Understanding Point-Of-Sale (PoS) Malware: A Full Guide

  • By Steven
  • Published: Nov 13, 2023
  • Last Updated: Dec 04, 2023

PoS Malware

The digital world is great, but for all it's helped the world, it's also opened businesses up to a massive number of threats. One particularly worrying danger is Point-of-Sale malware. These are sophisticated attacks targeting point-of-sale systems used by companies when handling transactions.

POS malware not only harms a company's data integrity and finances, but it also causes massive damage to its reputation in the eyes of consumers. The infamous Target breach in 2013 was due to this malware attack. The retail giant lost over 40 million payment card numbers shortly before the holiday shopping season.

The settlement of this breach alone was over $18 million, but the estimated losses from the loss of consumer trust were nearly $300 million. In this guide, we'll help you understand these attacks, learn how they get into your systems, and how to defend your business better moving forward.

Understanding PoS Malware

Point-of-sale malware is software that installs into the operating systems of digital cash registers used at retail stores, restaurants, or virtually any location that deals in direct transactions with customers.

These programs steal sensitive customer information (PII), with their main focus being debit and credit card data. They do this by capturing data in transit and remotely sending the spoils to a cybercriminal's device. Once the information is in their hands, it's possible to initiate fraudulent transactions, steal your identity, or sell it to others on the dark web.

Types of PoS Malware

There are several forms of PoS malware, each focused on different weaknesses of the targeted systems. Some of the most common examples include:

Keyloggers

Keyloggers are among the more senior malware types available. The technology is relatively well known but generally works by recording every keystroke on the infected operating system. So, if a clerk manually inputs a customer's information (Full name, card number, PIN, etc.), the criminal is sent the information as well. 

Memory Dumpers

Every computer has memory where it stores important information for later use. PoS systems use short-term memory to briefly store transaction information in case of a refund or voided purchase. Memory dumpers target data packets before the encryption process and gain plaintext versions of sensitive information.

Network Sniffers

Network sniffers, or packet analyzers, intercept data as it travels across networks instead of stealing it from the PoS system. They target the intersection between the terminal and the payment processing server. By focusing solely on this relationship, the cybercriminal knows precisely where to look and can covertly access the information before having it continue to the intended designation. This process makes it extremely difficult to detect a sniffer.

How PoS Malware Works

Understanding how PoS infect and steal from devices is vital for both prevention and detection. A typical PoS malware attack follows these steps:

  1. Access: The criminal gets in contact with the PoS system, such as social engineering, phishing, faulty configuration, or exploitable hardware.
  2. Installation: The malicious software is uploaded to the system, usually disguised or hidden inside a legitimate process, such as an update.
  3. Data Theft: The malware starts recording sensitive data like payment information, customer details, or employee logins.
  4. Data Transfer: The stolen information is moved to a separate server owned by the attacker. Other methods include real-time transfer over Bluetooth in the case of keyloggers.
  5. Hiding Evidence: More advanced malware will initiate a sweeping process to conceal evidence of tampering, like deleting logs or reverting system settings. This allows attacks to remain undetected for months or never be discovered.

The end of this process spells terrible news for consumers and business owners. Many compliance laws in the US and other countries create standards all organizations must follow. Most recent breaches have occurred because the victim failed to adhere to some principles of those laws.

So, businesses suffer significant loss of sales and legal consequences for allowing the attack to happen in the first place.

Consumers must deal with the dirty process of freezing their credit if they even notice the fraudulent activity in the first place. Careful scammers can use a victim's identity for years without notice. If you've shopped at a breached business, it's a good idea to start monitoring your credit if your information was used without your knowledge.

Prevention and Protection

The first step to keeping this headache out of your business is to know where criminals are most likely to attack. Common vulnerabilities attackers exploit include:

  • Out-of-Date Software: Many operating patches that appear to do nothing are filled with minor fixes that address known security risks. Don't skip out on these, and make regularly updating your PoS software a priority.
  • Weak Passwords: An attacker may guess an employee's login information to gain access to the system. They could enter remotely or use social engineering to access the device physically.
  • Poorly Configured Networks: An unconfigured or wrongly configured network gives attackers an easy way in. Make sure to secure the Wi-Fi network your PoS systems connect to properly.

Addressing these weaknesses will significantly shore up your vulnerabilities to PoS malware schemes. However, it requires a multi-pronged approach, as leaving one open may undo all your efforts and resources.

Our recommendations for your first steps are to invest in secure and tamper-resistant hardware. In addition to anti-virus and firewalls, your hardware should exhibit clear warning signs that something has gone wrong. Doing so helps in identifying a problem quickly and fixing it before it gets out of hand.

Next is to integrate strong authentication standards for your employees in addition to security education. The human element is the weakest link to many businesses, and this weakness gets worse the bigger an operation becomes. Login features such as 2-factor authentication, access controls, and log-off protocols should be strictly drilled into the training process.

The third most important precaution to take is to configure your infrastructure so that the PoS system is appropriately isolated. Keeping it out of contact with other networks gives you time to identify the attack and keep it from spreading to more sensitive and dangerous areas.

Keep Yourself Safe from POS Malware Problems

PoS malware is an ever-present and growing threat that businesses must pay attention to. Knowing the various threats you'll face and how they operate allows you to identify the early red flags and avoid massive consequences.

If reading this has caused you to reconsider the state of your security infrastructure, then visit IDStrong to read more on the modern state of cybersecurity. We have many articles on how to improve your personal and professional barriers and minimize your appeal to cybercriminals.

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