PCI (payment card industry) compliance involves adhering to standards for processing payment information online. They were established by the PCI Security Standards Council (PCI SSC). PCI DSS aims to enhance controls and protection around cardholder data while reducing credit card fraud. Pursuing PCI compliance is therefore crucial for companies to safeguard payment information and mitigate fraud risks.
PCI compliance not only safeguards consumer data from theft and misuse but also helps protect the reputations of compliant companies. By proactively preventing cyberattacks, these companies significantly reduce the risk of facing public relations crises resulting from data breaches or security compromises.
Businesses pursue PCI compliance to protect against breaches that could compromise their customers’ financial data and personally identifiable information. This concern is increasingly urgent, as around half of all small- and medium-sized businesses experienced breaches in 2022. Understanding the steps to achieve PCI compliance has never been more critical for safeguarding your business, customers, and reputation.
Different companies face varying requirements and processes in their quest for PCI compliance. Therefore, it’s essential to start by understanding the four different levels of PCI compliance.
PCI Levels
PCI levels categorize companies based on the volume of online credit and debit transactions they process annually. The PCI DSS was developed collaboratively by major credit card companies to establish best practices for managing consumer data online. Recognizing that a single solution does not fit all, they defined four distinct PCI compliance categories that companies may fall into.
The PCI DSS levels at a glance:
- Level 1: over 6 million card transactions per year
- Level 2: between 1 and 6 million transactions per year
- Level 3: processes 20,000 to 1 million transactions in a year
- Level 4: processes less than 20,000 transactions per year
A company’s PCI level indicates the volume of transactions it processes annually. Companies handling over six million transactions per year are classified as Level 1, including major e-commerce giants like Amazon and Alibaba. Level 2 includes businesses processing between one and six million transactions annually. Companies with 20,000 to one million transactions per year fall into Level 3, while those processing fewer than 20,000 transactions are categorized as Level 4.
What it Means in Practical Terms
These PCI levels dictate the extent of assessment and security validation required for a merchant to achieve PCI DSS compliance. Except for Level 1, all merchants must complete a self-assessment questionnaire and perform an external vulnerability scan quarterly with an Approved Scanning Vendor (ASV). Level 1 merchants, handling the highest transaction volumes, must undergo on-site data security assessments due to the greater risk and incentive for attackers.
Levels 1 through 3 must report their PCI compliance status directly to their banks. In contrast, Level 4 merchants, which process fewer transactions, should consult with their banks to understand specific requirements, as they may not need to report but still must adhere to applicable rules.
Levels 2-4
Levels 2, 3, and 4 are required to have an approved scanning vendor perform a compliance scan each quarter and submit an Attestation of Compliance (AOC) form. This means these companies must have a certified third-party auditor visit their facilities at least four times a year to review their payment processing infrastructure. With evolving threats and updates to software and hardware, the auditor ensures that all systems remain up-to-date. While Level 4 merchants might not undergo this process, Level 1 merchants must meet these requirements and additional standards.
Level 1
In addition to the aforementioned requirements, Level 1 merchants must submit an annual compliance report completed by a qualified security assessor (known as a Level 1 on-site assessment) or by an internal auditor if signed by a company officer. For companies processing six million or more transactions annually, it is often beneficial to have a dedicated full-time employee focused on maintaining PCI compliance consistently.
Who Needs to be PCI Compliant?
PCI compliance might seem like a complex topic unrelated to daily operations, but these standards apply to every merchant, processor, and service provider that handles, transmits, or stores cardholder data online, regardless of their size.
If your company processes online payments and you’re unfamiliar with PCI, it’s time to get informed. Ignorance about your PCI level often equates to noncompliance—if you don’t know your level, you’re likely overlooking crucial data processing requirements. Fortunately, many resources are available to help you understand and manage PCI compliance, avoiding costly fines and protecting customer data.
To start, simply ask: how many credit card transactions does my company process annually? This question will determine your PCI level and guide you in addressing your PCI requirements effectively.
Achieving PCI compliance
The PCI DSS aims to enhance data protection and reduce credit card fraud. Achieving compliance is crucial for safeguarding consumer data and maintaining a company’s reputation by avoiding data breaches and security issues. Companies are categorized into four PCI levels based on their annual transaction volume: Level 1 (over 6 million transactions), Level 2 (1-6 million transactions), Level 3 (20,000 to 1 million transactions), and Level 4 (fewer than 20,000 transactions).
Ready to safeguard your business and customer data? Discover your PCI compliance level today and take the necessary steps to protect against breaches and fines. Contact us for expert guidance on navigating PCI requirements and ensuring your company stays compliant and secure.
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