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What is Point-to-Point Encryption?

Point-to-Point Encryption, commonly referred to as P2PE, is an emerging technology that is often especially useful for merchants. P2PE protects data from payment cards at the capture point, for instance when a card payment terminal reads the card, until it reaches the safe decryption endpoint.

Encryption describes the process through which the payment card information is converted into an unintelligible format. P2PE ensures that cardholder information undergoes immediate encryption once the card is used at the point-of-sale terminal.

For the P2PE solution to function as intended, stringent controls need to be enforced when it comes to access to and the protection of decryption. Here’s a look at how the technology works.

P2PE Basics

The technology is a standard set by the Payment Card Industry (PCI) Security Standards Council. However, not all P2PE solutions are PCI-validated. While payment solutions can perform data encryption in various ways, they must be reviewed and audited by a P2PE Qualified Security Assessor and then approved by the PCI Council to be given the P2PE status.

P2PE encryption begins once the card is read and continues as the data passes on to the acquirer and processor before going back to the merchant. Simply put, the technology ensures that data is safe from risk.

How P2PE Works

P2PE allows businesses to secure communication between devices or constituents within those devices, reducing the risk of the exposure of sensitive data being transmitted through the network.

The technology is mainly deployed as a compliance solution with the PCI Standard. Nonetheless, it can also work for other sensitive information. Since the transaction data undergoes full encryption during the process, it isn't susceptible to misuse and capture by illegal third parties.

In case a hacker was to intercept a transaction, the obtained information would be indecipherable as it would be in an encrypted form. To be able to decrypt the data, the user would need the encryption keys, which are only accessible to authorized parties.

Benefits of P2PE

The major advantage of P2PE is its capacity to reduce the extent of security endeavors. In a regulated environment, the strategy can decrease the number of networks and systems that would have to meet arduous monitoring and compliance requirements. Here are some other advantages of P2PE.

A Decreased Likelihood of Payment Fraud

When cardholder information is instantly encrypted, it becomes virtually impossible for fraudsters to interpret and intercept sensitive data and payment information.

Decreased Liability

Merchants who adhere closely to the manual instructions and implementation guide without combining their payments with different P2PE devices face decreased liability.


Processing payments with P2PE is faster than other processes. Subsequently, this creates faster and simpler consumer–merchant transactions.

Simplified Compliance Endeavours

Numerous merchants have to undergo semi-annual or annual audits that can be very time-consuming. P2PE helps reduce the load entailed in these annual audits and self-assessments considerably while helping merchants concentrate on their core business functions.

Limitations of P2PE

Although the technology is promising, it has not been implemented extensively because of the limited number of mature market products. Numerous organizations that intended to implement P2PE after the PCI Security Standards implemented an easy validation process for similar products weren’t able to as they couldn’t find a product that met the PCI’s guidelines.

Vendors have even reported that product offerings weren't commercially viable. Though suitable products are gradually entering the market as businesses are upgrading their systems. Another limitation concerns compliance delay because the solution frequently needs a sizeable monetary investment to be up and running. This includes upgrades to POS software, hardware, and possible fee increases from vendors eager to maximize the abrupt demand from businesses looking to restrict their compliance responsibilities.

It’s worth noting that P2PE is not a cure-all. While it can reduce the need for securing remote networks, it doesn’t eradicate the need for controls. The most significant example is the importance of implementing solid encryption practices. If an adversary can access the decryption key, this means the solution is ineffective. Thus, any device that is considered out of scope shouldn't access the keys used for protecting sensitive information.


P2PE is a promising technology that businesses are gradually adopting in an attempt to improve data security and decrease the extent of compliance initiatives, particularly in payment systems. However, security professionals must consider significant limitations associated with it. As the technology surrounding commercial data security advances, we can expect to see P2PE being implemented on a larger scale.

To learn how our payment solutions can help you run your business more efficiently, schedule a free consultation with our merchant services team today.


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