iPad credit card reader hacked

The Square credit card reader application for iPhone and iPad has been hacked and a hacked version can enable criminals to convert stolen cards into cash, reports InformationWeek.

Speaking recently at Black Hat, a UBM TechWeb event in Las Vegas, security researchers from Aperture Labs in England demonstrated a hack that criminals could use to convert skimmed cards into cash, via Square.

Square's dongle converts credit card magstripe data into audio, which the iOS application then listens to and translates back into credit card numbers.

According to The Wall Street Journal, Adam Laurie and Zac Franken from Aperture Labs demonstrated how a thief could use a laptop, the Square software and a credit card number to get cash into a bank account without making a real purchase.

Laurie says the process is easier than current methods of credit card fraud, which involve purchasing actual goods and reselling them for cash.

According to Cnet, Square doesn't see it as a significant threat, saying that there are easier ways to commit credit card fraud and that they can detect fraud through traffic analysis and other methods.

However, the threat is significantly mitigated by federal anti-fraud bank regulations in the US that make it difficult for fraudsters to set up dummy accounts.