EXCLUSIVE: Interview with Heartland Payment Systems' Executive Director, Mr. Steven Elefant

We had a chance to talk with Mr. Steven Elefant, Executive Director of end-to-end security at Heartland Payment Systems shortly after the security breach reportedly affecting hundreds of millions of credit card transactions. While the complete interview is available in the forums, here are a few excerpts:

Mr. Elefant, would you please tell me a little bit about your background?

I’ve been in and around payments for 20 plus years. I started a company called IC Verify which was the first PC payment software company in the 80’s doing credit cards, ATM / debit and check processing on personal computers. We rolled that out to 250K merchants in 21 countries with a half dozen languages. ICVerify was merged with CyberCash, and I became the vice chairman of CyberCash. After leaving CyberCash, I was involved in several other startups including a company called Price Radar in the online auction space, a digital content management and micro payments company called Yaga and then venture capital for the last five years before joining Heartland Payment Systems.


So the division you’re handling is the payment systems?
I am the executive director of end-to-end encryption. This position touches on many aspects of Heartland’s diverse business.


As far as the end-to-end encryption, first, what do you think of the media’s treatment of Heartland? From my perspective, with a little time in journalism, the story was ‘if it bleeds, it leads’… that seems to be the mantra and the announcements that went on with Heartland incident, the media absolutely had a field day. What was the actual severity of the breach, and was it as bad as the media portrayed?

We seem to be turning the tide. We’ve been proactive in leading industry change, sharing information and furthering the development of end-to-end encryption as a key element that will help the industry be more secure.

What do you think of the PCI DSS? Does it go far enough? Obviously, with Visa putting you guys and RBS on probation… What was the disconnect, and what do you think of the PCI DSS?

Heartland was PCI certified every year it was assessed. Yet our system was breached, showing that the standards did not fully protect data. It may well be that no set of standards ever could fully protect data in this environment — where motivated criminals develop ever more sophisticated ways to infiltrate systems. We are working on new approaches to enhance security.

So it’s just the application itself has to be certified and you guys are going above and beyond that throwing in the end-to-end encryption to take care of everything that’s not currently called out in the PCI-DSS?

Yes. What we’re doing is from the time the digits leave the mag stripe, as they are read through that read head, they will be encrypted with very strong TRSM (Tamper Resistant Security Module) and AES encryption. Through the terminal, over the wires, through our hosts and through the card brands, the transaction will be encrypted – as long as the brands agree to do this.


As far as the price tag for a breach, what are we looking at as far as potential sanctions from the PCI, I’m not talking about specifically about Heartland, but in general terms if you can’t talk about Heartland, what are we looking at as a breach? We’re talking sanctions, breach notifications, brand harm – what do you see as the final price tag?

Breaches are expensive in all of those categories and more. The results of some past breaches are publicly available. I don’t’ know how to answer your question about a specific price tag. It’s still TBD.

A pretty consistent theme in my reading and at conferences is people saying, “The reason we’re doing all this security work is for compliance – we’re trying to comply with the governmental regulations rather than trying to do what’s in the best interest of protecting the customer.” Because there are risk tradeoffs, how do you weigh between the privacy of the user and the compliance with whatever regulation?

I think compliance and security go hand in hand. Compliance, though, is not enough in and of itself. That is why we are working to enhance the existing industry standards. We are also working with ANSI X9 F6 t to help create greater security around PAN’s as well as the Financial Services Information Sharing and Analysis Center (FS-ISAC) and the Payments Processing Information Sharing Council (PPISC) to share threat information and protect the entire industry, business owners and consumers

So one of the reasons for the CIPP Guide website is to serve as a resource for the privacy professional certification. What do you think of certification programs, both in general as far as technology certifications go?

I think they’re very important. The education process that goes on within the industry has to be an ongoing one. It’s not a one-time thing. The industry changes and evolves, and the threat vectors change. This is a continuous process the industry needs to continue to support.

It definitely seems like you guys are moving in the right direction. As I said earlier, it’s unfortunate that the media gets a hold of these things, because, I seem to recall that the information that was lost was bad, but not so bad that it was going to bring about the end of the financial market.

We are trying to do things that benefit our business, the entire industry, merchants and consumers.

The complete interview with Mr. Steven Elefant, including more details on PCI and his thoughts on compliance is available in the CIPP Guide forums.

Ed. note:  Before the interview, Visa had revoked Heartland’s PCI compliant status as of March 13th, 2009.  According to Visa’s website, Heartland apparently regained their PCI compliant status as of April 30, 2009.  As of May 7, 2009, the Heartland breach reportedly cost over $12.5 Million.


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