What is PCI DSS Compliance

Payment Card Industry Data Security Standard (PCI DSS) compliance represents a critical control requirement for organizations within the payment ecosystem. Version 4.0, released March 2022, introduces 64 new requirements focusing on customized controls and continuous security validation.

For GRC analysts managing third-party relationships, PCI DSS creates specific vendor assessment obligations. Any service provider with access to cardholder data environment (CDE) or systems connected to the CDE requires documented compliance validation. This includes cloud providers, payment gateways, tokenization services, call centers, and even janitorial services with physical access to data centers.

The standard operates through a shared responsibility model. While your organization maintains overall compliance accountability, third-party service providers must demonstrate their own PCI DSS compliance through Attestations of Compliance (AOC) or relevant Self-Assessment Questionnaires (SAQ).

Core PCI DSS Requirements

PCI DSS organizes 12 requirements across 6 control objectives:

Build and Maintain a Secure Network

1. Install and maintain network security controls
2. Apply secure configurations to all system components

Protect Account Data 3. Protect stored account data 4. Protect cardholder data with strong cryptography during transmission 5. Protect all systems and networks from malicious software 6. Develop and maintain secure systems and software

Maintain a Vulnerability Management Program 7. Restrict access to system components and cardholder data by business need-to-know 8. Identify users and authenticate access to system components 9. Restrict physical access to cardholder data

Implement Strong Access Control Measures 10. Log and monitor all access to system components and cardholder data 11. Test security of systems and networks regularly 12. Support information security with organizational policies and programs

Regulatory Context and Framework Alignment

PCI DSS maintains crosswalks with multiple compliance frameworks:

Framework	Key Overlapping Controls
SOC 2 Type II	CC6.1 (Logical Access), CC7.2 (System Monitoring), CC6.8 (Encryption)
ISO 27001:2022	A.8 (Asset Management), A.9 (Access Control), A.12 (Operations Security)
NIST CSF 2.0	PR.AC (Access Control), PR.DS (Data Security), DE.CM (Security Monitoring)
FedRAMP	AC-2 (Account Management), SC-8 (Transmission Confidentiality), AU-2 (Audit Events)

Major regulations requiring PCI DSS compliance include:

• Minnesota Plastic Card Security Act - First state law mandating PCI DSS
• Nevada SB 227 - Requires PCI DSS compliance for merchants
• Washington HB 1149 - Establishes PCI DSS as minimum standard
• EU Revised Payment Services Directive (PSD2) - References PCI DSS for strong customer authentication

Third-Party Risk Management Applications

Service Provider Classifications

PCI DSS defines specific service provider levels based on transaction volume:

Level 1: >300,000 transactions annually

• Requires annual on-site assessment by QSA
• Quarterly ASV network scans
• Annual Attestation of Compliance (AOC)

Level 2: <300,000 transactions annually

• Annual self-assessment (SAQ D)
• Quarterly ASV scans
• Annual AOC

Vendor Due Diligence Requirements

When evaluating third-party PCI DSS compliance:

1. Request Current AOC Documentation

   • Verify QSA company certification
   • Confirm assessment covers your service scope
   • Check expiration date (valid for 12 months)

2. Review Service Provider Agreement Must include:

   • Acknowledgment of security responsibilities
   • Right to audit clause
   • Incident notification within 24 hours
   • Data retention and disposal procedures

3. Validate Technical Controls

   • Network segmentation diagrams
   • Data flow documentation
   • Encryption protocols (minimum TLS 1.2)
   • Key management procedures

Real-World Implementation Examples

Payment Gateway Integration: A retail company using Stripe must obtain Stripe's PCI DSS AOC and ensure their integration method (redirect vs. embedded form) aligns with appropriate SAQ type. Stripe's AOC covers tokenization services, reducing merchant scope to SAQ A.

Call Center Outsourcing: A healthcare provider using third-party call centers for payment processing must verify:

• DTMF masking implementation
• Call recording pause functionality
• Clean desk policy enforcement
• Background check procedures

Cloud Infrastructure: Organizations hosting CDE in AWS must:

• Use only PCI DSS compliant services (documented in AWS Artifact)
• Implement responsibility matrix for shared controls
• Maintain network isolation between CDE and non-CDE workloads
• Document data residency for each region

Common Misconceptions

"Tokenization eliminates PCI scope" False. Tokenization reduces scope but doesn't eliminate it. Systems generating, transmitting, or detokenizing data remain in scope.

"SAQ completion equals compliance" Self-assessment represents one validation method. True compliance requires implementing all applicable controls continuously, not just during assessment periods.

"PCI DSS only applies to merchants" The standard applies to all entities in the payment chain: merchants, processors, acquirers, issuers, and service providers.

Industry-Specific Considerations

Healthcare: HIPAA-covered entities processing payments must maintain separate compliance programs. PCI DSS and HIPAA controls don't fully overlap—encryption standards differ (AES-256 for HIPAA vs. strong cryptography per PCI DSS).

E-commerce: Online retailers face expanded requirements under SAQ A-EP or SAQ D, including web application firewalls, secure coding practices, and penetration testing.

Hospitality: Hotels and restaurants using P2PE-validated solutions can reduce scope to SAQ P2PE, eliminating 90% of traditional requirements.

Compliance Validation Tools

Effective PCI DSS programs use continuous monitoring rather than point-in-time assessments:

• File Integrity Monitoring (FIM): Required under Requirement 11.5
• Vulnerability Scanning: Internal scans (monthly) and external ASV scans (quarterly)
• Penetration Testing: Annual testing plus after significant changes
• Security Awareness Training: Annual training with acknowledgment tracking

Frequently Asked Questions

What determines my organization's PCI DSS merchant level?

Annual transaction volume determines merchant levels. Level 1 processes >6 million transactions, Level 2 processes 1-6 million, Level 3 processes 20,000-1 million, and Level 4 processes <20,000 transactions annually.

How do I verify a third-party vendor's PCI DSS compliance?

Request their current Attestation of Compliance (AOC) signed by a Qualified Security Assessor (QSA). Verify the AOC covers your specific services and check the PCI Security Standards Council website for QSA validation.

What's the difference between PCI DSS v4.0.2.1 and v4.0?

Version 4.0 introduces customized implementation options, requires authenticated vulnerability scanning, mandates security awareness training for all personnel, and extends the transition period to March 2025 for most new requirements.

Do cloud service providers need separate PCI DSS certification?

Yes, CSPs handling cardholder data must maintain their own PCI DSS compliance. Major providers like AWS, Azure, and GCP publish their AOCs and responsibility matrices through their compliance portals.

How does PCI DSS relate to SOC 2 Type II reports?

While SOC 2 and PCI DSS share security control objectives, PCI DSS requires specific technical implementations. A SOC 2 Type II report doesn't substitute for PCI DSS validation but can support control mapping efforts.

What happens if a vendor breaches while handling our cardholder data?

Your organization remains liable for PCI DSS compliance regardless of vendor failures. Contracts must include breach notification within 24 hours, and you must maintain incident response procedures covering third-party breaches.

Can small vendors self-certify PCI DSS compliance?

Service providers processing <300,000 transactions annually can self-assess using SAQ D for Service Providers. However, many organizations require third-party attestation regardless of transaction volume.