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02/04/2024

The Importance of PCI DSS Compliance in Payment Gateway Integration

Keeping customer data safe is a top priority, especially in payments. Achieving PCI DSS compliance makes this task more manageable. Learn how PCI DSS safeguards your business and your customers.

Paulina Twarogal

Content Specialist

Andrzej Puczyk

Head of Delivery

In the credit card processing industry, protecting sensitive customer data is crucial. That’s where PCI DSS compliance comes in, setting the global standard for security. While more businesses are taking PCI DSS compliance seriously, achieving and maintaining it remains a significant challenge. A whopping 80% of organizations have yet to secure compliance. Even more concerning, only 29% retain it a year after validation. Many businesses treat PCI DSS as a one-time hurdle, forgetting it’s an ongoing process crucial for protecting sensitive customer data. 

What’s the importance of PCI DSS compliance in payment gateway integration? What are the risks of non-compliance and the benefits of a strong security posture?

What is PCI DSS compliance?

PCI DSS stands for the Payment Card Industry Data Security Standard. It’s a set of requirements designed to ensure organizations that accept, transmit, or store credit card information keep it safe from breaches and fraud. This applies to all entities engaged in credit card transactions, including merchants, processors, acquirers, issuers, e-commerce businesses, and service providers.

Launched in September 2006, the PCI Security Standards Council (PCI SSC) was established to oversee PCI security standards and enhance account security during transactions. Formed independently by Visa, MasterCard, American Express, Discover, and JCB, the PCI SSC is responsible for governing and maintaining global security standards.

By following the PCI DSS guidelines, businesses demonstrate their commitment to data security and build trust with their customers. It’s not just a one-time effort, though. It’s an ongoing process. The PCI DSS consists of 12 core requirements that can be grouped into six broad categories. These requirements work together to create a comprehensive security framework for organizations that handle cardholder data.

PCI DSS v3.2.1 Quick Reference Guide

There have been four versions of PCI DSS so far, with the latest update (PCI DSS 4.0) released in March 2022. These ongoing updates reflect the evolving security landscape. The latest version introduced changes to multifactor authentication, passwords, phishing, and e-commerce standards. It also mandates organizations to assign roles and responsibilities for each requirement while offering more flexibility for organizations using various security methods. Businesses must comply with these updates by March 2025.

PCI compliance levels

There are four different PCI compliance levels, each with its own set of requirements. Businesses are categorized into different compliance levels based on their risk profile, specifically the amount of cardholder data they handle.

Level 1: These are companies processing over 6 million credit card transactions annually or those who experienced a data breach in the past year. They face the most stringent requirements due to the high volume of sensitive information they manage.

Level 2: This category includes businesses processing 1 to 6 million transactions a year. Their compliance requirements are less strict than level 1 but still significant.

Level 3: Companies in this level handle a moderate amount of cardholder data, processing 20,000 to 1 million transactions annually. Their compliance requirements are less demanding compared to the higher levels.

Level 4: These are businesses processing less than 20,000 transactions a year. The requirements are the least demanding, but it’s important to remember that even smaller businesses still need to take steps to safeguard cardholder data.

There’s a bit of flexibility, though. If a credit card company deems a business high-risk despite a low transaction volume, it might bump it up to a stricter level 1 classification. This ensures companies with higher potential for data breaches face the most rigorous security standards.

Penalties for non-compliance

Businesses not meeting PCI DSS standards could face fines of up to $100,000 per month, as well as higher transaction fees. Even worse, they risk losing their banking relationship permanently and being placed on the Merchant Alert to Control High-Risk (MATCH) list, barring them from processing card payments ever again. Furthermore, in the event of a data breach, merchants may see their PCI DSS compliance level raised as a penalty.

How to get a PCI DSS compliance certification?

PCI DSS isn’t technically a certification program, but achieving compliance involves following a set of requirements.

  1. Determine your certification level: Identify your PCI compliance level based on your transaction volume.
  2. Implement security measures: Put in place the required security controls like firewalls, encryption, and access control.
  3. Conduct assessments: Perform internal scans and penetration testing to identify vulnerabilities.
  4. Maintain documentation: Document your PCI DSS policies and procedures.
  5. Annual report (Level 1) or self-assessment questionnaire (Level 2-4): Submit an annual report (Level 1) or self-assessment questionnaire (Level 2-4) to a Qualified Security Assessor (QSA) for review.

The six core principles of PCI DSS

Many companies gradually meet PCI compliance by following the PCI SSC’s recommended prioritized approach. It can be broken down into six steps.

1. Build and maintain a secure network and systems

​​The first set of PCI DSS requirements focuses on building and maintaining a secure network environment. This means protecting the systems from external threats and ensuring security across all IT components.

Previous versions of PCI DSS emphasized firewalls. However, today’s corporate networks are more complex. They can involve both physical locations and cloud-based services. To address this complexity, PCI DSS now requires a broader security approach. 

This includes:

  • Implementing and maintaining secure network configurations such as firewalls, routers, and intrusion detection/prevention systems;
  • Minimizing unnecessary services and protocols to reduce potential vulnerabilities;
  • Regularly patching systems to keep the network protected against evolving threats.

2. Protect cardholder data

Protecting cardholder data, which includes names, account numbers, and expiration dates, is a top priority for any business that accepts credit or debit card payments. Whether the data is stored locally, printed on receipts, or transmitted across networks, businesses have a responsibility to keep it secure and prevent unauthorized access or misuse.

Storing cardholder data should also be minimized. If it’s necessary to keep it on file, strong security measures are crucial. There are techniques that play a role in making this data useless to prying eyes, such as encryption, hashing (converting data into a unique code), and truncation (masking parts of the account number).

3. Maintain a vulnerability management program

The third group of PCI DSS requirements centers around proactively identifying and addressing weaknesses within systems and applications before attackers can exploit them and compromise cardholder data. 

It involves:

  • Conducting systematic scans of systems and applications to identify potential vulnerabilities. These scans can be internal (using in-house tools) or external (contracting a qualified security firm);
  • Regularly updating antivirus software or programs;
  • Prioritizing identified vulnerabilities based on severity and risk;
  • Verifying the effectiveness of remediation efforts through retesting;
  • Remediating vulnerabilities by applying security patches or implementing other controls.

4. Implement robust access control measures

Here, it’s all about keeping cardholder data secure by strictly controlling access. This means following the principle of “least privilege,” where only employees who absolutely need cardholder data for their job duties can access it. To ensure accountability, everyone with access receives a unique ID and uses a strong password.

Additionally, some systems might require an extra layer of security with multi-factor authentication. Physical access to areas with cardholder data might also be restricted by security measures such as cameras or keycard systems. Finally, any paper records or media containing cardholder data must be securely destroyed once they’re no longer needed, preventing unauthorized access even after disposal.

5. Regularly monitor and test network 

The fifth set of PCI DSS keeps a watchful eye on the network, especially for cardholder data. Every attempt to access the network or this data is logged, like a detailed record. This record shows who accessed what and when, helping to spot suspicious activity. These records are kept for at least a year, with the most recent ones easily accessible for review. Importantly, they’re also backed up to prevent tampering. Security personnel regularly review these logs for anything unusual, like unauthorized access attempts.

The focus isn’t just on monitoring. Regular testing is also required. This involves simulating attacks (penetration testing) to see how strong the defenses are. Scans are also conducted to find weaknesses in the system, allowing them to be fixed before attackers can exploit them. The network is scanned for unauthorized devices as well. On top of that, special tools are in place to alert workers of any unexpected changes, allowing for a swift response to potential threats. By constantly monitoring and testing the network, organizations can ensure it remains secure, and cardholder data is protected.

6. Maintain an information security policy

Maintaining an information security policy is important for organizations to ensure the protection of cardholder data. This policy serves as a guide for employees, contractors, and partners, outlining their responsibilities in keeping a secure payment environment. It includes protocols for incident response, acceptable resource use, and security responsibilities. 

What’s more, regular training initiatives help employees understand their roles in safeguarding cardholder data and following security practices. By establishing a robust security policy, organizations not only set a foundation for security but also educate employees about their obligations in protecting cardholder data and maintaining security standards throughout the organization.

How does a PCI-compliant payment gateway benefit businesses?

PCI DSS compliance might seem like a technical hurdle, but the benefits are clear and can have a big impact on your business. Let’s take a look at the key advantages.

Stop data breaches before they start 

The most important reason for PCI DSS? Preventing security incidents, like data breaches, from happening in the first place. By following the guidelines (like building firewalls, encrypting data, and having a security plan), you strengthen your defenses against the most common attacks.

Build trust with customers

Stronger information security goes hand-in-hand with a better relationship with your customers. As cyber threats become more common, people expect businesses to take data security seriously. PCI DSS compliance demonstrates your commitment to protecting their information. This builds trust and confidence, encouraging customers to choose your services. Even if a security incident happens, a well-managed response (as outlined in PCI DSS Requirement 12) can actually strengthen your reputation by showing you handle these situations responsibly.

Avoid costly fines

Under PCI DSS, fines for non-compliance are passed from acquiring banks to businesses. Unlike other regulations, these fines can keep adding up every month until compliance is achieved. This can quickly become a significant expense. Plus, non-compliance with PCI DSS might also put you out of compliance with other data protection regulations like GDPR. With hefty fines possible under GDPR (up to €20 million), avoiding compliance weaknesses becomes even more critical.

Meet global security standards

Being PCI DSS compliant shows the world you’re on top of your data security game. Developed by major payment card companies, PCI DSS represents the gold standard for secure transactions. By complying, you’re aligning yourself with other trusted and respected businesses worldwide.

Are there any challenges with PCI DSS compliance?

Going PCI DSS compliant isn’t always a smooth ride. Here are some of the common challenges organizations face.

Figuring out what needs protection

Knowing exactly what systems and data fall under PCI DSS can be tricky, especially if your systems are complex and interconnected. It takes a careful review of your entire environment to identify everything that handles cardholder data.

Technical complexity

Think firewalls, encryption, and access controls—all these need to be properly set up and work together to keep data secure. For businesses with complicated payment systems, coordinating security across different platforms can be an additional hurdle.

Resource constraints

Upgrading security to meet the new PCI DSS standards might mean significant changes for some businesses. Tight deadlines and complex infrastructure can make hitting those compliance goals a challenge. Additionally, achieving and maintaining compliance requires ongoing investment in security tools and skilled personnel. This can be a burden, especially for smaller companies with limited resources.

Continuous maintenance and monitoring

PCI DSS compliance isn’t a “check-the-box” task. It’s a constant battle against evolving security threats. Regular monitoring, updates, and security assessments are crucial to stay compliant.

Criticism of PCI security standards

While PCI DSS is widely recognized, it’s not without its critics. Some argue that simply meeting PCI requirements doesn’t guarantee a truly secure system. Research shows that many businesses struggle to maintain the security measures they put in place after initial compliance audits. For example, a study found that in 2020, only 43% of companies remained fully compliant a year after passing an audit.

Not all businesses require external audits by certified security professionals. Smaller businesses processing fewer transactions can self-assess their compliance through questionnaires. Critics worry this lack of independent verification might lead to companies overstating their security posture.

Another criticism focuses on the involvement of credit card companies in creating the PCI standards. Some see this as a conflict of interest, raising questions about whether the standards truly prioritize overall security or the interests of the credit card companies themselves. Moreover, some businesses report facing extra penalties from credit card giants like Visa or Mastercard after a data breach on top of regulatory fines.

Conclusion

Integrating a PCI DSS compliant payment gateway is a strategic decision that goes beyond just ticking a compliance box. It signifies a commitment to robust security, fostering trust with customers, and potentially opening new business opportunities. While implementing and maintaining PCI DSS compliance can pose challenges, particularly for smaller businesses, the benefits far outweigh the initial investment. By prioritizing robust security practices, you safeguard sensitive data, minimize the risk of breaches, and ultimately build a more resilient and trusted business.

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Agata Tomasik
Board Member
Head of Outsourcing
agata.tomasik@neontri.com

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