It’s crucial for consumers to protect their own personal information, but on the other side of the coin, what are retailers doing to help ensure credit and debit transactions are secure? In 2005, VISA International, MasterCard International Inc., American Express Co., Discover Financial Services LLC and JCB banded together to draft the Payment Card Industry (PCI) Data Security Standard (DSS), a mandate for merchants to protect customer account data at various points during the payment process. PCI-DSS is not a law or set of government regulations. Instead, it is an industry standard that retailers and payment card service providers must meet in order to stay compliant with their payment card company contracts.

As of September 30, 2007, all Level 1 merchants, those with more than six million credit card transactions annually, were required to meet PCI standards. The next big deadline is December 31, 2007, when Level 2 merchants, those with 1 to 6 million credit card transactions annually, must comply. However, a lot of companies (more than half of large, affected retailers) still do not adhere to PCI's best practices.

This article will explain how companies can best meet PCI-DSS standards, and make credit card payments more secure and worry-free for consumers.

Money, money, money

Never underestimate the dangers involved in paying by credit card -- for consumers, retailers and service providers alike. A simple act of buying a new pair of shoes can turn awry before your very eyes. For example, in one of the largest hacking cases reported, thieves who accessed shoe retailer Designer Shoe Warehouse's (DSW) database in 2005 obtained 1.5 million credit card numbers, debit card numbers, checking account numbers, and driver's license numbers, leading to a flurry of law suits.

High-profile cases such as this drew a greater focus on cardholder data protection and network access control, thus leading to the development of PCI-DSS, which encompasses “12 commandments,” or requirements, designed to tighten data security. These guidelines include everything from installing firewalls to monitoring all network access to cardholder information. Those companies that refuse to meet PCI-DSS standards may face some hefty fines and loss of interchange rates from the participating credit card companies.

In 2006 alone, VISA filed claims totaling $4.6 million against retailers who failed to comply with the standard, an increase of around 35 percent from the previous year. The individual fees and fines themselves are hefty, ranging from $50,000 for each day that a retailer fails to comply with the guidelines, up to $500,000 for cases of data theft. If the fines are not enough to force compliance, then three little letters may also serve as motivation -- T-J-X! The TJX data breach resulted in the loss or theft of more than 45 million credit and debit card numbers over an 18-month period. Investigators found the company had not encrypted customer data, a key component of the PCI standards. Retailers do not want to be the next poster child for failing to protect its customers, and class action litigation and government regulations can potentially bankrupt a company that exposes cardholder data to hackers or identity thieves.