DEFINITION of 'Point-To-Point Encryption (P2PE)'

Devices, applications, and processes that keep payment card information secure from the point that the card is swiped until it is decrypted and the transaction processed. Point-to-point encryption (P2PE) is provided by a third-party that acts as the middleman between the business located at the point-of-interaction (POI) and the company responsible for payment processing.

BREAKING DOWN 'Point-To-Point Encryption (P2PE)'

Consumers and businesses rely on the use of payment cards, such as credit or debit cards, to conduct billions of transactions every year. Unlike cash transactions, which don’t require much in terms of security, payment card transactions require electronic communication between a payment terminal where a card is swiped or inserted, and the card company that must verify that the account has sufficient funds. This presents a security risk, as the information contained on the card needs to be protected from unauthorized access.

Point-to-point encryption provides for the secure management of both the encryption of card information at the point-of-interaction, and the decryption of that information at the point of verification. P2PE providers are third parties, including acquirers, payment gateways, and card processors. These organizations typically charge a fee to the business offering payment card transactions. The P2PE provider charges this fee for its encryption management services.

Companies providing encryption services are responsible for providing an instantaneous service. This includes the hardware used to swipe the payment card and ultimately transmit and route the payment card information, as well as the software used to manage and encrypt/decrypt the payment card.

P2PE standards are developed by the Payment Card Industry (PCI) which is an organization led by payment card companies such as VISA, American Express, and MasterCard.

P2PE is different than end-to-end encryption, or E2EE, which is not certified by PCI. P2PE directly connects the point-of-interaction with the payment processing company, while E2EE indirectly connects systems.

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