New PCI DSS Goes Beyond Compliance

As we hear about some of the biggest security breaches in retail history, it seems like good timing that the Payment Card Industry Data Security Standard (PCI DSS) has been updated. The new version became effective January 1, 2014, and all validation efforts for compliance must follow the new standard beginning January 1, 2015. This latest release is part of the Security Standards Council’s continuous improvement cycle to see that it adequately addresses changing security risks. The council also makes updates to provide operational best practices. Version 3.0 takes a step in the direction of embedding security practices into business operations so that it is more than just an exercise in compliance. And with good reason: in today’s data-driven environment, cybersecurity is part of running a successful business. Not only are you protecting against your own risks of fines, losses and reputational hits, you’ll protect and attract customers.

With the new release come five significant changes:

1. Recommendations on making PCI DSS “business as usual”  

The new section entitled “Best Practices for Implementing PCI DSS into Business-as-Usual Processes” provides guidance for maintaining compliance throughout the year. The council has recognized that some organizations have treated compliance as a point-in-time effort. The companies have not taken proper diligence to ensure that controls continue to operate or have not considered the impact of organizational or infrastructure changes on compliance.

The Attestation of Compliance that the merchants sign states, “The merchant has read the PCI DSS and recognizes that they must maintain full PCI DSS compliance at all times.” With the inclusion of this guidance, the council is emphasizing that compliance efforts should be ongoing. They don’t want companies to focus on compliance only around their compliance validation deadline, then have the attention wane the rest of the year. The council wants compliance to be continuous. A few recommendations include:

• Monitor controls to ensure that they are functioning properly; detect and respond to control failures in a timely manner
• Review organizational and IT infrastructure changes from a PCI DSS compliance perspective prior to the change being approved and implemented
• Perform periodic reviews to determine if controls continue to operate and processes continue to be followed

2. Clarification on responsibilities of service providers and their customers  

Whether you are a merchant or service provider, you will need to clearly delineate roles and responsibilities regarding PCI DSS requirements so there is proper coverage and validation. Version 3.0 requires that the roles be defined and documented. Each relationship will need to be addressed on a case-by-case basis since there isn’t a standard way to set up roles. It will be based on the services provided, and the service providers and their customers will set up a scope of validation for auditing.

The clarification of roles will help both merchants and service providers understand their part in the compliance process, take ownership of those responsibilities and ideally be vigilant in maintaining year-round compliance and monitoring their controls.

3. Increased flexibility around password strength

For companies with environments that do not support the specific password composition controls – such as some mainframe or mid-range systems – you’ll need to explore the built-in flexibility to meet the requirements. In the previous version, there were requirements around password strength and complexity that some organizations with older systems couldn’t meet. The council recognizes there are alternative ways to achieve the same effective password strength and wants to accommodate these systems. Organizations now have options to achieve “equivalent strength” through a concept called “password entropy” that makes it more difficult to guess passwords.^[1]

4. Requirements for point-of-sale (POS) security

To address the growing number of physical attacks on POS systems, the PCI DSS has incorporated a new requirement to protect devices that capture payment card data via direct physical interaction with the card. This requirement should instill the best practice of inventorying and routinely inspecting POS devices and assessing which devices may be more at risk for tampering (unattended versus attended).

Merchants will be required to have policies and procedures to:

• maintain a list of devices,
• periodically inspect devices to look for tampering or substitution and
• train personnel to be aware of suspicious behavior and report tampering or substitution of devices.

For companies in the retail industry, the POS system security and physical inspection may be particularly burdensome. Depending on your organization’s size, number of locations, current process for POS system inventory and available resources, this requirement could be a major undertaking. The good news is that while version 3.0 goes into effect January 1, 2015, the POS security requirement start date is June 30, 2015.

5. Considerations for handling cardholder data in memory

Companies that internally develop payment applications will need to update software development policies, procedures and training to minimize the exposure of cardholder data while in memory. This requirement is designed to protect against memory-scraping malware being installed that can pull cardholder data from memory. Organizations will need to modify their development processes to address the risk of data exposure through this threat. This applies only to applications developed in house; the Payment Application Data Security Standard addresses this risk for commercial payment applications.^[2]

Changing the culture

For an easier transition to version 3.0, we recommend first performing a readiness assessment against the new standard and contact your Qualified Security Assessor if you use one. If this is an internal effort, it’s important that you start early so you have ample time to get your arms around the project. Then you’ll need to identify gaps to be addressed prior to the new standard being required and develop a compliance roadmap. Take into account all factors: company size, compliance approach, number of service providers, state of passwords, industry, retail presence/POS devices, etc. Leverage the PCI DSS Prioritized Approach if possible, which ranks the requirements based on their risk-reduction impact.

The transition may be a cultural change. The goal isn’t simply to verify that specific security technologies are in place, but to emphasize the importance of cardholder data protection and risk management. It’s best to view version 3.0 as not just another compliance mandate, but a driver to make cybersecurity a part of the operational process and a way to effectively run a business.