Point of Sale (PoS) systems have allowed retailers to surpass customer expectations by speeding up transactions through seamless connectivity across multiple touchpoints.

However, this increased convenience also extends to cybercriminals. PoS systems handle vast amounts of sensitive financial data, including credit card information, transaction details, and customer data. Constant internet connectivity, frequent IT security lapses, and multi-user access make them attractive targets for data breaches and malware attacks. These threats have become more sophisticated, with attackers using keyloggers to record keystrokes or RAM scrapers to capture card data before encryption, later exfiltrating them.

Before attacking a PoS system, attackers conduct reconnaissance gathering information about the target’s vulnerabilities and unprotected entry points. They gain access via phishing emails, exploiting unpatched vulnerabilities, or using weak or stolen credentials. Once inside, they establish a foothold by deploying malware or backdoor trojans. Compromising one application allows attackers to move laterally within the network, accessing additional PoS systems and stealing vast amounts of data, including personally identifiable information (PII) for financial theft or broader identity fraud.

Indicators of Compromise (IoC) of a PoS attack

Continuous monitoring of network traffic and endpoint activities can help detect suspicious behaviour early. Administrators should watch for sudden spikes in outbound traffic, particularly during off-hours, which may signal data exfiltration. Additionally, POS operators should monitor for communication with unfamiliar domains or ports, especially those associated with known malicious activity.

Most PoS attacks occur through malware injection. The presence of unfamiliar files in sensitive directories or unusual processes running on POS terminals could indicate malware activity. Since hackers often delete logs to cover their tracks, altered log files and unexpected system or user behavior could suggest malware interference.

Administrators should pay attention to alerts from security tools. Security Information and Event Management (SIEM) systems, if properly configured, generate alerts on suspicious activities. They also help detect unauthorised privilege escalations, where user accounts are granted higher permissions.

Lesser-known vulnerabilities in PoS systems often overlooked

Many retailers rely on outdated PoS terminals, making them more susceptible to exploits. Moreover, weak password policies and lack of encryption expose data transmitted between PoS systems and payment processors to interception. Retailers should adopt smarter PoS solutions that allow for regular updates and patches to address vulnerabilities and comply with security standards.

PoS systems often work with third-party providers to improve customer service, but misconfigurations, as seen with McDonald’s recent threat, can pose risks. It’s essential to use reliable PoS management solutions and regularly review third-party integrations to ensure compliance.

Employees with access to PoS systems can intentionally or unintentionally compromise security, and physical access to PoS devices can allow attackers to install skimmers or tamper with hardware. While regular background checks and least privilege access principles can mitigate insider threats, continuous surveillance can prevent unauthorised access to PoS terminals.

Without adequate logging and real-time monitoring, suspicious activities can go unnoticed. Therefore, businesses should implement comprehensive logging and monitoring systems to detect and respond to anomalies quickly.

Responding to suspicious activity in PoS systems

One compromised PoS system can lead to a wider breach across multiple systems. Therefore, it’s essential to immediately isolate affected systems to prevent further spread and minimise the risk of data exfiltration. After isolation, follow the pre-established incident response plan by notifying key stakeholders, assessing the breach’s scope, and initiating forensic analysis to determine the cause and extent, including analyzing logs and identifying compromised systems.

Patch the identified vulnerable components. Inform affected customers, regulatory bodies, and possibly credit card companies if payment data was compromised. It’s crucial to review and update security policies, procedures, and controls based on the breach findings. Additionally, analyse the incident response process to identify gaps and areas for improvement.

Long-term planning for PoS security

Retailers need to take a proactive approach, keeping in mind the following ‘PoS’tulates to avert cyberattacks on PoS systems:

Create an Incident Response Plan (IRP): Establishing a detailed incident response plan that outlines instructions for employees to detect, respond to, and recover from security incidents will help speed up the response time. Moreover, periodically test these response systems to ensure their effectiveness.

Cybersecurity audit: Conduct thorough audits, clearly categorising sensitive and confidential data, and tracking their storage locations, instances, and volumes on the network. As the saying goes, “We can’t protect what we can’t see,” organisations need to be aware of their PoS presence and data collection systems.

Cybersecurity risk management: Implement a system for regular risk assessments to identify new vulnerabilities and potential threats to PoS systems. These risk management strategies should be continuously updated based on the latest security trends.

Endpoint/PoS security: A multi-faceted approach is the way to go. It helps set up defenses on multiple fronts. For instance, using a Unified Endpoint Management (UEM) framework ensures that the right applications are installed, password policies are enforced, and network connections are secure. IT admins can oversee their PoS network spread across multiple locations from a single console, enabling remote updates and patching. Preferably, choose UEM solutions that partner with PoS hardware vendors to ensure smooth performance and regional compliance.

Skill gap analysis: Address the shortage of experts in areas like penetration testing and threat analysis. Employ specialists in information security to proactively identify anomalies in real-time. Ultimately, businesses must stay adaptable with new technologies, and having the talent to manage these advancements is essential.

How advanced technology helps enhance and secure the retail industry

In recent years, artificial intelligence (AI) has taken various markets by storm, including retail. Businesses can now integrate AI into their inventory management systems and demand forecasting models, helping them predict product replenishment. On the other hand, retail giants like Walmart are leveraging generative AI, using them to negotiate prices and terms with suppliers.

Meanwhile, AI hasn’t disappointed in terms of security. Businesses can utilise advanced algorithms to detect suspicious activities and prevent unauthorised access by analysing user behaviour, such as typing speed and mouse movements from which deviations from normal PoS system usage can be identified.

Fortunately, AI-trained software can also identify unusual transaction patterns and flag them in real-time. Plus, while technologies like encryption and tokenisation protect customer data by turning sensitive information into secure tokens or encryption, blockchain technology help create secure, unchangeable transaction records, reducing the risk of tampering and fraud.

For payment security, solutions like NFC (Near Field Communication) and mobile wallets (like Apple Pay and Google Wallet) offer secure and convenient options that lower the risk of card skimming. EMV chips in credit and debit cards are also more secure than traditional magnetic stripes, making card cloning significantly harder.

While advanced technology has greatly impacted retail, it’s crucial to balance innovation with customer experience. For instance, Amazon’s Just Walk Out technology didn’t resonate as well with customers, leading to reduced investment. Smart retail technologies hold promise but must align with customer preferences to be truly successful.

Apu Pavithran is CEO of Hexnode.