What is PCI Compliance and How Does It Affect My Business?

If your business accepts credit card payments, you’ve probably heard the term “PCI compliant” before. The PCI DSS applies to all entities that store, process, or transmit cardholder data, regardless of their size or transaction volume. But what do you need to do to be PCI compliant and how does it benefit you as a merchant? PCI compliance is a lot like exercising regularly for your credit card processing. Although it takes effort to achieve and can be a bit annoying, the benefits are worthwhile. It also cannot be achieved in one sitting; maintaining compliance is an ongoing effort to prevent fraud and data breaches.

A Brief Overview of PCI DSS Compliance

PCI Compliance, officially called the Payment Card Industry Data Security Standard (PCI DSS), is a standard set by major credit card brands in order to set a standard of data protection for businesses that take credit cards. The Payment Card Industry Security Standards Council PCI (PCI SSC) is the authoritative body responsible for establishing and managing these security standards, including PCI DSS.

It was merged from several different programs when in 2004 the first PCI DSS was released. The PCI Security Standards Council (PCI SSC) was formed in 2006 by major credit card companies to manage security standards for organizations that handle credit card data.

PCI compliance is assessed annually by either a Report on Compliance (ROC) or Self-Assessment Questionnaire (SAQ), depending on the volume of cards that are handled by the organization. There are four different PCI compliance levels based on the volume of credit card transactions processed annually: Level 1 applies to businesses processing over 6 million transactions annually, while Level 4 applies to those processing fewer than 20,000 transactions. Businesses must meet specific pci requirements and pci compliance requirements depending on their compliance level and their role in payment processing, including the use of SAQ documentation, ROC, and validation processes as defined by the standards council PCI SSC.

What is PCI Compliance Made Up Of?

PCI compliance is made up of a lot of steps and best practices to prevent fraud as much as possible, and should be treated as an ongoing commitment, not a one-time project. Here is a quick list of what is expected:

1. Secure your network.
This includes building and maintaining a secure network by installing firewalls for data protection and avoiding vendor supplied defaults for passwords and security settings, which are easy to crack.

2. Protect the data of your cardholders.
This includes securing all card data, credit card data, payment card data, and stored cardholder data, such as the primary account number (PAN) and sensitive authentication data (like CVC/CVV codes, PINs, and magnetic stripe data). Protect cardholder data by minimizing storage, securely disposing of it, and encrypting cardholder data during transmission over open networks to prevent unauthorized access. Special care must be taken when transmitting cardholder data to ensure compliance.

3. Keep systems safe and up-to-date.
Implement a vulnerability management program and maintain secure systems by regularly updating software, running anti-virus programs, and conducting ongoing security testing to address new threats.

4. Restrict the access to data.
Restrict access to sensitive data by limiting who can gain access, assigning unique IDs for computer access, and using strong access controls. Restrict physical access to areas and devices where cardholder data is stored or processed. Employ Multi-Factor Authentication (MFA) to further strengthen security and prevent unauthorized access.

5. Keep your network in good standing.
Monitor network resources and system components by maintaining access logs, using file integrity monitoring, and performing continuous monitoring to detect suspicious activity. Conduct regular PCI-specific penetration tests to uncover vulnerabilities within the Cardholder Data Environment (CDE).

6. Make security a business-wide policy.
Integrate PCI compliance into your business processes to help streamline and improve how payment card data is handled, ensuring all employees are aware of and follow best security practices.

7. Use network segmentation.
Isolate the Cardholder Data Environment (CDE) from other systems using network segmentation to reduce the attack surface and simplify compliance efforts.

Why Become PCI Compliant?

As soon as you start accepting credit card payments, you are required to sign an agreement to follow the Payment Card Industry (PCI) Data Security Standards. This is basically an agreement to protect the cardholder data you collect from your customers by following some basic security measures. Compliance with PCI DSS is necessary for any business that handles card data, including merchants, payment processors, and software developers. Even businesses that do not store cardholder data but merely process it are still required to comply. Becoming PCI Compliant can have benefits beyond just saying “Whoopee. I’m compliant!” Besides having increased security for your business, your customers will appreciate your efforts in keeping their data safe and it can complement payment processing solutions tailored for small businesses that prioritize secure, efficient transactions. Maintaining PCI compliance acts as a public statement of your business’s commitment to data security. You will be better prepared to become compliant for other regulations such as HIPAA if that applies, and you’ll have a stronger foundation for implementing compliant pricing strategies like a cash discount program to reduce processing fees. Also, a lot of bad things can happen if you are not compliant. The mildest form of this is that your provider could charge you a non-compliance fee in order to encourage you to fill out the questionnaire. If you suffer a data breach, the credit card companies will distance themselves from you and blame your poor security measures, and you may also have to rethink how you handle processing costs, including whether to pass processing fees on to customers. They can also fine you, possibly sue you, and your merchant account may be cancelled with your business blacklisted on the MATCH database, making it difficult to take credit cards in the future. Let me say that once more: Any breach of the PCI security requirements may subject you to a hefty fine of between $5,000 and $100,000 per month at the discretion of the specific payment brand and a loss of your ability to complete credit card transactions. It also violates the trust between you and your customers, meaning you could lose their business. According to a Ponemon Institute study, more than half of customers lost trust in an organization after it suffered a data breach. According to Privacy Rights Clearing House, “80% of small businesses go bankrupt or experience severe financial difficulties within two years of a breach”.

To ensure compliance with PCI DSS standards, organizations—including software developers—must make continuous efforts to follow security measures that protect payment data. Compliance provides a framework to mitigate cyberattacks and prevent data breaches.

What PCI Compliance Means to Your Merchant Account

Your merchant account provider wants you to be PCI compliant. Not only does it help you out, but it keeps them safe too. Therefore, you can expect a lot of encouragement from your provider if you are not compliant, and possibly a fee associated with ignoring those requests. Therefore, it is in your best interest to follow up with them and get PCI compliant when they ask in order to avoid such fees.

To achieve and maintain compliance, you should use a PCI compliance checklist as a structured guide for implementing security measures and meeting all requirements and review essential credit card processing terms every business must know so you can better understand how compliance fits into the broader payments ecosystem. Part of the process is to validate PCI compliance regularly, which includes annual PCI validation and, for many businesses, quarterly vulnerability scans performed by an approved scanning vendor recognized by the PCI Security Standards Council.

When you do become PCI compliant, many providers will offer validation and breach assistance or insurance. For example, VMS offers coverage up to $50,000 for breaches when the business is correctly PCI compliant and registered. If you store credit card data, it’s especially important to understand the risks and regulatory requirements involved, as proper PCI compliance and secure storage methods are critical for protecting sensitive information and for running credit card processing for merchants in a way that is both secure and efficient.

Consequences of Non-Compliance

Failing to achieve or maintain PCI compliance can have serious repercussions for any business that processes credit card transactions. The risks go far beyond just a slap on the wrist—non-compliance with PCI DSS can expose your business to devastating data breaches, where sensitive cardholder data like credit card numbers, expiration dates, and security codes can be stolen. This not only puts your customers at risk but can also lead to significant financial losses and long-term damage to your business.

Here are some of the major consequences businesses face when they are not PCI compliant:

• Hefty Fines and Penalties: The PCI Security Standards Council and card brands can impose fines ranging from $5,000 to $100,000 per month for PCI compliance violations. These penalties can quickly add up and threaten your bottom line.

• Reputational Damage: Suffering a data breach or being found non-compliant can severely damage your reputation. News of compromised cardholder data spreads fast, and customers may lose confidence in your ability to protect their sensitive information.

• Loss of Customer Trust: Trust is everything in the payment card industry. If your business is not PCI DSS compliant and customer data is compromised, you risk losing loyal customers and deterring new ones from making credit card payments with you.

• Increased Risk of Data Breaches and Credit Card Fraud: Without strong access control measures, secure networks, and proper security systems in place, your business becomes a prime target for cybercriminals. This can lead to unauthorized access to cardholder data, resulting in credit card fraud and further financial losses, which makes it vital to follow key steps to protect your business from credit card fraud.

• Potential Loss of Ability to Process Credit Card Transactions: In severe cases, acquiring banks may terminate your merchant account, making it impossible for you to accept credit card payments and operate effectively.

To avoid these costly and damaging outcomes, it’s essential to maintain PCI compliance by following the PCI DSS requirements, understanding what every business owner must know about PCI compliance, and applying those principles consistently. This means protecting cardholder data, restricting physical access to sensitive areas, implementing strong access controls, and regularly monitoring your cardholder data environment. Regular vulnerability scans, penetration testing, and security audits are also crucial for identifying and addressing weaknesses in your security systems.

By staying vigilant and prioritizing PCI DSS compliance, you not only protect your business from data breaches and credit card fraud but also build trust with your customers and ensure the long-term success of your business in the payment card industry.

How Do I Become PCI Compliant?

The PCI compliance process of becoming PCI compliant can be complicated if you’re not sure how to approach it, and missteps can also increase the risk of chargebacks or even account freezes, so following practical tips to avoid chargebacks, holds, and freezes alongside your compliance efforts is wise. The instructions should come from your account provider. If you are a smaller business, you may be given a link to go online to a website like trustwave.com that will walk you through the questions in a more manageable way. The act of preparing your business to qualify as PCI compliant is broken up into three phases: Assess, Remediate, and Report. These are key steps in achieving PCI compliance and achieving PCI DSS compliance. The Assess stage involves taking stock of all of your technology that handles payment processing and checking them out to see where possible vulnerabilities exist. Remediate is when you fix the issues found in the Assess phase. Report is filling out the questionnaires (SAQ) to validate that you have taken the steps necessary to try to prevent data breaches. All three of these phases should be repeated, keeping a constant vigilance to keep your business and customer data secure.

The PCI SSC (Payment Card Industry Security Standards Council) oversees the standards and validation process for PCI DSS compliance, including accrediting vendors and setting requirements, which also intersect with hardware-related mandates such as upgrading terminals for chip-only EBT cards and maintaining EMV-compliant devices. For larger organizations, a qualified security assessor (QSA) can help guide you through the PCI compliance process, including on-site audits and ensuring all requirements are met. PCI DSS compliance applies to all organizations that accept credit card payments, regardless of size or transaction volume. Since 2005, over 10 billion consumer records have been compromised due to data breaches in the US, highlighting the importance of PCI compliance. Achieving PCI DSS compliance involves protecting cardholder data through encryption, secure key management, and ongoing data maintenance and scanning to ensure continued security.

PCI DSS, or PCI compliance, is something you should seriously consider doing if you accept credit cards at your business, especially if you also want to lower your credit card processing fees easily while keeping security and regulatory obligations in mind. If you are looking for more information about becoming PCI compliant, you can call us at (888) 902-6227 or email info@getvms.com. Here are some additional resources on the topic: Getting Started Guide for PCI Compliance