September 25, 2006 by tim.

What is a PCI Service Provider? 

Any company that stores, processes, or transmits cardholder data on behalf of another entity is defined to be a Service Provider by the Payment Card Industry (PCI) guidelines. Visa’s website provides the clearest information about how the PCI Data Security Standard (DSS) applies to Service Providers. However, Visa is just one of the companies participating in PCI, so a Service Provider must understand and adhere to the security program for all major credit card companies with its own set of requirements for compliance and registration.

How do we know what Service Provider Level we fit in?

Each of the credit card companies that participate in PCI has its own rules that define Service Provider Levels. For example, Visa, whose rules are available on its CISP for Service Providers page, defines the levels based on the number of annual transactions. However, there is one very important distinction in Visa’s rules that is overlooked by many service providers. By Visa’s definition, any service provider that stores, processes, and/or transmits cardholder data as part of a payment transaction is a Level 1 Service Provider. So in other words, a company that has access to cardholder data as part of a payment is automatically defined to be Level 1.

MasterCard is also very clear in defining the levels for Service Providers for its SDP program. MasterCard defines two categories of Service Providers: Third Party Processors (TPP) and Data Storage Entities (DSE). The Service Provider Levels Defined page defines all Third Party Processors to be Level 1.

What are the requirements for becoming a Level 1 Service Provider in compliance with the PCI DSS?

There are two primary qualifications of a PCI Level 1 Service Provider. The first is the successful completion of an On-Site PCI Data Security Assessment that is validated by a Qualified Security Assessor. To pass the Data Security Assessment, the company must demonstrate compliance with 100% of the requirements detailed in the PCI Security Audit Procedures, which contains over 250 specific points of compliance. The second qualification is successful completion of a PCI Security Scan by an Approved Scanning Vendor. Given the complexity of meeting the requirements, the compliance process often takes more than one year to complete.

Posted in Payment Card Industry / Credit Card Security | 2 Comments »

September 25, 2006 by tim.

We are a small company or organization with a fairly low volume of transactions. Do we have to comply with PCI?

Absolutely. The credit card companies have made it clear that ANY entity that stores, processes, or transmits cardholder data must comply with the PCI requirements. Furthermore, the merchant agreement typically has language that binds the merchant to comply with PCI. The specific PCI compliance requirements for merchants vary based on the transaction volume of the merchant.

While the compliance requirements are somewhat relaxed for smaller merchants, there are still many complexities that even a small merchant should consider, and I will mention only three major ones here. First, every merchant must comply with all of the various card companies’ requirements (see this post for more detail), so someone in the organization must invest time in understanding and complying with the maze of these requirements. Second, every merchant must validate compliance by hiring an Approved Scanning Vendor and completing a security compliance assessment. The scanning vendors charge widely ranging fees for their services, and many merchants may find it necessary to hire a security consultant to complete the assessment, not to mention the costs of purchasing hardware, software, or consulting to meet the PCI standards. Third, every merchant is subject to the data breach laws of any state whose resident(s) the merchant has collected information that is subject to these laws. Clearly, the costs of PCI compliance should be considered before a merchant undertakes any project involving cardholder data.

Is there any way for a merchant to avoid complying with PCI?

Well, sort of. Visa and the other companies have made it clear both on their websites and in their merchant agreements that the merchant has primary responsibility for complying with the PCI requirements. The easiest way for a merchant to comply is to outsource the handling of cardholder information to a Service Provider that is fully PCI compliant. The best way to find such a company is the List of Compliant Service Providers published by Visa.

We already use a service provider for accepting online payments. Does this ensure that we are PCI compliant?

It depends. Unfortunately, many service providers do not fully understand PCI compliance. In fact, some service providers that claim to be PCI compliant have not completed the validation and registration requirements. The only way to ensure that you are complying with the PCI requirements is to use a Service Provider that is on the List of Compliant Service Providers published on Visa’s website.

We already use SSL on our website pages that transmit cardholder data. Does this make us PCI compliant?

No. The Payment Card Industry (PCI) Data Security Standard (DSS) is comprised of twelve general requirements. SSL encryption is essential, but it merely satisfies only a small part of one of the twelve requirements (#4).

We do not store any cardholder data. Does this make us PCI compliant?

No, even if you do not store cardholder data, you must still be fully compliant with all of the PCI DSS. Visa directly states this in their Frequently Asked Questions (see question 3).

We process credit cards on a server that is behind a firewall on our in-house network. Does this make us PCI compliant?

No. A firewall is certainly required for PCI compliance, but it only addresses one of the twelve general requirements. Furthermore, the PCI DSS places very rigorous requirements on the functionality of the software applications on that server and on the configuration and management of that server. Visa does publish a List of Validated Payment Applications, yet the document includes a blatant disclaimer that use of an application on the list does not yield PCI compliance. Although running payment applications on an in-house server may offer some business advantages, this approach may substantially increase the complexities of PCI compliance because it then mandates compliance for the entire internal network.

What advantages does a merchant gain by using a validated PCI-compliant Service Provider?

To be clear, any service provider that has completed the PCI compliance process is named on Visa’s List of Compliant Service Providers. By using one of these Service Providers, a merchant is deemed to be fully PCI compliant. Furthermore, by using such a Service Provider, a merchant can qualify for Safe Harbor, thereby eliminating liability in the event of a data compromise.

Posted in Payment Card Industry / Credit Card Security | No Comments »