Retailers Still Lag in PCI Compliance

Even after the reputation-damaging data losses experienced at TJX Companies and other retail organizations, many merchants still have not complied with security standards set by credit card authorities, according to a study released yesterday.

Although the initial deadline for compliance was last June, more than half (52.5 percent) of merchants surveyed still have not fully implemented the Payment Card Industry Data Security Standard (PCI DSS), according to a survey conducted by security vendor RSA, the Security Division of EMC.

PCI, a rigorous set of guidelines for protecting the security of credit card data, is mandated by the major credit card companies, such as Visa, MasterCard, and Discover. Merchants who do not comply with the standards may be fined, or they may lose their ability to accept credit cards.

"Our survey results indicate that the majority of merchants are motivated to comply in an effort to protect their customers, but that there are still challenges to achieving it," says Jim Melvin, vice president of marketing at RSA. "With an issue so complex, we expect efforts to understand the standard and comply with it will continue well into 2008 and beyond.”

Most of the larger retailers surveyed by RSA have achieved PCI compliance, the RSA study says. But only 19 percent of Level 4 merchants -- the smallest retailers -- have met the standards. Most of the incentive programs and fines for non-compliance have been directed toward Level 1 and Level 2 merchants, RSA noted.

One of the biggest obstacles in achieving PCI compliance is the time requirement. Of the merchants that are already compliant, nearly half said their compliance projects took over a year. Five percent said it took over two years, 16 percent said the process took 18-24 months, and 27 percent said the timeframe from conducting an initial assessment to submitting the compliance report took approximately 12-18 months. Only 19 percent said achieving compliance took less than six months.

Of the respondents polled who have not achieved compliance, 19 percent believe it will take more than 18 months to comply, while 26 percent expect to become compliant within 12-18 months. Twenty-four percent anticipate meeting the PCI DSS requirements in six to 12 months, and almost one third believes compliance will be attained within six months.

The merchants who have achieved compliance said "understanding the PCI DSS requirements" was the most time-consuming aspect of the project. About 21 percent said that "determining their current PCI status before an audit" was their most significant challenge.

Merchants were also asked to pick the three most significant technology challenges they face in the drive toward compliance. More than half cited "tracking and monitoring access to the network and systems with cardholder data," while 48 percent cited encrypting card data. Thirty five percent listed "controlling logical access to systems containing card data," while 23 percent felt that "authenticating users accessing systems containing card data" was a top challenge.

Companies also differed in their approach to PCI auditing. A slight majority of those surveyed (54 percent) said a Qualified Security Assessor would handle the audit. Seventy-five percent of Level 4 merchants plan to manage audits internally, while 64 percent of Level 3 merchants will rely on internal audits. Only 40 percent of Level 2 merchants expect to do internal audits, and only 30 percent of Level 1 merchants plan to do so. An internal audit requires the signature of an officer of the company.

"Many [merchants] understand the need for the standard and believe that it will be effective, but they continue to face technology challenges as they attempt to comply," says Melvin. "While we’re moving in the right direction, the technology challenges are something that vendors need to consider as they look to build solutions to help merchants."

— Tim Wilson, Site Editor, Dark Reading