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Triple Data Encryption or TDES is an ANSI sanctioned algorithm for encryption. In TDES, block cipher algorithms are used and every data block gets the application of the algorithms thrice. The size of the key is increased so that the security can be improved and made better. There are 64 bits of data in every block and the keys are three in number, called bundle keys. Every key has 56 bits, making TDES 168 bits.

In data encryption standards, there are basically 3 keying options –

1. All independent keys;
2. The independent keys are Key 1 and 2, and Key 1 and Key 3 are identical. [K1 = K3]
3. All the three keys are identical. [K1 = K2 = K3]

The third option is the TDES key, containing 168 bits and security of 112 bits.
TDES is used for PIN encryption by all transaction terminals that are debit capable. It was developed so that it could be much more secure than DES, its predecessor, and any potential breaches in security could be successfully combated. DES only had one algorithm whereas TDES has 3 independent parts of keys.

Initially, when DES was used, it was realized that with payments and credit card processing, the merchant accounts were still vulnerable to security issues, especially brute force attacks. With the help of TDES, the key space was enlarged easily without switching to a new algorithm. 2 Key TDES would fall vulnerable to ‘meet in the middle attacks’ and the three steps used in TDES were strong enough to prevent that situation.

Thus, to summarize, TDES provides the following benefits –

• Better security in electronic payment than ever before, because of added security layers and triple running of the encryption algorithm. Basically, it is providing triple protection that is harder to crack and corrupt by any attacker.
• Simpler system, with an elimination of the need to switch to a new algorithm.
• Compliance of TDES by merchants who want to facilitate PIN debit transactions is mandatory because of the enhanced security it provides.
• Overall better service and smooth operations, sans attacks and intrusions.

Every other use of TDES has almost disappeared because of the introduction of AES or Advanced Encryption Standards but within the credit card processing and electronic payment industry, merchant accounts still use it extensively. It is still being developed to become even more secure, which is why it could still be seen in the future as an active cryptographic standard.