According to the payment-card industry, or PCI, standards for credit card transaction security, PIN numbers are supposed to be encrypted in transit, which should theoretically protect them if someone intercepts the data. The problem, however, is that a PIN must pass through multiple [Hardware Security Modules, HSMs] across multiple bank networks en route to the customer's bank. These HSMs are configured and managed differently, some by contractors not directly related to the bank. At every switching point, the PIN must be decrypted, then re-encrypted with the proper key for the next leg in its journey, which is itself encrypted under a master key that is generally stored in the module or in the module's application programming interface, or API.To be fair, the article title is unnecessarily inflammatory since this doesn't involve cracking the actual PIN, but simply exploiting flaws in the design (no one is cracking crypto in this case). There is no legitimate cause for this type of problem nor a need to decrypt at various points in the network- it's kowtowing to backward compatibility concerns that is causing a problem like this.
"Essentially, the thief tricks the HSM into providing the encryption key," says Sartin. "This is possible due to poor configuration of the HSM or vulnerabilities created from having bloated functions on the device."
Sartin says HSMs need to be able to serve many types of customers in many countries where processing standards may be different from the U.S. As a result, the devices come with enabled functions that aren't needed and can be exploited by an intruder into working to defeat the device's security measures. Once a thief captures and decrypts one PIN block, it becomes trivial to decrypt others on a network.
Either way, though, it's time to think twice before putting my ATM card into the that sketchy gas station ATM. And use the credit card feature of your check-card if you have them. Refuting an ATM transaction is so much more difficult than a fraudulent credit card transaction.