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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


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