What is PCI DSS compliance?
To protect cardholder data, PCI DSS compliance entails putting particular security procedures and policies into place. This includes keeping a network safe, safeguarding cardholder information, putting robust access control mechanisms in place, testing and monitoring networks often, and upholding information security policies.
PCI DSS compliance rules must be followed by businesses that handle credit card information to safeguard cardholder data and lower the risk of fraud and data breaches. Penalties, higher transaction costs, and harm to one’s reputation may arise from noncompliance. Self-assessment questionnaires and/or on-site audits by certified security assessors are commonly used to evaluate compliance.
Understanding PCI DSS
Let’s run through a quick Q&A to get up to speed on PCI DSS.
What PCI Compliance Applies to Your Business, as a Merchant?
The technical and operational system components pertaining to cardholder data are addressed by the Payment Card Industry Data Security Standard (PCI DSS). It applies to all companies that handle, transmit, or keep cardholder data. It is required of you as a merchant to comply with PCI DSS if you accept or process credit cards.
The global standard for data security, PCI DSS is supported by major credit card companies including Visa, Mastercard, AMEX, and JCB. It covers all organizations that handle sensitive authentication data and cardholder data, including those that process, store, or send such data.
What types of data does PCI DSS protect?
PCI DSS prevents unwanted parties from accessing or stealing sensitive data, such as cardholder information and authentication data. This contains details such as security codes, expiration dates, credit card numbers, and cardholder names. It also includes PINs and other significant codes, as well as sensitive information from the card’s magnetic stripe or chip. In essence, it protects against cybercrime and helps keep your credit card information secure when making online purchases.
What are the best practices for PCI DSS Compliance?
The best way to lessen the possibility and impact of a payment card data breach is to maintain compliance with the Payment Card Industry Data Security Standard (PCI DSS). Serious repercussions for your company might come from non-compliance, such as lost sales, penalties, the loss of your ability to take credit cards, harm to your reputation as a brand, and possibly even legal action. Thus, retaining consumer trust, protecting sensitive payment card data, and preventing serious financial and reputational loss all depend on PCI DSS compliance.
PCI DSS Benefits
Let’s dig into the benefits of achieving PCI DSS compliance, which secures the company from these types of following:
One of the most important factors to take into account is the possibility of reputational damage, which may have a permanent, long-lasting, and even irreparable effect. By endangering your customers’ credit card information, you run the risk of losing money in addition to damaging your reputation and the trust you’ve worked so hard to build.
In a recent case study, Company X, a prominent e-commerce platform in India, faced a substantial revenue loss in 2020 following a PCI DSS compliance breach. The Reserve Bank of India (RBI) imposed a fine of approximately ₹75 million for negligence in safeguarding clients’ sensitive payment data. Despite being a leader in the competitive Indian e-commerce market, Company X failed to uphold adequate security measures, leading to a major breach in April 2020.
Losing the ability to accept payment card transactions
In addition to the possibility of losing money, organizations risk paying hefty fines assessed by payment card companies. But far more detrimental than the monetary fines is the possibility of the card companies revoking their authorization to handle credit card transactions. This would have very negative effects and make it very difficult, if not impossible, for the organization to continue operating. The organization’s future viability may be severely jeopardized and business continuity severely disrupted if credit card transactions are no longer processed.
When cardholder data is compromised, it often leads to legal action and potential litigation. A notable case of a significant data breach resulting in legal consequences is the Equifax data breach in 2017. This breach compromised the personal information of over 147 million people, including names, social security numbers, birth dates, addresses, and in some cases driver’s license numbers and credit card details. The breach led to a series of legal actions, including a multi-state settlement of over $600 million, as well as a consumer class-action lawsuit that resulted in a settlement of around $1.4 billion to compensate the victims for the harm caused.
Indian firms may also suffer major financial consequences from data breaches. In India, the average cost of a data breach peaked in 2023 at Rs 17.9 crore, per a survey published in The Economic Times. The report also showed that malevolent insider threats trailed social engineering as the most expensive root cause of breaches, accounting for Rs 19.1 crore. Furthermore, 83% of Indian organizations reported having at least one cybersecurity issue in the previous year, according to a Cloudflare survey.
In one instance, it was alleged that the hotel chain Taj Hotels, which is owned by Tata, experienced a data breach that may have endangered 1.5 million patrons. Many data breaches affect Indian businesses, highlighting the necessity of strong data security protocols to reduce financial consequences.
Certainly! Investing in meeting and maintaining PCI compliance is a small cost compared to the huge fines and serious problems that can come from a data breach if you’re not compliant. Creating a strong PCI DSS culture in your company can lower your risks. By focusing on and following the 12 requirements of the PCI DSS, like keeping your network safe, protecting customer data, and controlling who has access to it, you can significantly reduce the chances of a breach.
Organizations should comply with PCI DSS must meet with these 12 requirements, covering the use of firewalls, encryption, antivirus software, network monitoring and access controls.
- Install and maintain a firewall configuration to protect cardholder data.
- Do not use vendor-supplied defaults for system passwords and other security parameters.
- Protect stored cardholder data.
- Encrypt transmission of cardholder data across open, public networks.
- Use and regularly update antivirus software.
- Develop and maintain secure systems and applications.
- Restrict access to cardholder data by business’ need to know.
- Assign a unique ID to each person with computer access.
- Restrict physical access to cardholder data.
- Track and monitor all access to network resources and cardholder data.
- Regularly test security systems and processes.
- Maintain a policy that addresses information security.
Since its development in 2006, there have been four Full versions of PCI DSS up till now let’s breakdown for a better understanding.
PCI DSS 1.0: This was the first version released in 2004 and included the original 12 requirements with a focus on maintaining security policies and procedures, as well as the need for regular audits and reporting.
PCI DSS 2.0: The second version was released in 2011 and involved minor language adjustments to clarify the 12 requirements. It reinforced the importance of scoping before assessment and promoted more effective Log Management. There were also broadened validation requirements for assessing vulnerabilities in a merchant environment.
PCI DSS 3.0: Released in 2013, this version introduced new requirements for methodology-based penetration testing, inventorying hardware, and software components within the cardholder data environment, and outlining new malware detection and remediation standards, among other measures.
PCI DSS 4.0: The most recent update in March 2022 included updates to multifactor authentication and password requirements, along with new standards for phishing and e-commerce. It also added requirements for organizations to assign roles and responsibilities for each requirement, offering greater flexibility for organizations using multiple security methods. Organizations have until March 2025 to comply with the new 4.0 requirements.
PCI DSS merchant levels
The payment card industry uses merchant levels to decide how much security a business needs. The levels also show how much assessment and validation a merchant needs to pass a PCI DSS assessment. There are four levels based on the number of transactions a merchant handles annually.
Level 1 merchants handle over 6 million transactions for Visa or Mastercard, or over 2.5 million for American Express each year. Additionally, if a merchant of any size has experienced a data breach resulting in data compromise, they are classified as Level 1. The card brand may also designate merchants as Level 1 to minimize risks to the system.
Level 2 merchants process between 1 million and 6 million transactions annually across all channels.
Level 3 merchants conduct between 20,000 and 1 million online transactions annually.
Level 4 merchants deal with fewer than 20,000 online transactions annually or process up to 1 million regular transactions per year.
How do I know if I am required to comply?
The first step in understanding PCI compliance is knowing which requirements should be applied to your business. If you’re a Level 1 merchant, you must have an onsite assessment. For Levels 2–4, you should check with your payment processor to see if you need to fill out an SAQ, and if so, which one fits your setup. SAQs are forms that help merchants and service providers assess and report their PCI DSS compliance on their own.
Becoming PCI DSS Compliance
It is crucial to ensure compliance with cardholder data security regulations and to assess the impact of PCI DSS on your company. Finding and fixing issues can be facilitated by testing the data storage systems on a regular basis and looking for any vulnerabilities. It is essential to protect sensitive data. Adhering to the guidelines involves establishing a routine for managing and resolving vulnerabilities.
Until the infraction is remedied, fines for PCI DSS violations range from $5,000 to $100,000 per month. Examine the people, procedures, and technology aspects of your PCI DSS scope. Collaborate with the IT and security teams to make sure the right security setups and procedures are in place. There are resources available on the PCI SSC document library’s official website to help you at every stage. Depending on the level of PCI DSS mentioned above, you may need to submit a Report on Compliance from a competent auditor or complete a Self-Assessment Questionnaire.
Third-party PCI Compliance
An Annual Self-Assessment Questionnaire (SAQ) is necessary for self-validating compliance, and it is not desired to endure a comprehensive Report on Compliance (ROC). Additionally, businesses can work with an Internal Security Assessor (ISA) or a Qualified Security Accessor (QSA) recognised by the SSC in place of performing an Annual SAQ. The company takes into account the precise cost that goes towards implementing PCI compliance. Being counted is far harder than we realise. Every merchant level is very different, and some will incur more expenses than others.
If you’re just starting with PCI DSS compliance, the first step is to review your organization’s current and future needs. Identify the people, processes, and technologies involved in handling cardholder data and decide what changes can be made internally. Then, figure out what you might need help with from outside sources, and research the right providers for your compliance needs.