A guide to PCI compliance

Payment Card Industry Data Security Standards (PCI DSS) sets the minimum standard for data security. Here's a step-by-step guide to maintaining compliance and how Stripe can help.

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Mike Dahn

Mike Dahn leads security policy relationships at Stripe. He is a recovering PCI trainer, auditor and implementer.

  1. Introduction
  2. Overview of PCI Data Security Standard (PCI DSS)
    1. Handling card data
    2. Storing data securely
    3. Annual validation
  3. Step-by-step guide to PCI DSS v3.2.1 compliance
    1. 1. Know your requirements
    2. 2. Map your data flows
    3. 3. Check security controls and protocols
    4. 4. Monitor and maintain
  4. How Stripe helps organisations achieve and maintain PCI compliance
  5. Conclusion
    1. PCI compliance helps. It's just not enough.

Since 2005, over 11 billion consumer records have been compromised from over 8,500 data breaches. These are the latest numbers from The Privacy Rights Clearinghouse, which reports on data breaches and security breaches affecting consumers dating back to 2005.

To improve the safety of consumer data and trust in the payment ecosystem, a minimum standard for data security was created. Visa, Mastercard, American Express, Discover and JCB formed the Payment Card Industry Security Standards Council (PCI SSC) in 2006 to administer and manage security standards for companies that handle credit card data. Before the PCI SSC was established, these five credit card companies all had their own security standards programmes – each with roughly similar requirements and goals. They banded together through the PCI SSC to align on one standard policy, the PCI Data Security Standards (known as PCI DSS) to ensure a baseline level of protection for consumers and banks in the internet era.

Understanding PCI DSS can be complex and challenging

If your business model requires you to handle card data, you may be required to meet each of the 300+ security controls in PCI DSS. There are more than 1,800 pages of official documentation, published by the PCI Council, about PCI DSS, and more than 300 pages just to understand which form(s) to use when validating compliance. This would take over 72 hours just to "read".

To ease this burden, the following is a step-by-step guide to validating and maintaining PCI compliance.

Overview of PCI Data Security Standard (PCI DSS)

PCI DSS is the global security standard for all entities that store, process or transmit cardholder data and/or sensitive authentication data. PCI DSS sets a baseline level of protection for consumers and helps reduce fraud and data breaches across the entire payment ecosystem. It is applicable to any organisation that accepts or processes payment cards.

PCI DSS compliance involves three main components:

  1. Handling the ingress of credit card data from customers; namely, that sensitive card details are collected and transmitted securely
  2. Storing data securely, which is outlined in the 12 security domains of the PCI standard, such as encryption, ongoing monitoring and security testing of access to card data
  3. Validating that the required security controls are in place on an annual basis, which can include forms, questionnaires, external vulnerability scanning services and third-party audits (see the step-by-step guide below for a table with the four levels of requirements)

Handling card data

Some business models require the direct handling of sensitive credit card data when accepting payments, while others do not. Companies that need to handle card data (e.g. accepting untokenised PANs on a payment page) may be required to meet each of the 300+ security controls in PCI DSS. Even if card data only traverses its servers for a short moment, the company would need to purchase, implement and maintain security software and hardware.

If a company does not need to handle sensitive credit card data, it shouldn't. Third-party solutions (e.g. Stripe Elements) securely accept and store the data, whisking away considerable complexity, cost and risk. Because card data never touches its servers, the company would only need to confirm 22 security controls, most of which are straightforward, such as using strong passwords.

Storing data securely

If an organisation handles or stores credit card data, it needs to define the scope of its cardholder data environment (CDE). PCI DSS defines CDE as the people, processes, and technologies that store, process or transmit credit card data – or any system connected to it. Because all 300+ security requirements in PCI DSS apply to the CDE, it's important to properly segment the payment environment from the rest of the business so as to limit the scope of PCI validation. If an organisation is unable to contain the CDE scope with granular segmentation, the PCI security controls would then apply to every system, laptop and device on its corporate network. Yikes.

Annual validation

Regardless of how card data is accepted, organisations are required to complete a PCI validation form every year. The way PCI compliance is validated depends on a number of factors, which are outlined below. Here are three scenarios in which an organisation could be asked to show that it is PCI compliant:

  • Payment processors may request it as part of their required reporting to the payment card brands.
  • Business partners may request it as a prerequisite to entering into business agreements.
  • For platform businesses (those whose technology facilitates online transactions among multiple distinct sets of users), customers may request it to show their customers that they are handling data securely.

The latest set of security standards, PCI DSS version 3.2.1, includes 12 main requirements with more than 300 sub-requirements that mirror security best practices.

BUILD AND MAINTAIN A SECURE NETWORK AND SYSTEMS

  • 1. Install and maintain a firewall configuration to protect cardholder data.
  • 2. Do not use vendor-supplied defaults for system passwords and other security parameters.

PROTECT CARDHOLDER DATA

  • 3. Protect stored cardholder data.
  • 4. Encrypt transmission of cardholder data across open or public networks.

MAINTAIN A VULNERABILITY MANAGEMENT PROGRAM

  • 5. Protect all systems against malware and regularly update anti-virus software.
  • 6. Develop and maintain secure systems and applications.

IMPLEMENT STRONG ACCESS CONTROL MEASURES

  • 7. Restrict access to cardholder data by business need to know.
  • 8. Identify and authenticate access to system components.
  • 9. Restrict physical access to cardholder data.

REGULARLY MONITOR AND TEST NETWORKS

  • 10. Track and monitor all access to network resources and cardholder data.
  • 11. Regularly test security systems and processes.

MAINTAIN AN INFORMATION SECURITY POLICY

  • 12. Maintain a policy that addresses information security for all personnel.

To make it "easier" for new businesses to validate PCI compliance, the PCI Council has created nine different forms or Self-Assessment Questionnaires (SAQs) which are a subset of the entire PCI DSS requirement. The trick is working out which is applicable or whether it's necessary to hire a PCI Council–approved auditor to verify that each PCI DSS security requirement has been met. In addition, the PCI Council revises the rules every three years and releases incremental updates throughout the year, adding even more dynamic complexity.

Step-by-step guide to PCI DSS v3.2.1 compliance

1. Know your requirements

The first step in achieving PCI compliance is knowing which requirements apply to your organisation. There are four different PCI compliance levels, typically based on the volume of credit card transactions your business processes during a 12-month period.

Compliance level
Applies to
Requirements
Level 1
  1. Organisations that annually process more than 6 million transactions of Visa or Mastercard or more than 2.5 million for American Express; or
  2. Have experienced a data breach; or
  3. Are deemed "Level 1" by any card association (Visa, Mastercard etc.)
  1. Annual Report on Compliance (ROC) by a Qualified Security Assessor (QSA) – also commonly known as a Level 1 onsite assessment – or internal auditor if signed by an officer of the company
  2. Quarterly network scan by Approved Scan Vendor (ASV)
  3. Attestation of Compliance (AOC) for Onsite Assessments–there are specific forms for merchants and service providers
Level 2
Organisations that process between 1 and 6 million transactions on an annual basis
  1. Annual PCI DSS Self-Assessment Questionnaire (SAQ) –- nine SAQ types shown briefly in the table below
  2. Quarterly network scan by Approved Scan Vendor (ASV) Attestation of Compliance
  3. Attestation of Compliance (AOC) – each of the nine SAQs has a respective AOC form
Level 3
  1. Organisations that process between 20,000 and 1 million online transactions on an annual basis
  2. Organisations that process fewer than 1 million total transactions annually
Same as above
Level 4
  1. Organisations that process fewer than 20,000 online transactions annually; or
  2. Organisations that process up to 1 million total transactions annually
Same as above

For Levels 2 to 4, there are different SAQ types depending on your payment integration method. Here's a brief table:

SAQ
Description
A
Card-not-present merchants (e-commerce or mail/telephone order) that have fully outsourced all cardholder data functions to PCI DSS–compliant third-party service providers, with no electronic storage, processing or transmission of any cardholder data on the merchant's systems or premises.

Not applicable to face-to-face channels.
A-EP
E-commerce merchants who outsource all payment processing to PCI DSS–validated third parties, and who have a website(s) that doesn't directly receive cardholder data but which can affect the security of the payment transaction. No electronic storage, processing or transmission of cardholder data on merchant's systems or premises.

Applicable only to e-commerce channels.
B
Merchants using only:
  • Imprint machines with no electronic cardholder data storage, and/or
  • Standalone, dial-out terminals with no electronic cardholder data storage.
Not applicable to e-commerce channels.
B-IP
Merchants using only standalone, PTS-approved payment terminals with an IP connection to the payment processor with no electronic cardholder data storage.

Not applicable to e-commerce channels.
C-VT
Merchants who manually enter a single transaction at a time via a keyboard into an internet-based, virtual payment terminal solution that is provided and hosted by a PCI DSS–validated third-party service provider. No electronic cardholder data storage.

Not applicable to e-commerce channels.
C
Merchants with payment application systems connected to the internet, no electronic cardholder data storage.

Not applicable to e-commerce channels.
P2PE
Merchants using only hardware payment terminals included in and managed via a validated, PCI SSC–listed Point-to-Point Encryption (P2PE) solution, with no electronic cardholder data storage.

Not applicable to e-commerce channels.
D
SAQ D FOR MERCHANTS: All merchants not included in the descriptions for the above SAQ types.

SAQ D FOR SERVICE PROVIDERS: All service providers defined by a payment brand as eligible to complete an SAQ.

2. Map your data flows

Before you can protect sensitive credit card data, you need to know where it lives and how it gets there. You'll need to create a comprehensive map of the systems, network connections and applications that interact with credit card data across your organisation. Depending on your role, you'll probably need to work with your IT and security team(s) to do this.

  • First, identify every consumer-facing area of the business that involves payment transactions. For example, you may accept payments via an online shopping basket, in-store payment terminals or orders placed over the phone.
  • Next, pinpoint the various ways cardholder data is handled throughout the business. It's important to know exactly where the data is stored and who has access to it.
  • Then, identify the internal systems or underlying technologies that touch payment transactions. This includes your network systems, data centres and cloud environments.

3. Check security controls and protocols

Once you've mapped out all the potential touchpoints for credit card data across your organisation, work with IT and security teams to ensure that the right security configurations and protocols are in place (see the list of 12 security requirements for PCI DSS above). These protocols are designed to secure the transmission of data, such as Transport Layer Security (TLS).

The 12 security requirements for PCI DSS v3.2.1 stem from best practices for protecting sensitive data for any business. Several overlap with those required to meet GDPR, HIPAA and other privacy mandates, so a few of them may already be in place in your organisation.

4. Monitor and maintain

It's important to note that PCI compliance is not a one-off event. It's an ongoing process to ensure that your business remains compliant even as data flows and customer touchpoints evolve. Some credit card brands may require you to submit quarterly or annual reports, or complete an annual on-site assessment to validate ongoing compliance, particularly if you process more than 6 million transactions each year.

Managing PCI compliance throughout the year (and year over year) often requires cross-departmental support and collaboration. If this doesn't already exist, it may be worth creating a dedicated team internally to properly maintain compliance. While every company is unique, a good starting point for a "PCI team" would include representation from the following:

  • Security: The Chief Security Officer (CSO), Chief Information Security Officer (CISO) and their teams ensure that the organisation is always properly investing in the necessary data security and privacy resources and policies.
  • Technology/Payments: The Chief Technology Officer (CTO), VP of Payments and their teams make sure that core tools, integrations and infrastructure remain compliant as the organisation's systems evolve.
  • Finance: The Chief Financial Officer (CFO) and their team ensure that all payment data flows are accounted for when it comes to payment systems and partners.
  • Legal: This team can help navigate the many legal nuances of PCI DSS compliance.

For more information about the complex world of PCI compliance, head to the PCI Security Standards Council website. If you only read this guide and a few other PCI docs, we recommend starting with these: Prioritized approach for PCI DSS, SAQ instructions and guidelines, FAQ about using SAQ eligibility criteria to determine onsite assessment requirements, and FAQ about obligations for merchants that develop apps for consumer devices that accept payment card data.

How Stripe helps organisations achieve and maintain PCI compliance

Stripe significantly simplifies the PCI burden for companies that integrate with CheckoutElementsmobile SDKs, and Terminal SDKs. Stripe Checkout and Stripe Elements use a hosted payment field for handling all payment card data, so the cardholder enters all sensitive payment information in a payment field that originates directly from our PCI DSS–validated servers. Stripe mobile and Terminal SDKs also enable the cardholder to send sensitive payment information directly to our PCI DSS–validated servers.

With safer card acceptance methods such as these, we'll populate the PCI form (SAQ) in the Stripe Dashboard, making PCI validation as easy as clicking a button. For smaller organisations, this can save hundreds of hours of work; for larger ones, this can save thousands.

For all our users, regardless of integration type, Stripe acts as a PCI advocate and can help in a few different ways.

  • We'll analyse your integration method and advise you on which PCI form to use and how to reduce your compliance burden.
  • We'll notify you ahead of time if a growing transaction volume will require a change in how you validate compliance.
  • For large merchants (Level 1), we provide a PCI packet that can reduce PCI validation time from months to days. If you need to work with a PCI QSA (because you store credit card data or have a more complex payment flow), there are more than 350 such QSA companies around the world, and we can connect you with several auditors that have a deep understanding of the different Stripe integration methods.

Conclusion

Assessing and validating PCI compliance usually happens once a year, but PCI compliance is not a one-off event – it's a continuous and substantial effort of assessment and remediation. As a company grows, so will the core business logic and processes, which means that compliance requirements will evolve as well. An online business, for example, may decide to open physical shops, enter new markets or launch a customer support centre. If anything new involves payment card data, it's a good idea to proactively check whether this has any effect on your PCI validation method and re-validate PCI compliance as necessary.

PCI compliance helps. It's just not enough.

Adherence to the PCI DSS guidelines is a necessary layer of protection for your business – but it's not enough. PCI DSS sets important standards for handling and storing cardholder data, but does not provide sufficient protection by itself for every payment environment. Instead, moving to a safer card acceptance method (such as Stripe Checkout, Elements and mobile SDKs) is a much more effective way to protect your organisation. The long-standing benefit this provides is that you don't need to rely on industry baseline standards or worry about the potential failure of security controls. This approach provides agile businesses with a way to mitigate a potential data breach and avoid the emotional, time-consuming and costly historical approach to PCI validation. Not to mention that a safer integration method is reliable every single day of the year.

Visa's Merchant level
Average audit time

(annual estimates)

Average audit time with Stripe Elements, Checkout or Mobile SDK

(annual estimates)

Level 1
3 – 5 months 2 – 5 days
Level 2
1 – 3 months 0 days
Level 3
1 – 3 months 0 days
Level 4
1 – 3 months 0 days

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