The Ultimate Guide to Payment HSM: Top 7 Strategies

The Ultimate Guide to Payment HSM: Top 7 Strategies
6 min read

Finding the right payment system is crucial for any institution. It is even more dire for financial institutions such as those in the banking sector. While there are several systems that can be put in place to assist payment security, finding one that is un-breach-able can be a hard task.

This is where the payment HSM comes in. HSM is a hardware device that is tamper resistant, highly trusted, and hardened to support the payment needs of the retail banking industry. It does this by offering top-level cryptographic key protection. It also offers protection for the customer PINs that are used when issuing EMV and magnetic stripe chip cards. The protection extends to the mobile apps that work in place of the cards.

The payment HSM supports all main card payment apps. It goes through an intense independent hardware certification by global schemes, including PCI HSM and FIPS 140-2. It is also covered by regional security requirements like APCA, which applies in Australia, and MEPS for France.

Top Uses of Payment HSM

Payment HSM is used for different functions. Some of the common cases of payment ecosystems where it is applicable include:

  • Generating, managing, and validating PINs
  • Validating user, card, and cryptogram when processing a payment transaction
  • Translating PIN blockage when switching networks from ATM to POS payments
  • Issuing payment credentials for mobile apps and card payments
  • Managing P2PE/ Point-to-point encryptionkey as well as securing data decryption
  • Facilitating secure communications by securely sharing keys with third parties

All these happen because of the different strategies applied. Below are 7 of the best methods you can use to make Payment HSM work for you.

1. Upgrade and Consolidate to Better Performing HSM Infrastructure

Keeping up with technological advancements in HSM infrastructure ensures that banks keep up with payment networks that match modern construction. Make sure the hardware has key-block capabilities.

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All aged designs together with outdated HSMs, should be replaced. The process should cover the adaptation of banking app crypto interfaces. When replacing the older HSMs, go for less more reliable and better-performing HSM infrastructures.

2. Consider HSM Virtualization

 Virtualization is the key to reducing the HSM amounts needed. This will help an institution move into the containerized or partitioned HMS, which works better.

3. Making Sure Bank Applications are Delegated to Partially Cloud

Banks may not embrace the public cloud because it opens them up to potential risks, primarily when not adequately addressed. However, it could also bring several advantages for the banks. These include scalability, flexibility, financial savings, and global reach.

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Just make sure to implement it partially while ensuring the bank still has control over its security. There is a safe way to migrate parts of the bank operations to the cloud. Explore these options with relevant professionals only.

4. Simplifying the Design of HSM and making it Straightforward

When you reduce the number of devices involved, you make the management more manageable and economical. Therefore, the overall purchase price also gets reduced. Alternatively, you can opt to go with full-line crypto producers that supply HSMs and key management. They help provide interfaces readily. They also give all the fundamental blocks you need for the various applications.

5. Merge General Purpose HSM and Payments

Combining paying and non-paying apps in the same HSM design is possible. All you need to do is fulfill all the compliance requirements. You can be sure that this will impact the bank's internal structure. Unfortunately, it may attract opposition as human resources will be reduced.

You will need an emphatic HR approach compared to a technical approach. Managers should be careful not to take workers' complaints about merging the two very seriously. More often than not, these complaints are often driven by fear more than possible technical concerns. Instead, make them understand the significance, answer questions, and address genuine concerns.

6. Turn the Bank Architecture into Crypto Agile and Flexible

Crypto agility is essential when addressing marketing time. New apps, strategic targets, and regulations may prompt changes to crypto and application. To resolve both challenges, crypto agility is essential. Banks require the right architecture that has the flexibility to integrate new apps quickly. These can be deployed or built in-house or connected through open APIs from service providers outside.

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However, note that crypto needs to be updated regularly as regulator demand changes, external threats, and other computing challenges drive them. Crypto-agile HSM design ensures that operating costs are controllable/ manageable.

7. Follow a Dual Vendor strategy

It's important to consider risk mitigation. In most cases, there are at least two vendors at a time when providing HSM solutions. You need to ensure that at least one of the vendors is available in case the other one cannot deliver. Such risk mitigation caused by a dual vendor strategy ensures you are not left hanging if one vendor cannot meet contractual obligations. It also takes care of downtime issues.

Final Thoughts

Payment HSM is an excellent tool for banks and other institutions that may need it. With the right strategy, this infrastructure works perfectly. However, the implementation may not be very straightforward despite its numerous gains. You may need to involve professionals to ensure your new changes are fully embraced and appreciated. Either way, an up-to-date payment HSM is a valuable asset.


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