Importance of PCI DSS for Payment Scheme & Fintech Companies

by Narendra Sahoo

The Digital Payment and Financial Technology Industry are today navigating through relentless gruelling waves of cybercrimes. With Data Security and Data Privacy being the top priority in the current digital world, it comes as no surprise that businesses are constantly pressured to strengthen and upgrade their security programs. With statistics indicating nearly 46%-48% of consumers using digital channels for banking, it clearly highlights the growing dependency on Fintech companies.

This also emphasizes the need for Fintech firms to brace themselves and secure their business environment. Not just from the Compliance and Regulatory Stand-point, but also, from the security and brand reputation standpoint, Payment Scheme and Fintech Companies are required to meet PCI Standards.

Covering more on this in detail, we have today explained in the article the growing importance of PCI DSS for Payment Scheme & Fintech Companies. But, before that, let us take a closer look at the significance of PCI DSS in the industry and then understand the benefits of achieving Compliance.

Significance of PCI DSS in the Industry

PCI DSS is one of the most crucial Compliance Standards and requirement in the Payment Card Industry for Digital Payment Service providers. The PCI Council that oversees the financial sector and the Digital Payment Industry mandates Compliance to the PCI Standards, to ensure the security of Cardholder Data.

The Security Standard to be achieved with PCI Compliance involves an ongoing process of constantly assessing the Digital Payment environment to identify threats and vulnerabilities, and accordingly mitigate them for maintaining a secure card payment environment.

Non-compliance to the PCI DSS Standards and incidents of Data Breach can result in huge reputational, and financial loss for the business. The repercussion to non-compliance will further involve large fines, increased fees, and termination of license to process credit cards.

Growing Security challenges for Payment Scheme & Fintech Companies

In the recent years, several mobile-based payment applications have managed to disrupt the traditional way of banking by leveraging modern technology. Although these platforms have changed the banking landscape and brought in a lot of convenience to consumers, it has also opened doors to hackers exploiting the technology loopholes.

Today, hackers are constantly preying on Payment Scheme & Fintech Companies for their ulterior motive of gaining access to sensitive data. With this, the security of payment applications and card data seems to be now a growing challenge for Payment Scheme & Fintech Companies. While the Payment Scheme & Fintech firms are working toward securing their environment and service offerings, they are yet not on par with the evolving security challenges. Some of the common threats & security challenges faced by these firms include-

  • DDoS Attack- DDoS is a very common cyber-attack observed in the industry which attempts to disrupt the normal traffic of a targeted server, service, or network by using multiple compromised systems or networked devices as a source to attack. This is typically used to take down an important link in the cyber security control framework such as a firewall or a WAF.
  • Cross-Site Scripting – A very common threat faced by most in this industry is Cross-site scripting wherein XSS injects malicious content into the website and gains access to sensitive data when the user clicks the link.
  • Malware Attacks- Malware attacks are the most prevalent security threats for Payment Scheme & Fintech Companies. The attack involves installation of malicious software on the victim's system without their knowledge and gaining access to sensitive data.
  • Configuration Issues- A number of mobile applications have serious misconfiguration issues or privacy issues that results in compromise or data breach such as vendor default passwords or a misconfigured rule in a firewall or an unnecessary route in a router.  Hackers identify these hidden flaws which provide them an easy opportunity to exploit.
  • Cloud-based Security Risk- Cloud Solutions are a significant part of the Fintech Business. So, lack of adequate security measures can result in the compromise of sensitive information. Some common security risks include contractual breaches, insecure APIs, misconfigured servers, malware, accidental errors, etc.
  • Third-Party involvement- Payment Scheme & Fintech firms most often use third-party services and solutions. With this, it allows hackers to exploit situations and access through a third party, masked as a legitimate user. Again when it comes to third-party, non-compliance to security standards can also be a huge risk. When you outsource, you are outsourcing responsibility and not accountability.
  • Compliance failure- Most Fintech firm’s websites and applications fail to comply with industry standards like PCI DSS & GDPR Compliance. Many may be certified but the control framework is woefully inadequate or many a time the scope is very insufficient. Failure to comply with industry standards and industry best security practices can leave businesses vulnerable to several cyber-attacks.

How does being PCI Compliant benefit Payment Scheme & Fintech Companies?

PCI DSS sets a benchmark for Payment Scheme & Fintech Companies to set strong security control measures in their business environment. As per the set standards, they are required to perform adequate security tests and implement security measures to ensure a safe business environment.

Implementing measures as per the PCI standard, shields Payment Scheme & Fintech Companies against misuse, data theft, and unauthorized access to sensitive data.  For better understanding, we have listed and explained how PCI DSS Compliance helps businesses tackle the above-mentioned common threats.

  • Encryption- Data Encryption which is one of the key requirements of the PCI Standards ensures data protection when transferred from one source to another or even stored. The encryption process ensures only authorized data access, leaving no scope for compromise of data or incidents of a data breach. This is one assured way of ensuring the safety of valuable information.
  • Prevents Cross-site Scripting- PCI DSS ensures all information transmitted on a network is encrypted and safe from unauthorized access. With every information encrypted, the chances of cross-site scripting threat drastically reduces.
  • Prevents DDoS attacks and Security Misconfiguration- PCI DSS requires organizations to strictly evaluate their IT infrastructure, system configurations, and accessibility logs. Assessment or evaluations like this helps prevent misconfigurations and loopholes. With proper encryption, configurations, and logs, reduces the possibility of DDoS attacks and removal of vulnerabilities like security misconfiguration.
  • Access logging – PCI DSS Compliance for Fintech companies will require them to maintain logs of employees who access user data. This ensures accountability and security of data against internal misuse. So, with this, not only does it protect sensitive data from external threats of hackers, but also from insider threats by employees of the Fintech Company.
  • Installation & Maintenance of Firewall- PCI DSS requirements of Firewall installation especially at key points in the network architecture of the organization, it ensures prevention of network threats and other cyber-attacks. With this, there is an assured constant vigilance of systems and networks. This helps minimize the risk of infiltration and secures the overall network.
  • Third-party security Assurance- Payment Card Industry Security Standard Council has issued guidance on Third-Party Security Assurance that helps the organization with due diligence of third-party and ensures the entity they engage with adopt adequate security practices. This reduces or limits the risk exposure arising from the third party.

Base for other compliance

PCI DSS Compliance ensures not just the protection of the payment card environment but also provides a baseline for achieving other related industry standards like GDPR, and HIPAA. PCI DSS outlines detailed requirements that help Payment Scheme and Fintech companies meet other industry standards.

Conclusion

Although the PCI Standard may seem comprehensive and challenging for most Payment Scheme & Fintech companies, efforts in this direction will surely be worth their time and investment.  Again for start-ups looking to enter the larger market with a partnership with larger financial service providers, PCI DSS will not just be an option, but a mandate to begin with.

Further, achieving PCI Compliance improves business processes and enhances credibility in the eyes of clients and other businesses, partners, and stakeholders. Compliance with PCI Standards will simply help Payment Scheme & Fintech companies demonstrate that they are trustworthy and safe to engage with for business.