How to Protect Cardholder Data
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Every year 7 – 10% of US adults are victims of identity theft. Also, global cybercrime expenses amounted to $1 trillion in 2020, which is up from $500 billion in 2018. This makes it more important now than ever that businesses and institutions prioritize the security of personal and financial data.
65% of credit cards holders have experienced credit card fraud at least once, making an estimated 151 million U.S. adults. Consumers expect their sensitive information, such as cardholder data, to be protected from fraud, misuse, and data breaches. Failure to do so can lead to a loss of consumer trust, brand damage, legal consequences, and financial losses.
What is cardholder data?
Cardholder data refers to any information stored, processed, or transmitted on a payment card, including credit cards and debit cards. This information includes the cardholder's name, account number, expiration date, and security code (CVV or CVC). It may also include the cardholder's address, phone number, and email address if the merchant chooses to collect this information. Cardholder data is highly sensitive and must be protected at all costs.
Why is protecting cardholder data important?
Protecting cardholder data is good for business for several reasons. First and foremost, it helps to maintain customer trust and confidence in your brand. When customers provide their personal and financial information, they expect that information to be kept safe and secure. If a business is unable to do so, it can damage their reputation and lead to a loss of customers. Not to mention, it’s predicted that card fraud in the US will reach $165.1 billion over the next 10 years.
Secondly, protecting cardholder data is important for legal and regulatory compliance. Businesses that fail to protect cardholder data can be subject to fines and legal action. In addition, some industries have specific regulations that require businesses to protect sensitive data. For example, the Payment Card Industry Data Security Standard (PCI DSS) for merchants that accept credit cards.
Furthermore, protecting cardholder data can help prevent financial losses due to fraud and data breaches. When cardholder data is compromised, it can result in significant financial losses for both the business and the customer. Businesses may also be liable for fraudulent charges made using the compromised data.
Overall, protecting cardholder data is essential for maintaining customer trust, complying with regulations, and preventing financial losses. By implementing security measures and monitoring their systems, businesses can help ensure that cardholder data is kept safe and secure.
5 Tips on protecting cardholder data
To protect cardholder data, businesses must follow the PCI DSS requirements. Here are some key steps that businesses can take:
1. Use secure payment processing systems
Secure payment processors have become a necessity for businesses to protect themselves from data breaches and to maintain their customers' trust. The Payment Card Industry Data Security Standard (PCI DSS) is a set of guidelines established by the major credit card companies. These guidelines ensure that all businesses that accept credit card payments protect sensitive cardholder data.
When selecting a payment processor, businesses should look for a solution that is PCI DSS compliant. Such solutions have undergone rigorous testing and are equipped with robust security features to protect cardholder data. These features include encryption, which scrambles the cardholder data to protect it during transmission and storage. They also typically include tokenization, replacing sensitive data with a unique identifier that is meaningless to anyone who intercepts it.
Businesses should also ensure that the payment processor they use offers secure storage of cardholder data. Meaning the data should be stored in a secure, encrypted format, and access should be restricted to authorized personnel only.
It’s important to note that simply using a secure payment processor isn’t enough. Businesses must also ensure that they are following best practices when it comes to securing their network and computer systems. This includes implementing strong passwords, regularly updating software, and using firewalls to prevent unauthorized access.
2. Limit access to cardholder data
Limiting access to cardholder data is a crucial aspect of protecting it from unauthorized access and misuse. When too many employees have access to sensitive data, the risk of data breaches and fraud increases significantly. Therefore, it is essential for businesses to establish strict access control policies to limit the number of employees who can access cardholder data.
To achieve this, businesses should determine who needs access to cardholder data to perform their job responsibilities and grant access accordingly. For instance, only employees who are responsible for processing payments or handling customer inquiries related to payments should have access to cardholder data. Other employees, such as those in marketing or IT, should not have access to this information unless it is necessary for their job duties.
In addition to granting access on a need-to-know basis, businesses should also implement strong authentication mechanisms to ensure that only authorized employees can access cardholder data. This may include requiring employees to use multi-factor authentication, such as a combination of a password and a smart card or biometric authentication.
Furthermore, businesses should monitor employee access to cardholder data and maintain audit logs to detect and investigate any suspicious activity. Regular security training should also be provided to employees with access to cardholder data to ensure they understand the importance of protecting this sensitive information and the consequences of failing to do so.
By limiting access to cardholder data, businesses can reduce the risk of data breaches and protect the trust of their customers.
3. Use strong passwords and two-factor authentication
Using strong passwords and two-factor authentication is an effective way to prevent unauthorized access to cardholder data. Businesses should encourage employees to create complex passwords with a mix of upper and lowercase letters, numbers, and symbols. Passwords shouldn’t be reused across multiple accounts and should be changed regularly.
In addition to strong passwords, two-factor authentication (2FA) adds an extra layer of security. With 2FA, a user is required to provide two forms of identification before gaining access to a system or application. This can include a password and a unique code sent to the user's mobile device or email. By requiring an additional form of authentication, businesses can significantly reduce the risk of data breaches and unauthorized access.
Even with strong passwords and 2FA in place, businesses must continue to monitor access to their systems and cardholder data. Regular audits can help identify any unauthorized access and ensure that access is granted only to those who need it.
4. Regularly update software and security patches
A common way that hackers gain access to cardholder data is by exploiting vulnerabilities in the software and systems. These software and systems store and transmit the cardholder data. To protect against this, it’s essential for businesses to regularly update their software and security patches. They should ensure that they have the latest security features and protections.
Regular software updates and security patches can address known vulnerabilities and help to prevent malicious attacks that exploit those vulnerabilities. Hackers are constantly evolving their methods of attack, so keeping software up to date is crucial in staying ahead of potential threats.
Updating software and security patches should be done as soon as possible once they’re released. Many software providers offer automatic updates, which can simplify the process for businesses. It’s also important to regularly review software and security patch update schedules to ensure all necessary updates are installed promptly.
Businesses should also conduct regular vulnerability assessments to identify any vulnerabilities in their systems and take steps to address them. This ongoing effort is critical to maintaining the security of cardholder data and protecting against data breaches.
5. Conduct regular security audits
Conducting regular security audits is an essential step in protecting cardholder data. Security audits can help identify vulnerabilities, gaps, and areas for improvement in your security systems and processes. During a security audit, a trained professional will examine your systems, networks, and processes to identify potential risks and weaknesses. The auditor will also review your compliance with industry security standards, such as PCI DSS, and make recommendations for improvements.
Regular security audits can help you stay on top of emerging security threats and ensure your security measures are up to date. By identifying and addressing vulnerabilities before they are exploited, you can protect your business from data breaches and financial losses.
It's important to note that security audits are not a one-time event. Instead, they should be conducted on a regular basis, at least once a year. This will ensure that your security measures are keeping pace with changing threats and technologies.
In addition to external security audits, businesses should also conduct internal audits to ensure their employees are following security policies. These internal audits can help identify areas where employees may need additional training to ensure they’re protecting cardholder data effectively.
How can PAYARC help protect cardholder data?
PAYARC can help businesses protect cardholder data by providing secure payment processing solutions that are PCI DSS compliant. Our payment processing systems use encryption to protect cardholder data during transmission and storage. Our systems are regularly updated with the latest software and security patches to protect against known vulnerabilities.
Our team of experts can help identify potential security risks and provide recommendations to mitigate those risks. By partnering with PAYARC, businesses can have peace of mind knowing their systems are secure, and cardholder data is protected.
Reach out to our team today and get on track with protecting cardholder data!