Playing The Payment Gateway Game

Written by David Taylor
January 7th, 2009

GuestView Columnist David Taylor is the Founder of the PCI Knowledge Base, Research Director of the PCI Alliance and a former E-Commerce and security analyst with Gartner.

The dominant trend in PCI compliance continues to be “Let’s make PCI someone else’s problem.” Along those lines, outsourcing and tokenization continue to be “hot” among merchants of all types and sizes. But there is another option that offers the potential to let someone else “do the dirty work” of PCI: Using payment gateways to mask non-compliant payment applications.

  • The payment gateway loophole
    Using a PCI-compliant payment gateway can enable a retailer to “mask” non-compliant payment applications. That is, the processor cannot generally tell what application (POS, online shopping cart) is generating the transaction. It “sees” the information about the payment gateway instead.

    So, a retailer trying to “buy time” to upgrade its payment applications without incurring fines could sign up for a payment gateway and, by so doing, better manage the POS or shopping cart replacement or upgrade process. Of course, this approach might also be used to “avoid” upgrading payment applications for an extended period of time. That’s your basic “loophole.” But using gateways in this manner would, of course, be wrong.

  • Why payment gateways will become much more popular
    We’ve written so often about PA-DSS (formerly PABP) that it seems like we’re on a rant. But the impending PA-DSS deadlines later this year and in 2010, and the scope of PA-DSS (which impacts all merchants), are going to drive more merchants to consider payment gateways as a technique for helping manage their payment application upgrade process.

    For a comparatively low cost (vs. the fines for non-compliance and PA-DSS “maintenance” upgrade fees), retailers can offload to a payment gateway some of their PCI headaches related to applications. Beyond the impending PA-DSS-related sense of desperation that we’re anticipating, payment gateways provide a very useful service in consolidating payments across multiple channels, brands, divisions, etc.

  • The risk of playing the payment gateway game
    If you’re a Level 1 merchant, chances are really good that a QSA (assessor) will not allow you to get away with using a version of a packaged payment application that is on the Visa (now SSC) “black list,” even if you’re using a payment gateway to prevent your processor from knowing the application source of the transactions. But there are thousands of payment-related packaged applications, middleware, etc., that are on neither the Visa black list nor the white list. They simply haven’t been through PA-DSS testing yet.

    Therefore, if you wish to use a payment gateway until you can re-think your payment application strategy (upgrade, switch vendors, move to a virtual POS, implement tokenization, outsource, etc.), you’re taking a risk. If you are doing your own self-assessment and want to use a gateway to “get away with” using non-compliant applications for an extended period of time, then you’re taking a big chance at getting caught, getting breached or both. So don’t say I didn’t warn you.

  • The Bottom Line
    There are some other “tricks” when it comes to this topic that I won’t even write about. If you’re interested in discussing this topic, or any other topic, I will be at the National Retail Federation’s “Big Show” next week in New York City. I’m presenting our research on “Cost-Effective Compliance” or Best Practices in PCI.

    I am also speaking at Crisis Strikes: Can You Serve Your Customers Tomorrow?, a session being moderated by Evan Schuman. I will be at the NRF ARTS (the NRF’s Standards Committee booth) Monday and Tuesday, so please stop by. Remember to visit the PCI Knowledge Base. We are doing a major upgrade to our knowledge database this weekend in preparation for the NRF show. If you want to ask questions or discuss PCI, just send me an E-mail at

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    One Comment | Read Playing The Payment Gateway Game

    1. Randy Carr, Shift4 Corporation Says:

      If a merchant uses a gateway (like Shift4) that does not allow actual cardholder data to ever enter the system, and thereby not store, process or transmit real CHD, are you saying that an acquirer might still unplug that merchant? I think is important to discuss exactly WHAT a gateway is doing with the actual CHD before making blanket statements about gateways.


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