Credit card theft and misuse are growing in both volume and sophistication. Recent reports suggest that cases of credit card fraud have doubled in volume in the last five years.
In response to the shifting nature of e-commerce, the Payment Card Industry Security Standards Council (PCI SSC) announced the PCI Data Security Standard (DSS) 4.0 in March 2022.
The council gave businesses a three-year deadline to prepare for and implement the new standard. As March 2025 grows closer, SaaS platforms must comply with a raft of new PCI DSS 4.0 requirements or face stiff consequences.
What is PCI DSS 4.0?
PCI DSS 4.0 is the latest iteration of the Payment Card Industry Data Security Standard, an updated set of requirements businesses must follow when handling credit card information.
The standard aims to protect customers’ payment data from theft and fraud and ensures businesses that accept, process, store, or transmit credit card information maintain a safe, secure environment.
How does PCI DSS 4.0 affect SaaS providers?
The new PCI DSS 4.0 requirements include changes that directly impact SaaS providers. Let’s break down some of the reasons below.
Expanded scope: The PCI DSS 3.2.1 provided rulings for payment processors. However, the 4.0 version has broadened its scope to include any SaaS providers that store, process, or transmit cardholder data. Even if you don’t directly process payments, you must comply with the new standards. Within the expanded scope, additional cardholder PII info is required.
More robust password requirements: Access to cardholder data environments (CDEs) now requires multi-factor authentication. These changes affect both remote and onsite teams. Password complexity requirements have also become more stringent.
You can read more about the different authentication options in this SSC supplement.
Stronger security controls: While much depends on your type of business and the volume of transactions you process, mechanisms like DMARC, SPF, and DKIM are required to protect against phishing attacks as part of the PCI DSS assessment. Additionally, businesses must commit to testing their security systems more frequently.
Risk assessment: The new standard also mandates that SaaS providers must perform regular risk assessments and proactively identify potential vulnerabilities. What’s more, the new regulations also require businesses to outline and apply security controls to mitigate or remedy adverse findings of these risk assessments.
Customization: While the core 12 PCI DSS requirements are non-negotiable, there is room for a more customized approach to suit the needs of their specific risk environment.
Implications for SaaS providers
Meeting the new PCI DSS 4.0 standards will have several implications for SaaS businesses. Some of the topline impacts include:
- Increased compliance costs: Meeting these new requirements means many SaaS providers will need to invest in new tech, personnel, and processes. These investments will result in a rise in compliance costs for many businesses.
- More security monitoring: The standards’ increased emphasis on monitoring and assessing risks means SaaS teams will need to budget for more time on security processes.
- Workflow adjustments: Stronger authentication and security controls could cause disruptions in existing workflow processes for many SaaS providers.
- User experience: On the user side, some SaaS end users might face extra steps when paying for products. However, disruptions should be minimal and more than justifiable when weighted against security benefits.
- Third-party risk management: SaaS providers must also ensure their third-party vendors or partners comply with PCI DSS 4.0. That means tighter contractual agreements, more ongoing monitoring, and enhanced due diligence in vendor selection and assessments.
What happens if SaaS businesses don’t comply with PCI DSS 4.0?
Non-compliance with PCI DSS 4.0 is not an option. Some of the penalties and adverse effects that could result from ignoring the March 2025 deadline are detailed below.
Fines: SaaS companies that fail to comply with PCI DSS 4.0 could face stiff monthly fines of between $5,000 and $10,000. The precise amount depends on various factors, such as non-compliance severity, business size, and any holdups in remedying the situations.
Business disruptions: Failure to comply with the new standards can lead to catastrophic payment processing bans for SaaS businesses. Additionally, non-adherence could result in companies being placed on the MATCH List or Terminated Merchant File (TMF) and even the potential loss of contracts needed to continue accepting card payments.
Legal liabilities: Failure to comply could open up SaaS businesses to lawsuits from affected parties, defense costs, and settlements. Additionally, it could increase the likelihood of audits from bodies such as the FTC, which could result in additional financial penalties.
Data breaches: The new regulations were designed to reduce the likelihood and effect of data breaches. Organizations that do not meet these standards run the risk of expensive and reputation-shredding data breaches and loss of trust among their users.
Lost access to payment processing: While this downside is limited to the worst infractions, SaaS companies that do not comply with PCI DSS 4.0 could lose access to payment processing, which would constitute an existential risk.
Additionally, merchants operating under software platforms that fail to comply with PCI DSS 4.0 face significant financial, operational, and reputational risks similar to those outlined above.
How can SaaS providers prepare for the March 2025 deadline?
With the March 2025 deadline on the horizon, SaaS teams need to take action before it’s too late. Here are some actions that can ensure you’re ready.
- Look at the PCI DSS 4.0 requirements and compare them to your current security practices. Identify what you must do to improve your security with these new standards.
- Perform a comprehensive risk assessment to pinpoint your vulnerabilities and shortlist tasks for remediation.
- Right now, PCI DSS 4.0 standards are thought of as best practices. However, implementing them now will ensure you’re ready for March 2025.
- Update your security policies, procedures, and practices to align with PCI DSS 4.0.
- Ensure that any third-party vendors and partners are compliant.
- Ask a Qualified Security Assessor to audit your current setup and make recommendations toward compliance.
How Payabli Can Help?
Partnering with an experienced and reputable payment service provider like Payabli can help you navigate the complexities of PCI DSS 4.0 compliance. Here is how we can support your business.
- Payabli handles the storage, processing, and transmission of cardholder data. SaaS businesses can significantly reduce their exposure to PCI DSS 4.0 compliance standards and broader security risks by allowing us to manage their payments.
- Payabli replaces sensitive cardholder data with tokens, adding an extra security layer and mitigating data breaches.
- Our payment processing infrastructure is already PCI DSS 4.0 compliant as well as featuring encryption, firewalls, intrusion detection, and regular security audits. We stay up to date on emerging security threats, best practices, and regulatory changes, allowing SaaS providers to remain compliant with PCI DSS 4.0.
- Finally, and perhaps most importantly, we have a team of payment experts with deep experience in implementing and maintaining PCI DSS 4.0 compliance. Payabli can provide personalized guidance on how your SaaS organization can meet PCI DSS 4.0 standards, helping you understand and interpret the requirements and outline areas for improvement.
Through a mix of security document preparation, self-assessment questionnaires, and audit support, we’ll ensure your SaaS business meets PCI DSS 4.0 standards and avoids fines, security breaches, and loss of payment processing associated with non-compliance. In addition, we offer ongoing PCI support, helping to ease the burden of managing and maintaining compliance. This not only protects your SaaS business but also enhances your end-user customer experience by safeguarding their sensitive data.
Reach out today to see how we can help.
Marketing at Payabli