The challenge of the week: What needs to happen to get smaller merchants to take PCI seriously and get them compliant with standards when they simply cannot afford 90 percent of the security products on the market?
I've come to the conclusion that there's a technical approach that will address the lion's share of the problem. Of course, like any former Gartner analyst, I felt the need to name it: "Remote Compliance Monitoring."
The conundrum is that most retail systems VARs and POS vendors cannot even get Level 3 and Level 4 retailers to show up for a 30-minute Webinar on PCI. The lack of coercion from their acquirers and the lack of time and money on the part of the retailers make simple communication about PCI a mountain that few have been able to scale. But there is light at the end of the tunnel through the mountain. (Don't you just love bad metaphors?)
Think of smaller merchants as a "portfolio," not as individual companies, and then ask yourself who else thinks of smaller merchants this way. There are several interesting answers: acquiring banks (of course), payment processors, retail software VARs, POS manufacturers, service providers and franchise owners. Each of these types of companies has a reason to want to help these merchants become PCI compliant. So, how do they make this happen? One of first tasks is already done—the PCI compliance portal.
Remote Compliance Monitoring, like any type of monitoring, is not about annually filling out a form. It's about software that runs around your systems constantly looking for problems relative to a set of criteria (e.g., PCI DSS). The key difference here is that we're going to assume that SME merchants aren't going to suddenly start to care about compliance. But they might very well allow a vendor, bank or franchise owner to provide them with a simple downloadable tool that can monitor a bunch of "high risk" vulnerabilities.
Fortunately, even SME merchants have antivirus (though they may have it turned off) and simple firewall/routers. On the other hand, most of these wouldn't pass PCI testing, and the systems are running Windows 98 or 2000 and are not properly patched.
Beyond these problems, Remote Compliance Monitoring tools have to perform tasks such as identity and access management (IAM), configuration lockdown, change management and maybe encryption. So, what does the footprint of such a "cool tool" look like? Is this a plug'n'play box (does anyone still call these "appliances"?), or is it 100 percent software? Personally, I'm expecting software is the only way to win this market. The next question is "When will all this happen?"
The main driver for this market shift will be the PA DSS enforcement date: July 1, 2010. However, don't start breathing easy yet, thinking that you have two years to switch out your payment applications or outsource the whole shootin' match.
Turns out that only a year from now, payment networks (at least VisaNet) will be "de-certifying" any payment applications not on the approved list, regardless of whether the merchant using them is a Level 1 or Level 4. (See related column about the PCI Shakedown.) Considering the time needed to switch out these applications, we suspect that growing awareness of the "finality" of this terminology will have a galvanizing effect on the market over the next 12 months.
Given that many pundits have focused on the fact that there seem to be only minor tweaks in PCI 1.2, coming in October, as an indicator that PCI is pretty much a "done deal," we think it's time to look at the larger problem of smaller merchants and how to manage the substantial impact of the PA DSS deadlines on this population.
By the way, if you're a retailer, we want to get you involved in both PCI Knowledge Base and the best practices study we're doing for the National Retail Federation. If you'd like to participate, please send me an E-mail at [email protected]