What Is PCI Compliance?

PCI stands for Payment Card Industry. The PCI Security Standards Council (PCI SSC) maintains the requirements for the PCI Data Security Standard (PCI DSS).

The PCI SCC provides standards and resources to help members of the payment ecosystem develop secure payments around the globe. It accomplishes this by managing payment security standards; validating and listing products and solutions that meet established requirements; training, testing, and qualifying security professionals and organizations; and providing best practices and resources.

According to Investopedia, the FTC is responsible for overseeing credit card processing. There is no regulatory mandate for businesses that accept credit cards to be PCI compliant. However, court precedent has established PCI compliance as de facto mandatory.

This means businesses that comply with PCI standards demonstrate that they’re following best practices to keep their customers’ credit card data secure. Businesses that fail to maintain PCI compliance may be putting their customers’ credit card data at risk, which means they may be held liable in the event of a breach.

Why Are PCI Standards Important?

Credit card fraud and identity theft are huge problems that cost consumers millions of dollars each year. According to the FBI’s 2023 Internet Crime Report, there were 55,851 complaints involving personal data breaches in 2023. That same year, identity theft resulted in losses totaling $126,203,809 and credit card and check fraud resulted in losses totaling $173,627,614.

When businesses experience data breaches that put their customers at risk, they may face expensive class-action lawsuits. For example, EdScoop says students are suing a university ticketing firm for failing to keep personal data secure ahead of a data breach. As another example, The Daily Swig says a U.S. water filter supplier agreed to pay $200,000 to settle a lawsuit over leaked credit card data, which impacted approximately 320,000 consumers. Lastly, the Daily News says the Metropolitan Opera is facing a class-action lawsuit for failing to keep personal information (including credit card numbers) safe.

These are just a few examples – many more incidents like this happen all the time. As the problem has grown, state legislators have been passing new data breach notification and consumer privacy laws. As a result, businesses face even greater liability than they used to.

PCI standards help on two counts. First, by following PCI standards, businesses may be successful in preventing data breaches. This is the ideal outcome. Second, if a breach does occur, businesses may be able to reduce their liability by showing they were following best practices to keep consumer data safe.

The PCI Standards

Companies that process, store, or transmit cardholder data or sensitive authentication data use the PCI DSS standard. This standard helps businesses achieve six goals:

  • Build and maintain a secure network or system
  • Protect cardholder data
  • Maintain a program to manage vulnerabilities
  • Implement access control measures
  • Monitor and test networks
  • Maintain an information security policy

To achieve these six goals, businesses need to meet 12 requirements:

  • Install and maintain a firewall that controls computer traffic into and out of the network to protect cardholder data. Among other things, this should restrict traffic from untrusted networks and hosts.
  • Use strong passwords and settings in place of vendor-supplied defaults and security parameters. Since hackers may use default passwords to gain access to systems, it’s important to change these.
  • Protect cardholder data that they need to store. Businesses should not store this data unless doing so is necessary. They should never store sensitive data on the magnetic stripe or chip of the card.
  • Encrypt cardholder data that is transmitted across open and public networks. This provides an important element of protection against hackers who may try to intercept the data during transmission.
  • Use and regularly update anti-virus software to protect systems against malware. They must protect all systems that are vulnerable to malware with anti-virus software. Businesses may like to use additional anti-malware solutions as an extra layer of security.
  • Develop and maintain secure systems and applications by applying security patches as soon as they become available. These patches prevent exploitation by hackers.
  • Limit access to cardholder data to only parties that need this information. Access should be restricted to individuals who require access based on their job responsibilities.
  • Identify and authenticate access to system components by giving each person with access to data a unique identification. It’s possible to authenticate users based on a password, a smart card, a biometric, or something similar.
  • Restrict physical access to cardholder data. Since the physical systems that store sensitive data are also vulnerable, proper facility entry controls, monitoring, and procedures are necessary to ensure security.
  • Track and monitor access to network resources and cardholder data using logging mechanisms. This is important to enable businesses to manage vulnerabilities and conduct forensics in the case of a breach.
  • Conduct security testing on a regular basis. Since hackers are always discovering and exploiting new vulnerabilities, businesses shouldn’t become complacent. Regular testing and vulnerability scans will help them stay ahead of threats.
  • Maintain a policy that addresses information security. Employees need to know what their duties are in terms of security and protecting cardholder data. Businesses should review their security policies annually and update them as necessary. Measures such as screening personnel, implementing an incident response plan, and implementing a formal security awareness program also form part of this step.

The above steps are just a broad overview of the PCI requirements. For more details, see the PCI DSS Quick Reference Guide.

How to Comply with PCI DSS

For many businesses, the easiest way to comply with PCI standards is to work with a payment processing company that is already PCI DSS compliant. However, your company will still need to play an active role in maintaining data security. No matter which payment processing partner you use, your company will still be solely responsible for the safety of the data you collect, handle, store, and send.

To uphold your responsibility to keep consumer data safe, you will need to:

  • Perform a quarterly network scan by an Authorized Scanning Vendor.
  • Submit an Annual Report of Compliance by a Qualified Security Assessor.
  • Complete an Attestation of Compliance.

Tranzpay takes credit card data security seriously. Our tokenized customer vault protects cardholder data and adheres to PCI security standards. Additionally, we have a dedicated PCI DSS compliance team to monitor merchants’ compliance. When you partner with us for your payment processing needs, you can rest easy knowing that we are following high standards of credit card security. Contact us to learn more.