I'd like to see more authentication frameworks take this use case into account. "Logged-in" should actually be a spectrum of at least 3 states, not binary.
It can be a bit of a hassle, but it makes a lot of sense when dealing with money.
So really, they should just ask for a PIN once instead of for every action. But I bet it makes people feel more safe to keep entering it.
- For logging in, I enter a 6 digit code to the dongle. It spits out a 8 letter pass-phrase, which I then enter to the website.
- For authorizing payments, I need to enter the last 5 digits from the account number to the dongle. Again it produces a passphrase.
- The authorization is only required the first time you make a payment to an account. So it's not even particularly annoying.
This is basically malware-safe, assuming a user who understands how the scheme works. The result from a 6-digit input code is useless to an attacker, and no amount of malware on the computer can make me enter a 5-digit code (since I'd read those numbers from the paper invoice). Likewise highjacking form submission and changing the account number when I enter a payment would do the attacker no good.
The malware only needs to monitor your session until you enter whatever credentials were prompted of you by the real-live site, upon which it captures the connection, prevents your post, and does an automatic drive-by withdrawl from your account.
Phishing is a different discussion. For users who don't know better (which is 99% of them) they will just ask you for whatever they want, with a carbon copy of the content of the real site, and once provided with it, will do whatever one-time transaction you would have done on the real site. The only difference is they don't need malware to do this.
Combine the two (perhaps with some slight-of-hand using your own browser's UI) and they can challenge and authorize a payment to an account you don't realize is incorrect. If you double-checked the account number you might realize the switch.
For most American banks none of what you described is offered to the consumer or business owner. In Europe there's just an extra step in the way for the fraud. (Swiss bank accounts would, I assume, require more stringent security procedures than most other banks)
The posited malware can't initiate an automatic transaction, since an OTP from the bank dongle is needed. The dongle needs to be seeded with a specific part of the receiver's account number, so just any OTP generated by the dongle won't do. The account number has been passed out of band (generally on a paper invoice), so taking control of my browser doesn't give the attacker a way of fooling me into generating an OTP suitable for use with their account either.
This attack hinges on intercepting a human entering in authentication information by hand into what they think is a secure, valid site. The human will be doing manual stuff, but the code is automated.
The account number has been passed out of band
If it was not passed out of band, or a phishing or mitm attack changes the account number and the user doesn't notice, this attack will work. It's a difficult but rewarding targeted attack similar to those used by the chinese, eastern europeans, etc.
And there should be better messaging for that.
For the last year or so I've been amused and then frustrated by ebay having a "Welcome, username" message in the header, but requiring another login before I can do anything relating to my account. Just providing a login link in the header would cut in half how many clicks I have to go through to add something to my watch list.