DUKPT Key Derivation: A Complete Tutorial

DUKPT (Derived Unique Key Per Transaction) is a key management scheme that generates a unique encryption key for each transaction. This tutorial explains the complete derivation process.

What is DUKPT?

DUKPT provides a method for:

1. Deriving unique transaction keys from a single base key
2. Ensuring that compromise of one transaction key doesn't expose others
3. Supporting millions of transactions without key exhaustion

Key Components

Base Derivation Key (BDK)

The master key held by the acquirer/processor. Never leaves the secure key management system.

Initial PIN Encryption Key (IPEK)

Derived from BDK and the initial KSN. Injected into the PIN pad device.

Key Serial Number (KSN)

A unique identifier that includes:

• Key Set ID (KSI): Identifies the BDK
• Device ID: Unique per device
• Transaction Counter: Increments with each transaction

Format: KKKKKKKKKKTTTTTTTTTT (80 bits)

• K: Key Set ID + Device ID
• T: Transaction Counter (21 bits)

Current Transaction Key

Derived from IPEK using the counter portion of KSN.

Derivation Process

Step 1: Calculate IPEK

IPEK = TDES_Encrypt(BDK, KSN with counter zeroed) 
     || TDES_Encrypt(BDK XOR C0C0..., KSN with counter zeroed)

Step 2: Future Key Derivation

For each transaction:

1. Start with IPEK (or current key register)
2. For each set bit in counter (from left to right):
   • Apply the "black box" function
   • XOR and encrypt to derive intermediate key
3. Final result is the Current Key

Step 3: Working Key Derivation

From the Current Key, derive specific working keys:

• PIN Encryption Key (PEK): XOR with mask 0x00000000000000FF00000000000000FF
• MAC Key: XOR with mask 0x000000000000FF00000000000000FF00
• Data Encryption Key: XOR with mask 0x0000000000FF00000000000000FF0000

Practical Example

Given:

• BDK: 0123456789ABCDEFFEDCBA9876543210
• KSN: FFFF9876543210E00001

Step 1: Extract Initial KSN (zero counter)

Initial KSN: FFFF9876543210E00000

Step 2: Calculate IPEK

IPEK: 6AC292FAA1315B4D858AB3A3D7D5933A

Step 3: Derive for Counter 1

Current Key: 042666B49184CFA368DE9628D0397BC9

Step 4: Derive PEK

PEK: 042666B49184CF5C68DE962BD0397B36

Security Considerations

1. Counter Exhaustion: After 2^21 (about 2 million) transactions, the device needs re-injection
2. Future Key Secrecy: Even if current key is compromised, future keys cannot be derived
3. BDK Protection: The BDK must never be exposed; all security depends on it

AES DUKPT

Modern implementations use AES instead of TDES:

• 128/192/256-bit key sizes
• Enhanced security
• Larger counter space
• Different derivation algorithm (NIST SP 800-108)

Try It Yourself

Use our DUKPT Tool to:

• Calculate IPEK from BDK and KSN
• Derive transaction keys step by step
• Generate PIN, MAC, and data encryption keys
• Visualize the entire derivation tree