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Four reasons why some big retailers are still not PCI-compliant

The deadline for compliance was Oct. 1

October 1, 2007 12:00 PM ET

Computerworld - Starting today, big retailers accepting payment card transactions face fines ranging from $5,000 to $25,000 a month if they don't comply with the Payment Card Industry (PCI) data security standard mandated by the major credit card companies.

Under the PCI standard, all companies accepting payment cards are required to implement a set of 12 security controls for protecting card holder data. The controls include ones related to access control and authentication, data encryption, and transaction logging.

About 325 Tier 1 merchants, those defined as processing more than 6 million card transactions a year, had until Sept. 30 to show they had implemented all of the required controls. But according to estimates from analyst firm Gartner Inc. and observers in the payment industry, a good half of them are unlikely to have made the deadline for a variety of reasons.

Here are four of the likeliest reasons:

The time and money required to implement PCI controls on legacy systems

Large companies with highly distributed, older computing environments are having an especially hard time applying the security controls mandated by PCI, said Amer Deeba, chief marketing officer and vice president of product marketing at Qualys Inc., a Redwood Shores, Calif.-based vendor of IT security systems. "Many of the big [retailers] are handling credit card information from all around the world and storing it in legacy systems that are no longer being supported or updated" by software vendors, he said.

Applying the needed security updates and patches in such an environment without breaking functionality can be a huge challenge -- especially given the near continuous uptime requirements of such systems, said Sean Smith, technology director at Steak N Shake Co., an Indianapolis-based restaurant chain. Steak N Shake, a Tier 1 vendor, has turned in its compliance reports "with all areas being marked as sufficient" for compliance, Smith said. But getting to that point involved a large-scale, yearlong effort that included adding new security controls such as file integrity monitoring and event log capturing to a "very legacy environment," he said.

A proper security upgrade in distributed legacy environments would require millions of dollars in system upgrades and months of dedicated manpower, said Avivah Litan, an analyst at Gartner Inc. "As a result, retailers in these positions are basically being forced to apply Band-Aids to patch the problems while having to juggle lots of priorities and competing interests as they do so," she said. "The effort is far from straightforward."

Differing interpretations of compliance by auditors

A company may think it has implemented all of the recommended controls under the PCI standard and discover that it is still not compliant when assessed because of the way different auditors assess compliance, said Jay White, global information protection architect at Chevron Corp. "The biggest challenge with PCI is that you are at the mercy of the auditors and their skill set," White said. With some auditors, he said, "everything becomes black and white. It's either on or it's off," whereas what might be needed is a more nuanced view of the controls a company has in place.

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