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Is Your Credit Card Information Safe?

Not complying with PCI requirements can be costly. If a merchant's systems are breached, the merchant is responsible for all costs associated with inappropriately used credit cards. The merchant is also required to pay all costs for informing consumers, canceling outstanding credit cards, issuing new credit cards and forensic audit costs.

Any firm that stores, processes or transmits credit card data should comply with security standards or risk great losses. Whether we buy goods online or in a store, credit card purchases are a way of life. We may worry about transactions over the Internet, but we generally assume credit card data and related personal information with merchants are secure. But are they?

According to analysts, financial fraud surpassed all forms of computer losses in 2007. The most noted credit card loss was with TJX (parent company of HomeSense and Winners) in 2006. The security breach resulted in the loss of 45 million credit- and debit-card numbers. The TJX losses reportedly will exceed US$1 billion. The breach was due to inadequate security controls. In addition, TJX may have also lost customers' personal information such as drivers' license numbers. The problem is that TJX is not alone: many merchants have inadequate controls to protect credit card information.

To address financial fraud, major credit card companies created an organization, the Payment Card Industry Standards Council (PCI). Its goal was to set standards to enhance the security of credit card payment data. The result is the Payment Card Industry Data security Standard.

Merchants that store, process or transmit cardholder data must comply with the PCI standard. Reports indicate that larger-merchant compliance is improving. On January 22,2008, Visa reported that as of the end of 2007,77 percent of large merchants and 62 percent of medium-sized merchants were PCI compliant. These are big improvements compared with the previous year, when less than 20 percent of large and medium- sized merchants were deemed compliant. These two categories represent approximately two-thirds of Visa's transaction volume. However, smaller merchants and government agencies are slower in adhering to PCI requirements.

PCI requires merchants to verify compliance with the data security standard. A merchant's credit card transaction volume determines what compliance validation steps are followed. Larger merchants are required to have annual on-site audits and network scans performed quarterly by certified assessors. Smaller merchants may only be required to do self-assessments. The merchant levels differ between the credit card companies so one should refer to the merchant agreement for specific requirements. Although compliance validation requirements differ, all merchants that store, process or transmit cardholder data, regardless of size, are required to comply with all aspects of the PCI standard. Failure to do so may result in a merchant being fined and/or terminated from the processing services.

Source : http://www.newsfactor.com/