A Complete PCI DSS Compliance Guide for Mid-Sized Businesses

Introduction

In today’s competitive marketplace, many businesses offer customers the convenience of paying with credit cards. However, this convenience comes with an increased risk of credit card fraud. Safeguarding sensitive customer data is paramount, making compliance with PCI Data Security Standards (PCI DSS) crucial for businesses.

Compliance with PCI DSS ensures the security of every credit card transaction your business processes. Whether you’re a startup or a mid-sized enterprise, understanding PCI DSS compliance is essential. Yet, comprehending its intricacies can be complex and daunting. Here’s a comprehensive guide to PCI compliance, covering what it entails, its requirements, and best practices. Let’s dive in.

What Is PCI Compliance?

PCI Compliance is a global security standard designed to protect cardholder information and prevent payment card fraud. Mandated by PCI Security Standards Council, it includes the technical and operational standards for capturing, processing and storing sensitive cardholder information.

This compliance is mandatory for any company accepting credit card payments, including any organization that collects, transmits or stores cardholder information, or any sensitive authentication data in any form.

PCI DSS Standards/Goals

To become PCI DSS compliant an organization needs to meet a set of requirements. However, prior to understanding what these requirements are it is essential to know what the goals of PCI DSS are. To become PCI DSS compliant organizations, need to meet all the twelve PCI DSS requirements as well as meet all these goals.

The six major goals of PCI DSS are.

• Build and maintain a secure network
• Protect cardholder data
• Maintain a vulnerability management program
• Implement strong access control measures
• Regularly monitor and test networks
• Maintain an information security policy

With the recent release of the PCI DSS V4.0, these goals have been further defined as:

• Continuing to meet the security needs of the payment industry
• Promoting security as a continuous process
• Adding flexibility for different methodologies
• Enhancing validation methods and procedures

12 Requirements of PCI Compliance

To become PCI compliant organizations need to adhere to and fulfill twelve PCI DSS requirements and meet the six PCI DSS goals. These requirements cover the complete ambit of technical and operational aspects that organizations must meet to safeguard customer data. The PCI DSS requirements provide organizations a clear roadmap to achieve compliance.

Key Requirements for PCI DSS Compliance

1. Installing/maintaining a firewall configuration for networks and systems
   

   Organizations need to establish and implement firewall and router configuration standards. This includes setting up rules that control the flow of traffic between internal networks and untrusted external networks. Regular testing and updating of these configurations are necessary, especially after any network changes, to ensure the firewall remains effective against new threats.

   
   
2. Avoid using vendor-supplied defaults for passwords & other security parameters
   

   Default passwords and settings provided by vendors are widely known and can be easily exploited by attackers. Organizations should change all default passwords and remove or disable unnecessary default accounts before installing a system on the network. This reduces the risk of unauthorized access through these common entry points.

   
   
3. Protecting cardholder data during storage
   

   Organizations should minimize the storage and retention of cardholder data to what is strictly necessary for business operations. Data that is no longer needed should be purged at least quarterly. Additionally, stored cardholder data must be protected using strong encryption and access controls to prevent unauthorized access and breaches.

   
   
4. Using encryptions during cardholder data transmissions in open and public networks:
   

   Cardholder data must be transmitted securely over open and public networks using strong encryption and security protocols. This ensures that sensitive information is protected from interception and eavesdropping by unauthorized parties during transmission.

   
   
5. Using and updating anti-virus software
   

   Deploy anti-virus software on all systems that are commonly affected by malicious software. Organizations should ensure that anti-virus programs are regularly updated with the latest virus definitions and patches. For systems not typically targeted by malware, periodic evaluations should be conducted to assess evolving threats and determine if anti-virus software is necessary.

   
   
6. Developing and maintaining secure network systems and applications
   

   Organizations should have processes in place to identify and address security vulnerabilities. This involves regularly consulting reputable sources for vulnerability information and applying patches or updates promptly. Assigning a risk ranking to vulnerabilities helps prioritize mitigation efforts based on potential impact.

   
   
7. Restricting user access to cardholder data
   

   Access to system components and cardholder data should be limited to only those individuals whose job responsibilities require such access. Implementing role-based access controls and regularly reviewing access rights helps minimize the risk of unauthorized data access.

   
   
8. Creating a unique ID for users who need to access cardholder data
   

   Organizations need to define and implement policies and procedures to ensure proper user identification management for users and administrators on all system components. Each user with access to cardholder data must have a unique identifier. This ensures accountability and allows for tracking individual actions on system components. 

   
   
9. Restricting any physical access to cardholder information
   

   Physical access to systems that store, process, or transmit cardholder data should be limited and monitored. Organizations should use entry controls such as access cards, biometric scanners, or security personnel to prevent unauthorized physical access to sensitive areas.

   
   
10. Tracking and monitoring all access to network systems and data
    

    Organizations must implement audit trails to link all access to system components to individual users. This involves maintaining detailed logs of user activities, access attempts, and system events. Regularly reviewing these logs helps detect and respond to suspicious activities.

    
    
11. Testing security processes and systems
    

    Internal and external network vulnerability scans should be conducted at least quarterly and after any significant network changes. These scans help identify potential security weaknesses. Additionally, regular penetration testing and security assessments are crucial to validate the effectiveness of security measures.

    
    
12. Maintaining information security policies
    

    Organizations need to develop, publish, maintain, and disseminate a comprehensive information security policy. This policy should outline security requirements, roles, and responsibilities. It should be reviewed and updated at least annually or whenever there are significant changes in the environment to ensure it remains relevant and effective.

    
    

Different Versions of PCI DSS 

Since its formation in 2006, the PCI SSC has continuously monitored the latest developments and industry risks and upgraded the PCI DSS security standards to ensure effective payment account security. 

PCI DSS 1.0

The initial iteration of the Payment Card Industry Data Security Standard (PCI DSS), known as PCI DSS version 1.0, was unveiled on December 15, 2004. This release included a fundamental yet robust set of security standards for merchants. All entities, including online retailers and various organizations handling credit card transactions, were obligated to adhere to this new standard.

In 2006, PCI SSC became an independent global monitoring collective. They swiftly released version 1.1, urging merchants to review online applications, install firewalls for added security, and provide clarifications. Version 1.2 followed in October 2008 to enhance clarity and address evolving risks. In August 2009, version 1.2.1 was released, covering minor adjustments for consistency across standards and documents.

PCI DSS 2.0

In 2010, the PCI SSC group implemented substantial changes aimed at enhancing merchants’ commitment to PCI DSS compliance with PCI DSS V2.0. The updated version emphasized crucial measures, such as restricting access to data on a need-to-know basis, prioritizing the encryption of sensitive information, and establishing robust management and control over encryption keys. These adjustments were pivotal in reinforcing data security practices and fostering a more resilient framework for organizations dealing with payment card transactions.

PCI DSS 3.0

In November 2013, PCI SSC released PCI DSS V3.0 to address the gaps in education, awareness, and intention related to PCI DSS. This release also recognized the impact of emerging mobile and cloud-based technologies, incorporating formal introductions of penetration testing and threat modeling. Following this, a short-term update, Version 3.1, was released in April 2015. It served as a transitional phase, providing merchants time to adopt and comply with the changes outlined in the April 2016 PCI DSS 3.2 release.

PCI DSS Version 3.2 came into effect fully in 2018 to counter the growing threats to payment information. This version introduced new measures to prevent, detect, and respond to cyberattacks, emphasizing the importance of maintaining security standards in everyday business practices. Notable enhancements included the introduction of multi-factor authentication, designated entities supplemental validation, a more secure version of TLS, and increased scrutiny of service providers. In 2018, additional minor changes were implemented, leading to the introduction of PCI DSS V3.2.1.

PCI DSS 4.0

The PCI SSC introduced PCI DSS version 4.0 on March 31, 2022, replacing the prior version 3.2.1. A two-year transition period has been established until March 31, 2024, during which entities can choose between version 3.2.1 or version 4.0 to demonstrate PCI compliance. Following the retirement of version 3.2.1 on March 31, 2024, entities must adhere to version 4.0. The new PCI DSS requirements of version 4.0 will officially take effect from March 31, 2025. PCI DSS V4.0 is further accompanied by significant improvements to the validation process and report structure. These enhancements aim to provide increased clarity and assurance to entities subject to PCI requirements and the third-party stakeholders relying on PCI DSS reporting from their business partners.

Importance of PCI DSS Compliance 

Today, almost every business handles payment processing, storage, or transmission of credit card data electronically. Be it eCommerce or retail, storing payment card data for subscription and recurring payments can make business much easier for both you and your customers. However, handling such data entails responsibility and a hefty expense for data protection.

4 Reasons to be PCI DSS compliant.

• Control measures laid out in the PCI DSS reduce the risk of credit and debit card theft. It provides a secure environment for your business and customers, encouraging them to exchange PCI information and make recurring payments easily.
• PCI compliance is packed with best practices to detect, prevent, and remediate data breaches, thereby enhancing your organization’s data security.
• Becoming PCI compliant also protects an organization against data breaches if cardholder data is compromised. Visa, Mastercard, Discover, and American Express recognize PCI DSS compliant mid-sized businesses and actively promote information security practices.
• Failure to comply with PCI DSS comes at the cost of fines that may end your ability to conduct eCommerce, accept card payments, and online payments in the future.

Here’s How to Become PCI DSS Compliant

PCI DSS categorizes compliance into four levels based on information security measures. The level of PCI DSS compliance for your organization hinges on the volume of debit card payments and credit card transactions processed annually, the types of credit cards accepted, and whether any breach or cyberattack has led to the compromise of credit card or cardholder data.

The four merchant levels are as follows:

Level 1: Applicable to merchants handling over 6 million total credit card payments annually across all channels. This level typically involves larger entities. To meet stringent compliance requirements, these organizations must undergo an annual on-site audit conducted by a Qualified Security Assessor (QSA) or an Internal Security Assessor. Level 1 compliance also mandates annual on-site audits, network vulnerability scans every 90 days, and, for service providers, penetration tests and internal scans.

Level 2: Targeted at merchants processing 1 million to 6 million transactions annually. This level generally encompasses mid-size and smaller enterprises. While Level 2 merchants usually aren’t obligated to undergo an on-site audit by a QSA, acquiring banks may, in certain cases, require an audit and a Report on Compliance (ROC), particularly for larger Level 2 merchants.

Level 3:Geared towards merchants handling 20,000 to 1 million transactions annually, with a focus on mid-size and smaller enterprises. In most cases, these organizations can skip an audit and instead complete a Self-Assessment Questionnaire (SAQ) and file an Attestation of Compliance (AOC).

Level 4: Applicable to merchants processing fewer than 20,000 transactions annually, typically involving mid-size and smaller enterprises. Similar to Level 3, these organizations can often forgo an audit and opt for completing a Self-Assessment Questionnaire (SAQ) and filing an Attestation of Compliance (AOC).

Steps for PCI DSS

Once organizations have identified their classification as well as risk level, the following steps need to be followed for PCI DSS compliance. 

• Define the scope: Identify the system components and networks falling under the purview of PCI DSS.
• Assessment: Evaluate the compliance of the system components within the defined scope by employing the testing procedures for each PCI DSS requirement.
• Reporting: Complete the necessary documentation (e.g., Self-Assessment Questionnaire (SAQ) or Report on Compliance (ROC)), including a record of all compensating controls.
• Attestation: Fulfill the appropriate Attestation of Compliance (AOC). AOC is a form that merchants use to record the successful completion of their PCI DSS assessment. In other words, an AOC paperwork lets PCI SSC know you’re abiding by the rules. Be sure to have a qualified security assessor review your work so that they can confirm your findings.
• Submission: Provide the SAQ, ROC, AOC, and any other requested supporting documentation, such as ASV scan reports, to the acquirer (for merchants) or the payment brand/requestor (for service providers).
• Remediation: If necessary, undertake remediation efforts to address unmet requirements and furnish an updated report.

Consequences of Non-Compliance to PCI DSS

Non-compliance with PCI DSS leads to several consequences, including:

• Monthly penalties

  PCI non-compliance can result in penalties ranging from $5,000 to $100,000 per month by credit card companies. The volume of clients and transactions determines the level of PCI DSS compliance for a company and its corresponding penalties.

• Data breaches

  Although PCI DSS compliance does not prevent data breaches, organizations that fulfill PCI DSS requirements would incur lower fines. Whereas a business that is not PCI DSS compliant will have to face significant financial damages in a data breach such as:

  • The average cost of a breach is $150 per record
  • Costs of card replacement or issuing are between $3 to $10 per card
  • Increased rates charged by banks and or processors
  • Termination of merchant relationship with the credit card brands
  • The lawsuit by the clients whose information was breached
  • Security costs related to mandatory credit monitoring for customers whose data was compromised, identity theft repair, and so on
  • The cost of conducting forensic investigations to discover the cause of the data breach

• Legal action

  You’ll likely face lawsuits in case any customer data gets compromised due to PCI DSS violations. In many instances, organizations paid more than $40.9 million for a data breach, putting an estimated 100 million bank cards at risk.
  

• Damaged reputation

  Putting clients’ bank card information at risk can result in irreversible damage to a company’s reputation, in addition to other related expenses incurred by the business. Failing to provide a safe and secure PCI environment will result in a lack of trust in your organization.
  

• Revenue loss

  Non-compliance with PCI can also indirectly lead to revenue loss. This can be due to the loss of customers as well as dealing with penalties and lawsuits that can impact the overall balance sheet. 
  

11 Best Practices for PCI DSS Compliance

PCI compliance is an ongoing and dynamic process that necessitates regular review and updates. As highlighted under the goals of PCI DSS V4.0, organizations need to promote security as a continuous process and must ensure adherence to evolving security payment standards. Some of the best practices that organizations should follow with regard to PCI DSS compliance are: 

1. Identify and categorize payment card information (PCI) data

Organizations should utilize a dedicated data classification solution to automatically scan repositories for payment card information, ensuring proper categorization at the point of creation or modification.

2. Encrypt PCI data

Organizations should employ encryption for PCI and consider adopting point-to-point encryption (P2PE) for secure data transmission. They should regularly scan repositories to ensure encryption of all PCI data.

3. Change default passwords

Organizations should promptly change default passwords on network devices, including servers, routers, modems, and POS systems. They should also maintain an updated inventory of all network devices and enforce a robust password policy.

4. Role-based access restriction 

Organizations should ensure that access to cardholder data is granted only to those who require it. They should document and monitor users, roles, and applications with access to PCI and update permissions as required.

5. Restrict physical access to PCI

Organizations should safeguard the physical storage of PCI documents with security measures such as locks, security alarms, and CCTV cameras. They should implement access controls, ideally using ID badges, even for electronic storage, to protect servers and devices.

6. Unique IDs for users

Organizations should assign unique credentials to all employees with access to PCI, avoiding the use of shared credentials. This ensures accountability in the event of a security breach.

7. Use firewall and antivirus software

Organizations should deploy firewalls and intrusion prevention solutions as the first line of defense. Additionally, they should install the latest anti-virus software on all devices storing PCI. 

8. Monitor access to PCI

Organizations should continuously monitor access to stored payment card data and employ an auditing platform to deliver real-time alerts for any authorized or unauthorized changes to PCI. 

9. Regularly check for vulnerabilities

Organizations should conduct regular scans for security vulnerabilities and consider penetration tests and mock phishing attacks. They should identify and promptly address any weaknesses identified to enhance overall security.

10. Implement security awareness training

Organizations should provide security awareness training to all their employees to enhance their ability to identify suspicious events, such as social engineering attacks. Further, they can ensure that their employees understand PCI-DSS compliance requirements and the consequences of non-compliance.

11. Document policies and incidents

Organizations should maintain up-to-date inventories of network devices and applications, along with documented policies, procedures, and risk assessments. Further, they should thoroughly document any security incidents, regardless of perceived relevance, to aid in analysis and future prevention efforts.

How HighRadius Can Help?

Back-office operations such as Order to Cash (O2C) often access PCI data as they are a part of the cardholder data environment (CDE). PCI DSS compliance is hence crucial for ensuring O2C operational efficiency. The positive impact of PCI DSS compliance on O2C and related processes is significant. A secure handling of customer card information establishes trust and facilitates smoother payment processing for businesses. In the current business landscape, a secure CDE is essential for most enterprises, regardless of transaction volume. 

Solutions like HighRadius EIPPand collections solutions augment PCI DSS compliance and play a vital role in minimizing compliance risks through an integrated PCI DSS compliant payment gateway.

FAQs

1. What is the latest version of PCI compliance?

The PCI Security Standards Council introduced PCI DSS version 4.0 on March 31, 2022, replacing version 3.2.1. A two-year transition period allows entities to choose between versions 3.2.1 and 4.0 for compliance until March 31, 2024. After this date, entities must adhere to version 4.0.

2. What are the 4 levels of PCI compliance?

PCI compliance levels depend on annual transaction volume. Level 1 is merchants processing over 6 million transactions, Level 2 for 1 to 6 million transactions, Level 3 for 20,000 to 1 million e-commerce transactions, and Level 4 for fewer than 20,000 e-commerce transactions annually.

3. Is PCI compliance mandatory in the USA?

Yes, PCI compliance is mandatory in the USA for organizations for any business that processes, stores, or transmits credit card information. The PCI DSS standard is enforced by major card brands that established the PCI Security Standards Council to prevent fraud and ensure secure payment processing.

4. How do I know if I am PCI compliant?

To assess PCI compliance, complete the relevant Self-Assessment Questionnaire and conduct scans by an Approved Vendor. Larger enterprises should use qualified security assessors for on-site assessments. Regularly review PCI DSS standards with your payment processor to meet compliance requirements.

5. Is PCI compliance legally required?

While PCI compliance itself is not a law, it is often contractually mandated by the major credit card companies (Visa, MasterCard, American Express, Discover, and JCB) that established the PCI council. Non-compliance can lead to fines or termination of credit card processing capabilities.