Consumers and organizations have a variety of options for making and receiving payments. While these payment types share the ultimate goal of transferring funds from payer to payee, the path those funds travel and the approaches employed for safely and securely completing transactions vary. The Secure Payments Task Force developed the Payment Lifecycles and Security Profiles as an educational resource and to provide perspectives related to:

  • The lifecycles of the most common payment types, covering enrollment, transaction flow and reconciliation
  • Security methods, identity management controls and sensitive data occurring at each step in the payment lifecycles
  • Relevant laws and regulations, and other references, as well as challenges and improvement opportunities related to each payment type

The profiles employ a consistent format for describing the lifecycle of each payment type. The lifecycle template is not designed to represent the nuances of specific payment transaction flows, but as a broad taxonomy that can be applied across different payment types for understanding and comparing controls and risks. The profiles are not all-encompassing in describing the layered security strategies that may be employed by specific networks, providers or businesses and shouldn’t be considered an assessment of overall security of different payment types. The improvement opportunities noted in the profiles highlight areas for further industry exploration and are not intended as guidance or specific solutions to be implemented.

These valuable resources were developed through the collaborative efforts of more than 200 task force participants with diverse payments and security expertise and perspectives. It is the hope of the task force that by helping industry stakeholders better understand these payments processes, the security and risks associated with these processes, and potential improvement opportunities, they will be well positioned to take action to strengthen their payment security practices.

Note: These materials were created by the Secure Payments Task Force and are intended to be used as educational resources. The information provided in the Payment Lifecycles and Security Profiles does not necessarily reflect the views of any particular individual or organization participating in the Secure Payments Task Force. The document is not intended to provide business or legal advice and is not regulatory guidance. Readers should consult with their own business and legal advisors.

Feedback and/or questions related to the Payment Lifecycles and Security Profiles can be submitted by using the “provide feedback” form.

Contactless Definition: A payment card (e.g. credit or debit) funded transaction whereby the cardholder typically presents a physical smart card (e.g. credit or debit card), key fob, or a mobile device or wearable (e.g. smartphones, smart watches) where the payment data is exchanged by placing the payment device in proximity of the point of sale to complete the transaction.

Enrollment

Payer ID / Enrollment

Enrollment of a payer includes identity (ID) proofing, management of users (enrollment, de-enrollment, and changes) and determination of authority based on role

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Individual or organization requests account with issuer. Issuer verifies customer information in accordance with their Know Your Customer (KYC) program.

The PIN associated with the account may be communicated to the cardholder via direct outreach, email, or physical mail

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Payee ID / Enrollment

Enrollment of a payee includes identity (ID) proofing, management of users (enrollment, de-enrollment and changes) and determination of authority based on role

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Acquirer approves merchant

Merchant is registered in advance and identification data is attributed when registered by the acquirer

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Transaction*

Payer Authentication

Verification of payer when originating payments

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Cardholder and card verification methods include Primary Account Number (PAN), expiration date, Dynamic Card Verification Value (DCVV), out-of-band authentication/verification Application Transaction Counter (ATC) with additional cardholder verification potentially required based on transaction request amount, EMV Application Cryptogram.

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Initiation: Access Mode / Network

Environment in which the payment origination is requested

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Point of Sale (POS), in-person

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Initiation: Device / Method Used to Initiate Payment

Type of interaction or device used to enter payment account information

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Contactless reader or scanner at the Point of Sale (POS), contactless form factor (e.g. card, sticker, mobile device, wearable etc.)

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Initiation: Funding Account for Payment

Entry and/or identification of the funding account (with formatting checks

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Demand Deposit Account (DDA) or credit account

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Initiation: Payment Initiation Mechanism

Payment network, system and/or third-party accessed

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Merchant, acquirer, association or network, processor

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Payer Authorization: Payment Network Traversed

“Rails” used to route authorization requests to the holder of the funding account

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Online authorization occurs through payment networks (e.g. credit and debit networks).

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Payer Authorization: Transaction Authorization

Determination of whether to approve or decline transaction including authorization time-frame obligations, and any recourse decisions

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Transactions are approved or declined within payment network service level agreements (SLAs)

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Format Exchange

payment instructions, rules and formatting

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Payment network rules dictate format exchange.

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Receipt: Acknowledgement / Guarantee

Notification and confirmation of payment completion including terms for use

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Transaction is confirmed but fulfillment may be delayed until authorization (guarantee of funds).

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Payee Authentication

Mode of access to funds (or accounts)

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Acquirer authenticates merchant

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Clearing and Settlement: Settlement / Exchange of Funds

Actual movement of funds to settle funding arrangements and applicable fees

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Settlement occurs per payment network rules (e.g. credit and debit networks).

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

Reconciliation

Reconciliation / Exception Handling

Process and responsibilities associated with reconciling and handling any exceptions or problems with a payment

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Disputes are required to be reported/processed within specified timeframe defined by payment network rules and law

Overview of Security Methods and Associated Risks

Expand

Inventory of Sensitive Payment Data and Associated Risks

Expand

User Protection / Recourse

Applicable rules, regulations and legal means of recourse

Payment Type Operation

Contactless (Near Field Communications (NFC), Bluetooth, Quick Response (QR) Code, Magnetic Secure Transmission (MST))

Determined by payment network rules and applicable consumer protection laws and regulation

Regulation Z consumer protections apply to consumer credit and Regulation E applies to debit.

 

Last Updated: 02/21/2018

Footnotes

1Card Verification Values: Card Verification Values represent data elements that are (1) encoded on the magnetic stripe or the chip of a payment card; or (2) printed on the physical payment card and are used to validate the card information during the transaction authorization process. Card Verification Values encoded on the magnetic stripe (e.g. CAV, CVV, CVC, CSC) or on the chip (e.g. dCVV, iCVV) are generated via a secure cryptographic process and may be static or dynamic data used to validate the card during the authorization process. Card Verification Values printed on the physical card (e.g. CID, CAV2, CVC2, CVV2) may be three-digit or four-digit codes printed on the front or back of the physical card that are uniquely associated with the physical card and ties the primary account number to the physical card. Note: Payment network rules and the PCI Security Standards Council provide additional definitions of Card Verification Values.

*Note: Payments/Transfers Flow in Both Directions