PCI Compliance - What Is It, and Why Is It Important?
February 16, 2022
Being a business owner comes with great responsibility. You carry duties to your investors, your employees, and your customers. In addition, the structure of the modern economy means you need to become the steward of sensitive data -- a fact that makes payment card industry (PCI) compliance a crucial consideration for your startup.
As you operate your new business, you will handle crucial financial data. Every time a customer pays for your product or service with something other than cash, you become the custodian of important personal information. You need to take that responsibility seriously.
PCI compliance represents the formal process of living up to that responsibility. Having a compliance system in place will allow you to maintain trust with your customers and clients. At the same time, you can avoid costly fees and nurture the peace of mind that comes with having a safe data-protection infrastructure.
Having a [PCI] compliance system in place will allow you to maintain trust with your customers and clients. At the same time, you can avoid costly fees and nurture the peace of mind that comes with having a safe data-protection infrastructure.
For all these reasons, it is critical that you ensure your business is PCI compliant. In this article, you'll learn the basics of PCI compliance, as well as the reasons you should enact its strictures.
What is PCI compliance?
Accepting credit cards means handling sensitive financial data. As a result, the card issuers require merchants to adhere to certain standards. These specifications make up payment card industry compliance, or PCI.
The standards themselves are maintained by the PCI Security Standards Council. The organization was created as a collaboration among the major credit card companies, including American Express, Discover, JCB International, MasterCard, and Visa Inc.
The PCI Council provides information and acts as an industry-wide resource on the issue. However, validation takes place through individual credit card companies. This is typically done through a self-assessment questionnaire, or SAQ.
You can hire third-party data security firms to assess your level of compliance. These companies, known as a Qualified Security Assessor, or QSA, are qualified by the PCI Council and will perform on-sight assessments.
For larger businesses, these QSA companies provide the main source of contact for obtaining and maintaining compliance. Smaller firms, who might not be able to afford a full assessment by QSA companies, will often deal directly with the payment processing companies.
Why does my business need to be PCI compliant?
There are numerous reasons to seek out PCI compliance. Some of these stem directly from the process itself. Others reflect on your operations in a more general way.
Here are three major reasons that should motivate you to obtain PCI compliance:
Avoid PCI fees
To encourage you to reach the standards required, you'll suffer non-compliance fees if you fall short. Save money by adopting the necessary safeguards.
Maintain good data practices
Think of PCI compliance as providing general guidelines for your overall data practices. The standards have been developed in conjunction with credit card companies, meaning they come with a wealth of knowledge built up over generations and cumulative trillions of dollars in transactions. Applying them to your business will give you the discipline you need to develop a strong culture around data management.
Build trust with clients/customers
To survive, your business will need to attract and retain customers. That means building trust. Start at the beginning, at the point of purchase. By achieving PCI compliance and promoting the details of your security measures, you let your clients know you are serious about protecting their data.
By achieving PCI compliance and promoting the details of your security measures, you let your clients know you are serious about protecting their data.
What are the PCI compliance levels?
We mentioned in a previous section that the road to compliance has different contours based on the size of the business. Realizing that different firms have varying levels of resources, the PCI system breaks potential merchants into four categories:
Level 1: Businesses with more than 6 million card transactions a year
Level 2: Businesses with between 1 million and 6 million transactions a year
Level 3: Businesses with between 20,000 and 1 million transactions a year
Level 4: Businesses with fewer than 20,000 transactions a year
What are the requirements for PCI compliance?
The details for receiving PCI compliance are laid out by the PCI Council. They broadly fit into six groups, which lay out the general guidelines that drive the process:
- 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
Within these categories, the PCI Council has created 12 specific steps that define a compliant company. You can use this as your checklist as you begin the process to become a qualified merchant:
- Install and maintain a firewall configuration to protect cardholder data
- Do not use vendor-supplied defaults for system passwords and other security parameters
- Protect stored cardholder data
- Encrypt transmission of cardholder data across open, public networks
- Use and regularly update anti-virus software or programs
- Develop and maintain secure systems and applications
- Restrict access to cardholder data by business need-to-know
- Assign a unique ID to each person with computer access
- Restrict physical access to cardholder data
- Track and monitor all access to network resources and cardholder data
- Regularly test security systems and processes
- Maintain a policy that addresses information security for employees and contractors
How to become PCI compliant
The first checkbox to achieve PCI compliance relates to technology. You'll need an appropriate system for receiving and processing payment information. At the same time, you'll need the following systems in place:
- Anti-virus software
- Secure systems and applications for payment processing
More than just crucial security steps, these investments give you the ability to receive payments from customers. As such, they represent the basic foundation to begin building your small business.
Consider the following tips as you think about creating a tech architecture that will allow you to become PCI compliant:
- Research the right tech backbone for your business.
- Find the hardware and software best suited to your business model.
- Keep up with improvements as they come out, as an ongoing commitment to security.
Beyond the tech front, there are some organizational traits that will help you obtain and maintain compliance. These include:
- Keep Detailed Records
- Limit Access to Data
- Prioritize Security in Your Dealings with Clients
- Create Policies that Maximize Security (And Stick to Them)
- Stay Vigilant and Routinely Test Your Security Measures
Driving your business forward with PCI compliance
Becoming PCI compliant should represent an important early step in founding your new small business. Without it, you won't have the security necessary to confidently receive sensitive financial data. This will make it difficult to make sales and drive growth.
As such, use the information provided here to get started. By pursuing PCI compliance, you ensure that you've taken all of the necessary steps to protect your customers' payment information.