From card swipes to contactless cards, digital wallets, and instant peer-to-peer transfers, fintechs really upscaled from secure payment gateways to established digital-only banks. 24/7 Global accessibility, transparent fee structures, and AI-driven advisory services have heightened the appeal of banking-at-your-convenience. Elevating fintechs to an ‘equal and better’ alternative to traditional brick-and-mortar banks.
With all these neat upgrades, consumers and regulators are looking at fintechs for responsible innovation. RBI has been redrawing the regulatory perimeter to be more inclusive toward the evolving fintech solutions, potentially blurring boundaries between traditional financial services and fintech solutions.
Layers of Compliance
Adhering to regulations is crucial, and there are additional motivations for fintechs to comply:
1. Building trust.
– Establishing credibility and trust is crucial for any finance-related company, and adherence to regulations plays a key role in achieving this.
2. A level playing field for the industry players.
– When companies in the same industry face identical requirements, it fosters fair competition.
3. Regulatory compliance facilitates fintech expansion.
– This involves introducing new products and services, obtaining a full banking license, or venturing into new countries.
Noncompliance entails various repercussions, ranging from tarnishing of the company’s reputation, and hefty fines to losing the ability to accept payment cards.
Presently, we have broadly two types of tech compliance regulations –
- Payment Card Industry-Data Security Standard (‘PCI-DSS’)
- Payment Application-Data Security Standard (‘PA-DSS’)
Payment Card Industry-Data Security Standard (‘PCI-DSS’)
A mandated set of security standards ensuring that businesses handling credit card information should maintain a secure environment. Administered by the Payment Card Industry Security Standards Council, PCI-DSS compliance is both a technical necessity and a legal requirement.
Payment Application-Data Security Standard (‘PA-DSS’)
PA-DSS helps software vendors develop secure payment applications for credit card transactions. This regulation ensures that companies do not store prohibited data, such as the security PIN, magnetic strip, or CVV.
Levels of PCI DSS Compliance
Three different forms of documentation are required based on transaction volume. The Self-Assessment Questionnaire (SAQ) is for organizations with fewer transactions, the Attestation of Compliance (AOC) is for moderate volume, and the Report on Compliance (ROC) is for organizations with the most transactions.
For example, consider VISA’s PCI levels:
■ Level 4: SAQ – Fewer than 20,000 transactions per year
■ Level 3: SAQ and AOC – 20,000 to one million transactions per year
■ Level 2: SAQ and AOC – One to six million transactions per year
■ Level 1: ROC and AOC – Over six million transactions per year
PCI DSS Requirements
With 300 security controls in PCI, it’s crucial to identify the ones relevant to your business. To maintain a secure system, for managing card-holder data, the PCI Security Standards Council – consisting of Visa, Mastercard, JCB, Discover, and American Express – outlined 12 primary requirements merchants must meet to be compliant:
Challenges of PCI DSS Compliance
Improper Segmentation and Scope
A common slip-up among fintech companies is the absence of network segmentation when building new functionalities, i.e., to separate the cardholder data zone from the rest of their data setup.
If a company doesn’t keep its cardholder data separate from the rest of its system, it’s risking unauthorized access to the sensitive card data.
Best Practice – Meticulously plan and document all in-scope areas of your cardholder data environment. Any system impacting the security of this environment is deemed in-scope and should be appropriately identified, particularly in your subnetworks. Any subnetworks without access to cardholder data should be isolated. In-scope systems include antivirus, patch management, monitoring servers, and administrative workstations.
Oversight in Modifying Vendor Defaults
Never use vendor-supplied defaults for system passwords or other security parameters. One of the most common mistakes is forgetting to change the vendor-set default passwords. This applies, such as when deploying virtual machines, which come with vendor-supplied defaults and might be missed during audits. These are particularly weakly set and can lead to unidentified and unauthorized access.
Accurately Completing Self-Assessment Questionnaires
If you’re not undergoing an audit, you’re likely to complete a Self Assessment Questionnaire (SAQ). A significant compliance hurdle is when your organization fills out the wrong SAQ. Many organizations make the mistake of assuming they meet certain criteria when they actually don’t, leading to incorrect information being provided in the questionnaire.
Building PCI DSS Compliance on AWS for Small Businesses
Start Small and Securely: Begin your AWS journey with a focus on security. Utilize AWS’s well-architected framework to set up a secure base environment.
Implement Strong Access Controls: Leverage AWS Identity and Access Management (IAM) to strictly control access to AWS services and resources.
Encrypt Sensitive Data: Employ AWS encryption services to protect data at rest and in transit, which is a core requirement of PCI DSS.
Regular Monitoring and Logging: Use Amazon CloudWatch and AWS CloudTrail to monitor your AWS resources and maintain audit trails, ensuring visibility and traceability.
Scaling PCI DSS Strategies for Mid-Sized Enterprises
Complex Access Management: Integrate AWS IAM with your enterprise identity systems for more granular control.
Enhanced Data Encryption and Key Management: Make use of AWS Key Management Service (KMS) and AWS CloudHSM for robust key management and encryption practices.
Automated Compliance Monitoring: Implement AWS Config and AWS Security Hub for continuous monitoring, helping identify and rectify compliance drifts.
Advanced Network Security: Deploy sophisticated network configurations using AWS Virtual Private Cloud (VPC), Network Access Control Lists (NACLs), and AWS Web Application Firewall (WAF) for additional layers of security.
Comprehensive Compliance for Large Enterprises
Multi-Account AWS Management: Utilize AWS Organizations for better governance, compliance, and resource management across multiple AWS accounts.
Enterprise-Level Security Architectures: Construct advanced security architectures that cater to the diverse needs of large organizations.
Robust Incident Response and Recovery: Develop a comprehensive incident response strategy using AWS tools to address potential security incidents rapidly.
Regular Compliance Audits: Regularly engage with external auditors and employ an AWS Audit Manager to stay audit-ready and compliant.
Conclusion
Adhering to PCI DSS standards on AWS is a continuous process, involving regular updates, and building a proactive approach to security and compliance. In the next blogs, we’ll guide you with tailored insights and strategies for PCI DSS compliance on AWS, addressing businesses of all sizes. Stay tuned for a closer look at specific architectures and more advanced security strategies.
Blog Pundits: Ashwani Singh and Sandeep Rawat
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