DUKPT for Software POS: A Technical Key Management Approach for Safeguarding Payment Data

Purpose: The paper explores how the Derived Unique Key per Transaction (DUKPT) encryption technique enhances the security of software-based Point of Sale (POS) systems, addressing rising cyber threats and safeguarding sensitive financial data. It aims to educate stakeholders across industries on DUKPT's implementation and long-term benefits in meeting evolving regulatory and customer demands for data security. Methodology: A thorough literature research and a hands-on examination of DUKPT's use in software-based point-of-sale systems comprise the methodology. Existing research on key management, encryption of payment systems, and the weaknesses of conventional key management techniques are all included in the literature review. The report also provides case studies that show how DUKPT has been implemented in various industries, looking at both technical details and practical results. The examination covers network communication protocols, device security measures, secure key storage, and PCI DSS (Payment Card Industry Data Security) compliance. The conclusions are further supported by quantitative data from security breach statistics and qualitative data from interviews with industry professionals. Findings: The findings of this paper reveal that DUKPT significantly enhances the security of software-based POS systems. Key results include: The Derived Unique Key per Transaction (DUKPT) encryption technique offers several advantages. It enhances security by generating a unique encryption key for every transaction, effectively reducing the risk of data breaches and preventing key reuse attacks. Additionally, DUKPT improves operational efficiency by allowing businesses to manage encryption keys securely without significant overhead, resulting in streamlined processes. Its implementation also demonstrates a stronger commitment to regulatory compliance, particularly with PCI DSS standards, minimizing the risk of penalties for non-compliance. Furthermore, the enhanced data security fosters greater customer trust, which ultimately strengthens client loyalty and retention Unique Contribution to Theory, Practice, and Policy: The study makes a unique contribution to the field by providing a thorough analysis of DUKPT's benefits, enhancing theoretical discussions on cryptographic techniques, educating policymakers about the need for updated security regulations to improve cybersecurity in payment systems, and providing useful case studies and suggestions for businesses looking to successfully integrate DUKPT in software POS environments.