Purchase transaction system with encrypted payment card data

A computer-implemented method for securing payment card data in a system having at least one point of sale terminal and at least one payment card transaction processing gateway, the method comprising:

• deriving, by a key server, an intermediate key from a master key;
• sending, by the key server, the intermediate key to the at least one payment card transaction processing gateway;
• deriving, by the key server, a first terminal key from the intermediate key;
• sending, by the key server, the first terminal key to the at least one point of sale terminal;
• obtaining, by the at least one point of sale terminal, payment card data associated with a payment card of a user during a purchase transaction;
• encrypting, by the at least one point of sale terminal, the payment card data using an encryption algorithm that takes as inputs a first part of the payment card data, a tweak formed from a second part of the payment card data, and the first terminal key;
• transmitting, by the at least point of sale terminal, the encrypted payment card data and the tweak, to the at least one payment card transaction processing gateway;
• deriving, by the at least one payment card transaction processing gateway, a second terminal key from the intermediate key;
• and
• decrypting, by the at least one payment card transaction processing gateway, the encrypted payment card data using the second terminal key and the tweak.