What Universities Can Teach Retailers About PCI

A 403 Labs QSA, PCI Columnist Walt Conway has worked in payments and technology for more than 30 years, 10 of them with Visa.

Things are busy right now. I have an assessment for a hotel that, due to the amount of cardholder data it retains, can be complicated. Another one is for a major medical center with more than 100 payment card merchants, ranging from individual clinics and doctors to an assortment of gift shops and food service outlets. Then I have a series of sports venues with season- and single-ticket sales, in addition to merchandise outlets—many of which are only open part of the year. And one of my parking-garage clients has several locations, all of which use a payment application that wants to store the magnetic stripe from every card it ever sees. Add these to some other retailers and the occasional charity, and the workload gets complicated.

Here is the punch line: All of these merchants belong to the same enterprise, and each of the varied and disparate activities needs to be included in a single assessment. Who is the client? It is a major university. And the reason I am bringing it up here is that the school's experience holds some lessons for retailers and merchants in every industry.

As I hope you have gathered, the higher education merchant landscape is complex. Schools frequently contain tens or even hundreds of individual payment card merchants spread across multiple campuses. As a result, many schools have adopted PCI compliance strategies and approaches that retail IT managers may want to adopt.

The higher education merchant landscape covers more than student payments. College bookstores are retailers. Schools also operate restaurants and hotels. They may have medical centers with doctors, dentists, pharmacies and gift shops. Campuses are in the entertainment business through their theaters and athletic stadiums where they sell tickets. Schools take donations, manage libraries that sell publications and subscriptions, and run parking facilities. Sometimes, even unaffiliated third-party merchants conduct card transactions using the school's network (e.g., food courts). Finally, there are part-time merchants who may only be taking payments for a few months each year. These include faculty who run conferences, summer athletic camps and student-run organizations that accept payments.

All of these different merchants take payment cards through every possible channel, including traditional POS, mail order/phone order (MOTO), E-Commerce, fax and probably the odd carrier pigeon. They have one-time and recurring payments.

The distributed nature of the payment application environment is similarly complicated. For example, student finance, athletics and the alumni association each has unique business needs. Each organization might develop its own systems or contract with specialized third-party vendors for business and payment applications. The applications may be outsourced or run on departmental servers that may or may not be under control of IT and network administration.<pHere are some of the PCI lessons that I believe higher education institutions can teach to every merchant.

Commitment from the top. Schools generally have top management commitment, which is critical to a successful PCI compliance effort. This could be the subject of an entire column, but the point is that it is a lot easier to achieve PCI compliance with the engagement and commitment of C-level executives (i.e., CFO, CIO, CEO).It takes a team. PCI compliance affects all parts of the enterprise, so universities assemble a dedicated, multidisciplinary team to address compliance. I don't see this response very often from other merchants. A good team might include a core group featuring representatives from the finance, networking, security and internal audit departments. Each has a role to play. Other departments that will likely get involved at some point are legal, purchasing, human resources and training. Unfortunately, too often retailers treat PCI as exclusively an IT issue (see below).

PCI is a business issue. In my experience, most retailers and other merchants assign PCI compliance to the IT department. But for all the firewalls, encryption, log management and technical prescriptions in PCI, it really is a business issue: There is financial risk (losses, fines, lawsuits) and brand risk (reputation with customers and suppliers); it is the business side that controls the data; and it is the business side that has to budget for achieving and maintaining compliance.

My experience (confirmed by research from the Treasury Institute for Higher Education) indicates that the finance department is primarily responsible PCI compliance at roughly two-thirds of universities.

No business process is sacred. If there is a single lesson anyone involved in PCI has learned, it is to limit your PCI scope. If you think that as a retailer you can't live without keeping PAN data, try talking to a university cashiering, alumni or athletics department. Initially, the staff in these departments feels as if they need the PAN for things like chargebacks, recurring payments and "customer service." That is not the case. And when you compare the cost of becoming PCI compliant with and without storing cardholder data, the incentive to reduce or eliminate cardholder data is clear.

Remember "PCI Requirement 0." Also, consider emerging technologies like tokenization and point-to-point encryption to reduce PCI scope.

Outsource intelligently. Every university asks itself what business it is in. The answer is always that it is in the education business, not the payment processing business. More retailers should ask themselves the same question.

There is a strong business case for outsourcing payment processing—especially for small and midsize merchants. Remember, though, outsourcing is not a panacea. Third-party processors need to be compliant (you need to get this in the contract), and purchased payment applications need to be PA-DSS validated and properly installed in a compliant environment.

Get Smart. Some of my happiest days come when I walk into a client and see training materials from a PCI workshop. Interestingly, I encounter this more in higher education than other industries. PCI training is important, and it can save a lot of wasted effort.

Communicate, train, empower. I believe people want to do the right thing, but they need to be trained. Most universities I know of require that all campus merchants take annual PCI training. If they miss the training, then they risk losing their ability to take payment cards. Some have the business unit manager sign a contract each year agreeing to comply with the institution's payment card policies. These schools also have a merchant handbook and FAQ available online. I wish more of my retail and other clients with multiple locations had the same training and enforcement practices in place.

What do you think? I'd like to hear your thoughts. Either leave a comment or E-mail me at [email protected].