If you’ve ever swiped your credit card at a store or made an online purchase, you’ve more than likely used the services of a company that follows PCI compliance guidelines. What exactly does that mean, and why does it matter, though?
PCI DSS stands for Payment Card Industry Data Security Standard. It’s a set of security standards created to protect credit card information during and after a financial transaction. These standards were developed by the PCI Security Standards Council, which is an organization founded by major credit card companies like Visa, MasterCard, American Express, and others. The goal of PCI compliance is to ensure that all companies that process, store, or transmit credit card information, do so in a secure environment.
Simply put, PCI compliance is a set of rules that businesses must follow to protect their customers’ payment card data. If a business handles credit or debit card transactions, it is required to meet these standards.
Any business that accepts, processes, stores, or transmits credit card data must be PCI compliant. This includes everything from small mom and pop stores to massive online retailers. Even if a company only processes a small number of transactions each year, it still needs to comply with PCI standards.
It’s not just stores that need to worry about PCI compliance, though. Service providers, like payment gateways or hosting companies that store card data for merchants, must also be PCI compliant.
The next question to ask, is: why is PCI compliance so important?
With the rise of online shopping and digital transactions, protecting customer payment data has become more crucial than ever. Cybercriminals are always looking for ways to steal credit card information, and breaches can be incredibly costly for businesses and devastating for consumers.
Here are a few reasons why PCI compliance is so important:
Protecting Customer Data
The most obvious reason for PCI compliance is to protect sensitive information like credit card numbers, expiration dates, and security codes. A breach could expose this data, leading to fraud and identity theft. By following PCI DSS standards, businesses can reduce the risk of this happening.
Avoiding Fines and Penalties
Non-compliance with PCI DSS can result in severe penalties. If a business is found to be out of compliance, it could face hefty fines from credit card companies. These fines can range from $5,000 to $100,000 per month, depending on the size of the business and the severity of the non-compliance. For smaller businesses, this could be devastating.
Maintaining Customer Trust
Customers expect that businesses will keep their personal and financial information safe. A breach can seriously damage a company’s reputation. Once trust is broken, it can be hard to earn it back. Following PCI compliance helps businesses show their customers that they take security seriously.
Preventing Financial Loss
In the event of a data breach, businesses could face huge financial losses. They may have to pay for credit monitoring for affected customers, cover legal fees, and deal with chargebacks and lost sales. Following PCI compliance can help reduce the likelihood of a breach and the financial damage that comes with it.
So, what does a business need to do to be PCI compliant? PCI DSS has 12 main requirements that businesses must follow. These can seem a bit technical, but let’s break them down so they’re a bit easier to understand.
- Install and Maintain a Firewall
A firewall is a security system that helps prevent unauthorized access to a network. Businesses must have a firewall in place to protect cardholder data. - Use Secure Passwords and Settings
Many systems come with default passwords and settings. Hackers know these defaults, so it’s important to change them to something more secure. - Protect Stored Cardholder Data
If a business stores cardholder data, it must be encrypted or masked so that unauthorized people can’t access it. It’s also best to store as little data as possible. - Encrypt Transmission of Cardholder Data
When sending card data over the internet or other networks, it must be encrypted so that hackers can’t intercept it. - Use and Update Antivirus Software
Viruses and malware can give hackers access to sensitive data. Having up-to-date antivirus software helps prevent this from happening. - Maintain Secure Systems and Applications
Software and systems should be regularly updated to fix any security vulnerabilities. - Restrict Access to Cardholder Data
Only people who need access to cardholder data to do their jobs should be able to see it. This minimizes the risk of internal theft. - Identify and Authenticate Access to System Components
Each person who accesses the system should have a unique ID, and businesses should use methods like passwords or biometrics to verify their identity. - Restrict Physical Access to Cardholder Data
Physical access to computers or servers that store cardholder data should be restricted to authorized personnel. - Track and Monitor All Access to Network Resources
Businesses should keep track of who is accessing the system and when. This helps identify potential breaches quickly. - Test Security Systems Regularly
Regular testing helps ensure that security measures are working as they should. This includes scanning for vulnerabilities and running penetration tests. - Create and Maintain an Information Security Policy
Every business should have a security policy in place that covers how they will protect cardholder data and meet PCI compliance
Not all businesses need to follow the same level of PCI DSS. The PCI Security Standards Council breaks compliance into four levels based on the number of transactions a business processes each year.
Level 1: Businesses that process more than 6 million transactions annually.
Level 2: Businesses that process between 1 million and 6 million transactions annually.
Level 3: Businesses that process between 20,000 and 1 million e-commerce transactions annually.
Level 4: Businesses that process fewer than 20,000 e-commerce transactions or fewer than 1 million total transactions annually.
Each level has its own specific requirements, but the general goal is the same: to protect cardholder data.
Now that we covered what PCI compliance is and the different levels, lets explore what happens if you’re not PCI Compliant.
Being non-compliant with PCI standards can have serious consequences. As mentioned earlier, businesses can face significant fines from credit card companies. In addition to fines, non-compliant businesses may also experience:
Loss of Credit Card Processing Privileges
In some cases, a business may lose the ability to process credit card payments altogether. This would be a major setback, as most customers expect to be able to pay with a card.
Higher Fees
Businesses that are not PCI compliant may face higher processing fees from banks and credit card companies.
Reputational Damage
A data breach can severely damage a business’s reputation. Customers may be hesitant to continue doing business with a company that has a history of poor security.
How can Businesses achieve PCI compliance?
Achieving PCI compliance can seem daunting, but it doesn’t have to be. Here are some steps businesses can take to ensure they meet the requirements:
Understand Which Level Applies to Your Business
Determine how many transactions your business processes annually and identify which PCI level you fall under.
Complete a Self-Assessment Questionnaire (SAQ)
For most smaller businesses, PCI compliance starts with a self-assessment. The SAQ is a series of questions that help you evaluate how well your business meets PCI DSS requirements.
Use a PCI-Compliant Payment Processor
One of the easiest ways to ensure compliance is to use a payment processor that is already PCI compliant. These processors handle much of the security work for you.
Implement Necessary Security Measures
Follow the 12 requirements of PCI DSS and make sure your systems are secure. This might include installing a firewall, encrypting data, and regularly testing your security systems.
Stay Informed
PCI DSS standards are updated regularly to address new security threats. Staying informed and updating your systems accordingly will help you maintain compliance.
PCI compliance isn’t just about following a set of rules. It’s about protecting yours and your customers business from data breaches and fraud. Whether you’re a small business or a large corporation, following PCI DSS helps ensure that sensitive payment data is handled securely.
By understanding and adhering to these standards, businesses can reduce the risk of financial loss, avoid penalties, and build trust with their customers. If your business handles credit card transactions, make sure you’re doing everything you can to stay PCI compliant.