With cashless transactions fast becoming the norm, the use of POS (Point of Sale) systems is rising. These systems enable streamlined payment processing and business management.
However, with the increasing adoption of POS systems, transaction fraud has become a serious threat to business profitability – protecting your business against PoS terminal hacking and cheating is critical.
In this article, we will dig deeper into PoS machine hacking and how to prevent it.
What is a PoS System?
A PoS (Point-of-Sale) system is a combination of software and hardware setup that facilitates payments by customers. Analogous to cash registers today’s entirely digital PoS system helps businesses track expenses, aggregate data, and transaction history from various checkout points.
PoS machines are widely used by many businesses, such as retail shops, bars, restaurants, healthcare providers, and more. Some high-end PoS machines come with e-commerce integration.
When a purchase is made by a customer the following steps involve:
- The customer picks the item they want to buy
- For an in-person purchase, the seller can go for a barcode scanning.
- The total amount the customer needs to pay is then calculated with the PoS machine. In this phase, any tax, if applicable on the sale, is also added to the bill. The PoS system then updates the inventory count to reflect the sale.
- The purchase is then completed, and the customer can pay for the items. They have a range of options while paying – cash-based payments, credit cards, debit cards, gift/loyalty points, tap cards, etc. In addition, the transaction needs to be authorised by the designated bank if the customer goes for a cashless transaction.
- The last step is to make the PoS machine finalise the transaction. In this step, an electronic receipt is created, and the sold items are handed over to the customer.
Understanding PoS Security Vulnerabilities
Even though the use of PoS machines has been skyrocketing recently, with electronic transactions outnumbering traditional cash-based payments, the security implemented with these services is not usually that much upgraded.
As a result, companies, even the “big fishes” and high-profile businesses, often fall victim to Point-of-Sale terminal hacking.
For example, in 2013, Target – the leading retailer – hit the headlines when it faced a PoS hacking attack. The attack left more than 40 million of its consumers at risk of credit card scams, while 70 million others had personal information (for example, email ID) exfiltrated during the breach.
A year later, Home Depot reported a massive PoS attack where scammers exfiltrated the credit card details of over 56 million customers.
That said, PoS system hacking can lead to long-term repercussions – financial loss, customer data exfiltration, operational disruption, hefty regulatory penalties, loss of credibility, and more.
Mitigating the operational disruptions caused by a PoS system breach often requires more than cybersecurity measures alone — it demands a well-structured business continuity strategy. Organizations that establish robust recovery capabilities before an incident occurs are far better positioned to restore operations quickly, limit financial exposure, and satisfy regulatory obligations. A critical component of such planning involves understanding the available disaster recovery site options, each offering a different balance of cost, recovery speed, and infrastructure readiness that businesses must evaluate against their specific risk tolerance.
For instance, in 2021, 98% of the total PoS data breaches the hospitality industry encountered were driven by financial motives.
Getting an in-depth insight into the vulnerabilities that can lead to PoS attacks helps businesses protect themselves.
The exploitation of two typical security flaws usually leads to a successful hack of PoS machines: the physical attributes of the devices and the IT systems they are connected to.
Remote Point-of-Sale Hacking
Remote PoS hacking is when scammers exploit an ingrained vulnerability in a PoS system to control it remotely.
Let’s look into the vulnerabilities cyber attackers exploit to gain remote control over a PoS machine.
Often, PoS machines are pre-loaded and operated with common operating systems (OSs). These OSs come with limited functionalities and often contain some types of security flaws. Scammers typically have knowledge of these flaws and thus can easily hack a PoS device through them.
In addition, a PoS machine connected to a compromised Wi-Fi network or an unprotected IP address can lead to a successful hacking attempt.
Cyber criminals also use the following tactics while hacking PoS systems:
- Network Attacks: PoS devices connected to the main network a business operates on are more vulnerable to this attack. If the hackers somehow manage to compromise the main network, they can hold sway over the PoS system and pilfer sensitive information, including credit card information, customer bank account details, debit card information, etc.
- Brute Force Attack: PoS systems with repeated or easily crackable passwords are more exposed to such attacks. In this attack, cyberpunks use automated scripts, apply combination methods, and generate a list of probable PoS passwords.
In 2021, Oracle – a leading American technology company – tracked down massive security vulnerabilities in its PoS Micros systems. By exploiting this flaw, scammers gained unauthorised access to the company’s system – servers, passwords, and usernames – and risked its customers for financial scams.
Physical Endpoint Hacking
This process involves accessing and tempering the physical parts of a PoS system to steal confidential data, such as credit card numbers and cardholder’s name.
The several tactics hackers employ in this process include:
- Thieving the Machines: In some cases, scammers steal the PoS machines of a company, connect them via Bluetooth or any other means, and steal data. Since the breach can be executed, and the machines can be returned in a few hours before the office resumes operations the following day, it gets harder for a company to detect such hacking attempts. It usually involves bribing employees to steal the systems.
- Installing Malware onto PoS Machines: PoS machines can be hacked without physically stealing the terminals. One of the widely used PoS hacking tactics is exploiting security loopholes in the machines or external vendor credentials and injecting malware into a company’s PoS system during usual customer transactions. PoS malware can be installed using other techniques – prompting targets to download malicious or harmful software, access infected websites, and open malicious documents – all from a company’s computers. Once malware is injected, cyberpunks can execute a malware-based PoS attack and steal customer data.
How to Hack PoS Machines
Regardless of the vulnerability exploited, a typic PoS hacking involves the following steps:
- First off, the internet is scanned for open ports of remote access tools such as VNC, pcAnywhere, VNC, RDP, etc. These are used by admins to access their company operations remotely. Using outdated versions of these protocols increases the likelihood of being affected by a cyber attack. Identifying any of these tools with security loopholes means the hacker has a target PoS environment.
- The aforementioned methods are then used to exploit the vulnerable versions of the remote access tools and crack login credentials.
- Having login credentials authenticates them as admins and gives them access to the PoS system. At this phase, various tools are installed to record keystroked logged on the system and gain access to confidential data such as credit card data. The data extracted by the malware is then sent back to the hacker’s server. To help avoid detection, the injected malware throttles transfer rates.
How to Prevent PoS Hacking
It’s no news that PoS machines are vulnerable to hacking or other cybercrimes. However, the severity and likelihood of these vulnerabilities being exploited are usually determined based on their cost vs. risk analysis.
Before you can effectively prevent PoS breaches, you need to know whether an intrusion is already underway. Recognizing the warning signs early — unusual network traffic patterns, unexpected outbound connections, or unfamiliar devices appearing on your network — can mean the difference between a contained incident and a full-scale compromise. Developing a solid grasp of network hacker detection techniques gives your security team the situational awareness needed to act decisively before a vulnerability is fully exploited.
Different enterprises can adopt different techniques while addressing the potential risks associated with these vulnerabilities. Let’s review the common strategies you can adopt to prevent PoS system hacking.
Keep Your Software and Hardware System Updated
The hardware and operating systems your company runs on constantly evolve – providers periodically roll out updates and security patches with these systems, and the latest versions are more sophisticated than the previous ones.
It implies that, based on how updated the systems are, the severity and likelihood of being affected by hacking differs. With that said, enterprises should deploy the latest software editions and security patches launched by their PoS providers to dodge PoS hacking efficiently.
Install Security Software
Besides keeping the PoS software updated with the latest security patches and upgrades, you should also install robust security software and anti-virus to lock out hackers from your PoS terminal. It also helps augment a company’s cybersecurity posture. Security software such as anti-malware tools prevent malware from infecting the PoS system.
In addition, by figuring out and deleting security flaws and infected attachments, these tools enable high-end protection against potential threats. On the other hand, firewalls add another layer of security by blocking fraudulent websites. It also employs stringent user access rules to restrict unauthorized login to any internal systems.
Implement Lock-out Mechanism
Ensure implementing a lock-out system in your PoS system and restrict a user from trying to log into the system after multiple failed attempts. This process also allows you to fix the permitted number of failed login attempts before the system locks out a user.
You can also specify the duration after which the system will auto-release a locked-out account. Implementing a lock-out system is a widely used measure that helps prevent unauthorized access and brute force attack on a PoS system.
Siloed Operations
Keep your PoS system shielded by limiting its exposure to unnecessary internet connection and unauthorized applications. Thus, you can minimize its attack surface and the likelihood of being affected by the hacking.
Use Secure Wi-Fi Connection
The network, especially the Wi-Fi, your PoS system is operating on should be highly protected and shielded with a strong password and encryption such as WPA2. Encryption protocols ensure your communications cannot be intercepted and are always protected.
Use Complex password
To prevent cyber criminals from spoofing genuine users and accessing the used accounts in your PoS system illegally, make sure you use highly complex passwords for each account.
Alter Default Setting
Make Sure you change the default configurations and settings with your newly bought PoS system, as cyber criminals have already got a hold of them.
POS Encryption and Tokenization
You can also update your PoS terminal and the possibility of transaction scams associated with PoS hacking by implementing near-face communication (NFC) and high-end Tap-to-Pay technology.
Enabling a contactless payment system with NFC technology encrypts transaction data before it’s authorized by the payment gateway. This high-end encryption ensures scammers can’t intercept this confidential transaction data.
In addition, even if this sensitive data is somehow intercepted, scammers cannot decipher and steal it due to the tokenization applied during the authorization step. This data encryption, coupled with tokenization, enables high-end end-to-end encryption that keeps transaction data transmission between the merchant and the customer bank. This end-to-end encryption makes it more challenging for cyberpunks to breach your PoS system.
Phishing threats extend well beyond email, and retail employees are increasingly targeted through SMS-based attacks known as smishing. A fraudulent text message may impersonate a bank, a vendor, or even internal IT staff, tricking employees into revealing credentials or clicking malicious links that compromise your PoS environment. Implementing proven strategies to prevent smishing attacks should be a foundational part of your security posture, since a single manipulated staff member can undermine even the strongest encryption and tokenization controls you have in place.
Train Your Personnel
While it’s critical to protect your PoS system by implementing proactive security measures, teaching your staff the best practices is equally important. Proper training will ensure they don’t get manipulated by phishing emails or messages and share account details or passwords with the scammers. In addition, they should be expert enough to identify any phishing or malware infection attempt before cyber criminals can hold sway over the PoS system.
