wiggle room existed. So I know SCA was a driver, because I talked to the people making this decisions. > which requires asymmetric cryptography. (Otherwise, you could trivially forge valid-looking cards and offline terminals would be none the wise since they obviously don't hold the symmetric keys for every card issued; that would be way too risky). This is where you are simply wrong. Again speaking as someone with actual experience working on this stuff, and having dealt with actual forged offline transactions as well. I can tell you the card uses symmetric encryption, the terminals themselves have zero ability to validate the signature a card produces. The terminals include some data that allows them to validate if a card number is routable, and also a hot list of card numbers to always reject, and thus reject transactions that can never be fulfilled, but they have no way of validating that a specific card or transaction hasn’t been forged. The entire system depends on the physical security of the chips in cards to make key extraction extremely hard, and to also make the correct mimicking of cards extremely hard. But it’s hardly impossible, and there’s plenty of demonstrated EMV attacks out there in the wild. It’s just that they all hard to replicate, require special equipment, and generally make you look very dodge in the moment because you have to have a weird card with wires running your shelves so you can intercept the card comms. The manufacturer and distribution of the chips in cards is extremely tightly controlled, so you can’t just buy them. In theory anyone with a million dollars and ASIC contract could manufacture their own ICs, but there simply easier ways to steal money. Ultimately EMV only needs provide enough security to make other methods of stealing more palatable. Cards are used for pretty low value transactions, so breaking EMV isn’t a very scalable way to steal money. You would be better off stealing products from merchants using decent pair of running shoes, rather than creating crazy ways to trick their payment terminals. Running shoes are cheaper and much more accessible than ASIC production.

madaxe_again 1y ago

The tech is fundamentally fine - where the problem arises is human behaviour. When offline contactless payments first emerged in the U.K., there was a significant spike in unplanned overdraft usage and disputed transactions, as people rapidly realised it essentially worked as a free line of credit, up to £100 or £250 depending on your issuer. This quite quickly caused issuers to push up prices on offline transactions, which made them less appealing to merchants - add to that that people were talking about them being a hotbed of fraud, and merchants err away from offering them, PCNs start dropping the capability due to lack of demand, and here we are today.