With the economic prospects for the next year or more so dour, it's not obvious that PCI compliance should be immune from cutbacks. The big issue is whether there is room in the PCI process for more rationality in light of these economics?
Over the last few years, PCI compliance has consistently generated larger security budgets, with little or no requirement for justifying them, other than "our bank told us we have to do it." But with some acquirers being no better off financially than many retailers, it's time to ask some hard questions: Is the risk of a security breach great enough to risk the financial health of our company?
Even as a certified security professional (CISSP), I find it hard to justify some of the things merchants are being told to do by their acquirers. Just last week, a PCI project manager told me his Level 1 retail employer had spent more than $4 million so far to achieve PCI compliance and they were anxiously awaiting a decision from their 28-year-old assessor (and their bank) as to whether this would be satisfactory. After discussing this retailer's situation for more than 45 minutes, with multiple thwarted project plans and conflicting standards interpretations, and going through three different assessors (but staying with the same "leading" assessment firm), the whole process began to sound so convoluted that I was nearly left speechless (which, anyone who knows me will tell you, is pretty darn rare).
I think it's time to fight to bring some more rationality to the PCI compliance process. The rumor mill says that PCI 1.2 (coming in October) will only bring minor "tweaks" to the standards because the card brands are reportedly pretty pleased with them and seek only to "clarify" some of the interpretations and eliminate some redundancies between standards. All these changes are good, of course. I'm a huge fan of PCI DSS as providing a level of detail that is needed in security standards. No, the problem isn't with the standards; it's with the process, which largely ignores the established concept of "risk acceptance" and which allows all parties (except the merchant) to avoid assuming any liability.
Make the switch to rationality. More than 80 percent of the merchants we've interviewed for the PCI Knowledge Base have stayed with the same PCI assessor for more than a year, even though less than half of them are happy with that assessor. More than 90 percent have stayed with the same acquirer, but many of them find their acquirer to be less than helpful when it comes to PCI.
Of course, switching acquirers involves many more issues than PCI, and there is no reason to let the tail wag the dog just to ease the path to compliance. That said, too many merchants simply sign up with the assessor recommended by their acquirer without doing a thorough interview process and ensuring that the assessor (the person and the company) is comfortable with both the industry and the specific "idiosyncrasies" of the merchant that may require compensating controls. A much more thorough assessor evaluation is needed, as is a willingness to switch more often.
Actively negotiate with your acquirer. I've talked to many merchants who feel that non-compliance with PCI puts them in an uncomfortable, disadvantageous position vis-à-vis their acquirer. As a result, they stop acting like the customers they are and sometimes neglect or refuse to exercise their market power when dealing with their acquirer. I would suggest to all retailers and other merchants that it is worthwhile to do some analysis of the monthly bank statement, focusing on downgrades, service fees and fines.
The goal is simple: Understand the revenue and profit that your company generates for your acquirer, so if there are additional fees, fines and interchange rate changes related to PCI, you can both identify these items and be prepared to discuss and even negotiate them with your acquirer. I have talked to several acquirers who have "subsidized" their most profitable merchant customers, simply because they want to keep their business. These same acquirers tend to be the most likely to listen to reason when it comes to helping merchants manage their risk, rather than dogmatically insisting on a "100 percent checklist completion" approach to PCI.
Finally, our "PCI Best Practices" study for the National Retail Federation continues. If you're a retailer, we would like to do a 100 percent anonymous interview with you for this NRF study. If you'd like to participate, just register at www.KnowPCI.com, or send me an E-mail at [email protected]