Tokenization Amplified XiIntercept The ultimate PCI DSS cost & scope reduction mechanism
Paymetric White Paper Tokenization Amplified XiIntercept 2 Table of Contents Executive Summary 3 PCI DSS 3 The PCI Audit Process 4 PCI DSS Scope 6 Tokenization and the Reduction of Scope from PCI Requirement 3 7 Tokenization Amplified Introducing XiIntercept, the Ultimate Scope Reduction Mechanism 8 XiIntercept for ecommerce 10 XiIntercept for ERP 11 XiIntercept Stand-alone 11 Benefits of XiIntercept 12 Conclusion 12 About Paymetric 13
Paymetric White Paper Tokenization Amplified XiIntercept 3 Introduction: Tokenization Amplified XiIntercept Executive Summary The Payment Card Industry Data Security Standards (PCI DSS) have presented a significant challenge for merchants over the past few years. Maintaining compliance with the PCI DSS requirements is time-consuming and extremely costly. That is why merchants are continuously seeking ways to reduce or eliminate their business from the scope of PCI compliance. There are several methods to reduce PCI DSS scope, but one that seems to stand out most is tokenization. Tokenization has increasingly been used to help merchants reduce the scope of PCI DSS compliance, particularly requirement 3. It has been difficult for merchants to find scope reduction anywhere beyond that, until now, introducing XiIntercept Solutions: Tokenization Amplified. There are several methods to reducing PCI DSS scope, but one that seems to stand out the most is tokenization PCI DSS Prior to 2004, each card brand had a unique security program that merchants were required to adhere to. These included: Visa s Card Information Security Program, MasterCard s Site Data Protection, American Express s Data Security Operating Policy, Discover s Information and Compliance and the JCB Data Security Program. These five card brands realized it was confusing for merchants to comply with multiple regulations and decided to develop a uniform security standard called the Payment Card Industry Data Security Standard (PCI DSS), released in December 2004. In 2006, the Payment Card Industry Security Standard Council (PCI SSC) was formed as a joint venture between American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa. The PCI SSC s goal is to facilitate the broad adoption of consistent data security measures and is responsible for the development, management, education and awareness of the PCI Security Standards including the PCI DSS. PCI DSS is a set of constantly evolving requirements intended to help organizations proactively protect customer account data. Any organization that processes, stores or transmits cardholder data is required to comply with PCI DSS. That means even if you process one transaction, you must be PCI compliant. Failure to do so may result in fines and the loss of a merchant s license to accept card payments. The standard is organized into six governing principles that contain a total of twelve requirements. Figure 1 illustrates these requirements.
Paymetric White Paper Tokenization Amplified XiIntercept 4 Principle Build and Maintain a Secure Network Protect Cardholder Data Maintain a Vulnerability Management Program Requirement 1. Install and maintain a firewall configuration 2. Do not use vendor-supplied defaults for system passwords 3. Protect stored cardholder data 4. Encrypt transmission of cardholder data 5. Use and regularly update anti-virus software 6. Develop and maintain secure systems and applications 7. Restrict access to data by business need-to-know Implement Strong Access Control Measures 8. Assign a unique ID to each person with computer access 9. Restrict physical access to cardholder data Regularly Monitor and Test Networks Maintain an Information Security Policy 10. Track and monitor all access to network resources and card data 11. Regularly test security systems and processes 12. Maintain a policy that addresses information security Figure 1: The Payment Card Industry Data Security Standards All PCI DSS eligible organizations are required to certify compliance on an annual basis, but that doesn t mean merchants should think about PCI DSS simply as a point-intime validation. Compliance with PCI DSS should become part of a company s overall security strategy and requires constant attention. The requirements outlined by the PCI DSS are sound guidelines but they can be quite onerous to achieve. Companies are increasingly looking for ways to outsource all or some of their payment card processing components to PCI compliant vendors in an effort to limit the scope of these requirements and the associated cost and effort that comes with maintaining them. The PCI Audit Process PCI audit process was designed to assist merchants in validating their compliance with the PCI DSS. Depending upon the individual company s electronic payment acceptance environment, the way in which PCI DSS validation is handled will differ. Any system or component of that system that is related to authorization and settlement of cardholder data is in scope for compliance validation procedures 1. 1 https://www.pcisecuritystandards.org/pdfs/pci_audit_procedures_v1-1.pdf
Paymetric White Paper Tokenization Amplified XiIntercept 5 Figure 2: Systems in Scope for On-Site Audit Merchants that process more than six million transactions per year must complete an on-site audit annually performed by a third party Quality Security Assessor (QSA). Any systems or their associated components involved in the processing, storage or transmission of cardholder data are considered in scope for the PCI DSS audit. Examples of Systems in Scope for an On-site Audit: All external connections into the merchant network (e.g., employee remote access, payment card company, third party access for processing and maintenance) All connections to and from the authorization and settlement environment (e.g., connections for employee access or for devices such as firewalls and routers) Any data repositories outside of the authorization and settlement environment where more than 500,000 account numbers are stored. Even if some data repositories or systems are excluded from the audit, the merchant is still responsible for ensuring that all systems that store, process or transmit cardholder data are compliant with PCI DSS A POS environment the place where a transaction is accepted at a merchant location (retail store, restaurant, hotel property, gas station, supermarket or other POS location) If there is no external access to the merchant location (by Internet, wireless, virtual private network (VPN), dial-in, broadband or publicly accessible machines such as kiosks), the POS environment may be excluded Companies that process less than six million transactions per year, Level 2 through 4, have the opportunity to self-assess their compliance with the PCI DSS. These merchants are eligible to complete a self-assessment questionnaire (SAQ) and the appropriate attestation document that is provided to the acquirer to validate PCI compliance. There are five SAQ validation types based on how the merchant accepts electronic payments. SAQ A is least invasive and only contains 13 questions, while SAQ D is most invasive requiring 288 items be validated. SAQ Validitaion Type 1 SAQ Validation Type, Description & SAQ Card-not-present (e-commerce or mail/telephone-order) merchants, all cardholder data functions outsourced. This would never apply to face-to-face merchants SAQ A 2 Imprint-only merchants with no electronic cardholder data storage B 3 4 5 Merchants using only web-based virtual terminals, no electronic cardholder data storage Merchants with payment application systems connected to the Internet, no electronic cardholder data storage All other merchants (not included in Types 1-4 above) and all service providers defined by a payment brand as eligible to complete an SAQ C-VT C D Figure 3: SAQ Validation Categories
Paymetric White Paper Tokenization Amplified XiIntercept 6 PCI DSS Scope Because, the scope of the PCI DSS requirements can be so large and complicated, companies are constantly searching for ways to reduce and even eliminate it. The great news is that there are multiple ways businesses can potentially reduce the size of their PCI DSS scope. Consolidation: Identifying and eliminating redundant data sets and consolidating applications and information storage can reduce scope Centralization: Encrypted data is stored in a highly secure on-site central data vault. The payment card numbers are replaced with tokens in other applications or databases. Since cardholder data is only stored in one central location, PCI DSS Scope is minimized All of the techniques outlined above are sound ways to reduce PCI DSS scope. Depending on the individual company s payment acceptance environment, some of these may or may not be appropriate strategies. For instance, E2EE/P2PE is a great technology, but it is highly POS-centric. In card-not-present (CNP) environments, E2EE/ P2PE is difficult to achieve because card numbers must be manually entered into merchant systems and applications. If a merchant were to have both card present and CNP payment acceptance landscapes, E2EE/P2PE and tokenization are a great tandem solution. But it s important to understand that with centralization, card numbers are still stored on site, minimizing the scope of PCI Requirement 3, but not eliminating it. End-To-End Encryption (E2EE) or Point-To-Point Encryption (P2PE): Ensures that card numbers are encrypted from first card swipe at the point-of-sale, and while in transit all the way to the payment processor and eliminates most PCI requirements. Outsourcing: Outsourcing all or some of your payment card processing capabilities to a PCI DSS compliant service provider can reduce PCI scope. This is especially relevant to companies conducting ecommerce transactions only. Tokenization: Stores card numbers in an off-site highly secure data vault. The payment card numbers are replaced with tokens in all other databases and applications. Not storing cardholder data anywhere greatly simplifies the scope of PCI Requirement 3.
Paymetric White Paper Tokenization Amplified XiIntercept 7 Tokenization and the Reduction of Scope from PCI Requirement 3 The PCI DSS scope reduction technique that works best for most CNP merchants is a combination of the outsourcing and tokenization techniques described above. Tokenization is a solution that affords businesses the opportunity to eliminate the storage and/or transmission of cardholder data in enterprise systems and applications. Implementing tokenization can make reaching compliance much easier than replacing an existing application with a PA-DSScompliant one, according to a Verizon Business report 2. Because tokenization is delivered on-demand, it is extremely affordable when compared to the investment businesses would have to make in costly encryption solutions. According to a Gartner research study, more than 25 percent of Gartner clients have already adopted payment card tokenization to reduce the scope of their PCI assessments, and three out of four clients calling about PCI, inquire about tokenization. 3 Tokenization works by intercepting cardholder data entered into enterprise systems or applications and replacing it with a surrogate value known as a token. A token is a unique ID created to reference the original data. The original data is encrypted and stored off-site in a secure data vault with reference to the token. The merchant no longer possesses sensitive cardholder data and the token can be passed throughout the enterprise to meet the demands of customer interactions and support analytics without disruption of day-to-day business activities. In the event of a data security breach, tokens can t be reverse engineered to retrieve the original number, and are thus useless to thieves. Tokenization not only protects businesses from a data security breach, but also helps reduce the scope of PCI compliance, particularly Requirement 3. PCI Requirement 3 mandates the protection of stored cardholder data. Prior to the advent of tokenization, most companies leveraged encryption solutions to protect stored cardholder data. However, merchants increasingly understand the cost and risk advantages associated with not storing data at all and they get the added benefit of limiting PCI compliance scope. If a tokenization solution is not utilized, merchants are forced to deploy costly encryption solutions to protect stored cardholder data. Encryption and key management technology must be implemented on each system where the numbers are stored. As the data passes between system components, it must go through the dreaded, encrypt, decrypt, re-encrypt process because keys cannot be shared. This method exposes the raw card number in transit, increasing risk. When companies utilize encryption, their systems remain in scope for the PCI DSS because encrypted cardholder data is still considered cardholder data a more costly and time-consuming scenario. In addition, because encryption technology is key-based, if a breach were to occur, it is feasible that the criminal could get access to each and every payment card number stored in that system. Not only would that be costly to deal with, but also extremely damaging to a brand. The bottom line is that encryption solutions still leave systems vulnerable to attack. With tokenization deployed, sensitive cardholder data is neither transmitted nor stored. Tokens can be easily passed from one system to another, never exposing raw data in transit. Because you only store tokens, the risk of a data security breach is greatly reduced and you are removed entirely from the scope of PCI Requirement 3, saving you time and money. 2 Verizon 2014 PCI Compliance Report 3 Choosing a Tokenization Vendor for PCI Compliance, Gartner Avivah Litan
Paymetric White Paper Tokenization Amplified XiIntercept 8 CSR Takes Web Store Authorization Encrypted Merchant SAP Sales & Distribution CRM Finance Authorization Processor Issuing Bank Settlement Figure 4: Before Tokenization Tokenization Amplified Introducing XiIntercept, The Ultimate Scope Reduction Mechanism One of the largest drivers for the adoption of tokenization solutions to protect stored cardholder data has been PCI scope reduction. Many firms have leveraged tokenization to eliminate the scope of PCI Requirement 3. However, as it becomes more challenging to maintain compliance with PCI DSS, merchants are looking for ways to further reduce the scope of PCI compliance. The great news is that now they can. Paymetric has developed XiIntercept, a data intercept technology that captures the card number as early in the workflow as possible to reduce or even eliminate the merchant s PCI footprint. How does it work? Sensitive information is intercepted and tokenized at the time of entry. This secure token is then provided to the merchant for storage and use in authorization and settlement. Raw data never enters the merchant system or application. XiIntercept solutions offer the ultimate breach protection, while dramatically reducing the cost and effort to achieve PCI compliance.
Paymetric White Paper Tokenization Amplified XiIntercept 9 Authorization CSR Takes Web Store Token Merchant ERP Sales & Distribution CRM Tokenization Finance Authorization Settlement Figure 5: After Tokenization According to Gartner Group, the cost to roll out encryption solutions is $6 per customer record. For a company with 100,000 records, that means they would spend $600,000. The most attractive advantage of XiIntercept is that if properly architected, merchants may be able to qualify for PCI SAQ-C, which means their annual audit would be reduced from 288 validation questions down to just 80.
Paymetric White Paper Tokenization Amplified XiIntercept 10 From the world s largest corporations to small Internet stores, compliance with the PCI DSS is vital for all merchants who accept credit cards, online or offline, because nothing is more important than keeping your customers payment card data secure. PCI Security Standards Council XiIntercept for ecommerce When a cardholder enters sensitive information through a merchant s web store, the raw data is transparently intercepted in the cardholder s browser, and is actually entered into fields managed by Paymetric. A token is generated and routed to the merchant s server for authorization and settlement. The process is entirely transparent to the cardholder. The merchant never transmits, processes or stores the raw data, but instead only handles and stores the token. XiIntercept is a solution that allows merchants to process electronic payments without ever having to touch the actual card number. When a customer places an order with the merchant, the raw card number is sent to Paymetric who tokenizes the card number and returns the token to the merchant. The merchant submits the token to Paymetric to obtain authorization for electronic payments without ever having to handle the raw card number. All of this is done without any change to the customer s experience. Customer Processor Merchant Figure 6: XiIntercept Solutions Payment Processing Without Merchant Touching the Card
Paymetric White Paper Tokenization Amplified XiIntercept 11 XiIntercept for ERP When taking a payment, a merchant accesses the XiIntercept solution via an integrated web browser popup that instantly generates a token for the cardholder s data. This token automatically passed to the enterprise payment acceptance system for authorization and settlement. The merchant never transmits, processes or stores the raw data, but instead stores only the token. XiIntercept Stand-Alone When taking a payment, a merchant accesses the XiIntercept solution via a web browser that instantly generates a token for the cardholder s data. This token flows through the enterprise payment acceptance system for authorization and settlement. The merchant never transmits, processes or stores the raw data, but instead stores only the token. Client Browser (B2B or B2C) Client places order on Merchant s Web store Client goes to checkout Client fills in cardholder data in Paymetric fields and submits Client Places Merchant Web Store Checkout Checkout Checkout Merchant s Systems SAP Gateway Data Intercept Processor Issuing Bank Figure 7: XiIntercept for ecommerce
Paymetric White Paper Tokenization Amplified XiIntercept 12 Benefits of XiIntercept Prevents sensitive cardholder data from entering merchants enterprise payment acceptance systems Substitutes credit card numbers with tokens, rendering the data useless to thieves Minimizes the likelihood of fees, fines and legal costs associated with a data breach Reduces scope and cost of achieving and maintaining PCI compliance Conclusions Merchants are becoming increasingly interested in solutions that reduce or eliminate PCI DSS scope. For years, tokenization has been used to eliminate the business from the scope of PCI Requirement 3. XiIntercept solutions are a natural evolution of tokenization technology that can help forward-thinking businesses further reduce PCI DSS audit scope and even qualify to reduce the number of compliance requirements. May qualify merchants for Self Assessment Questionnaire C (SAQ-C), reducing the number of compliance requirements from 288 to 80 Customer CSR SAP Sales & Distribution Merchant s Systems Delivery Invoicing Finance GL Posting Comms PAS Adapter Processor Settlement GL Posting Manual Settlement Deposit Issuing Bank Issuing Bank Figure 8: XiIntercept Stand-Alone
About Paymetric Paymetric, Inc. is the standard in secure, integrated payments. Our innovative payment acceptance solutions expedite and secure the order-to-cash process, improve epayment acceptance rates, and reduce the scope and financial burden of PCI compliance. Leading global brands rely on Paymetric for the only fully integrated, processoragnostic tokenization solution, supported by dedicated customer service. Paymetric is a nationally award-winning industry leader recognized for continual innovation, SAP partnership and world-class support since 1998. For more information, visit paymetric.com. 2014 Paymetric, Inc. All rights reserved. The names of third parties and their products referred to herein may be trademarks or registered trademarks of such third parties. All information provided herein is provided AS-IS without any warranty. 1225 Northmeadow Pkwy Suite 110 Roswell, GA 30076 T: 678.242.5281 F: 866.224.5867 paymetric.com