This question is in some way related to the below linked question. However, I need a little more clarity on some aspects and some additional information. Refer: REST Web Ser
The approach looks ok. Not very secure. Let me highlight some of the attacks possible with the request.
Man-In-the-middle attack in a POST request, the user can tamper with the request and server does not have any way to ensure the data is not tampered.
Replay attack: In this, the attacker does not tamper with the request. The attacker taps the request and sends it to the server multiple times in a short duration, though it is a valid request, the server processes the request multiple times, which is not needed Please read about Nonce.
In the first step, the user sends his credentials i.e username and password to the login service and if you have a web based application that also uses the same password it might be dangerous. If in case password in compromised, API and web everything is exposed, please use a different PIN for API access. Also, ensure decrypted token as specified by you, expires after a certain time.
Ensure the service (application server) tomcat. jboss never returns a server page in case of internal error, this gives the attacker extra information of the server where the app is deployed.
-- MODIFIED BASED ON SECOND POST --
Yes your correct if your using mutual SSL, but in case its a one way access you don't have the client certificates. It would be good if you just double ensured everything in the request, just like signed (signature) SOAP, one of the strong data transfer mechanism. But replay attack is a possibility with HTTPS, just handle that. Rest use tokens encryption is good. And why not ask the client to decrypt the token with the password and return the output of the decryption by this you can validate the output, if it is present in your database ? This approach the user does not send the password over the wire even if it is HTTPS ?
Why not simplify it to the following?
For first request:
For subsequent requests:
On the server side the token will be stored with an expiry date. On each access to the service this date will be updated to create a sliding expiration. There will be a job that will run every few minutes to delete expired tokens and the query that checks the token for a valid session will only check those that have not deemed to have expired (to prevent permanent sessions if the scheduled job fails for any reason).
There is no need to hash and encrypt the tokens within the database - it adds no real value apart from a touch of security through obscurity. You could just hash though. This would prevent an attacker that managed to get at the session data table from hijacking existing user sessions.