Overpaying For PCI Compliance

Written by Walter Conway
March 10th, 2010

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

Are you paying too much to validate your PCI compliance? It’s possible, even likely, that you are. The reason is not that your QSA is too expensive or that PCI is too demanding. Rather, the reason many merchants pay too much is that they forget PCI Requirement 0. You don’t know Requirement 0? It says: Minimize Your PCI Scope. Failing to comply with Requirement 0 may be due to inertia or ignorance or both. Regardless of the reason, the result is excessive and unnecessary spending on people, process and technology, together with a lot of frustration.

Although there may be legitimate reasons for storing cardholder data, many merchants store too much data and keep that data in too many places. One reason is inertia: “We always did it this way.” Another reason is that merchants do not understand all the ins and outs of the payment card business. Some acquiring banks have excellent education and support programs for their merchants. But the blame rests with the majority of acquirers and processors that do a poor job of educating and informing their merchants. Despite the reason, too many merchants fail Requirement 0.

For example, many merchants retain PAN data for chargebacks and refunds. In reality, there should be no need for this storage; your acquirer can locate any transaction based on date, amount, authorization response code and the last four digits of the PAN–all of which you may keep and are out of PCI scope. Similarly, storing cardholder data for recurring payments is not necessary if the merchant sets up the initial authorization properly. The merchant only needs the response code for subsequent transactions. And there is no need to retain cardholder data for customer service; for example, to locate a transaction. Again, some combination of the date, amount, authorization code and last four digits can be used to find any transaction with your acquirer. If any one of these needs is causing you to retain cardholder data, you may rate a Requirement 0 FAIL. And if your acquirer can’t help you fix the situation, you might consider getting a new acquirer.

Requirement 0 tells you to stop, take a deep breath, analyze your processes and challenge everything. The two things you need are a network diagram and a map of your cardholder dataflow. Interestingly, it may be difficult to get a comprehensive network diagram. A Department of Justice prosecutor once told me how the DOJ busted a carder ring that had remotely mapped out a target merchant’s network and put it on a giant poster. Upon seeing the poster, the merchant asked if it could keep it. Turns out the bad guys had a better network diagram than the merchant


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.