Talk to an Expert: 833-287-6722

Partner Login
Let’s Get Started!

Category: Security & Compliances

Stay informed on PCI compliance, data protection, and fraud prevention best practices to keep your business and customers secure.

  • Navigating PCI Compliance in 2025: What Merchants and Payment Providers Need to Know

    Navigating PCI Compliance in 2025: What Merchants and Payment Providers Need to Know

    Reading Time: 4 minutes

    As our payment technology landscape evolves, so do the tactics of today’s threat actors. For merchants and service providers, protecting consumers from credit card fraud is a moving target. We’re taking a look at the evolution of payment card industry (PCI) compliance standards, including the newest requirements that went into effect in March 2025.

    What is PCI compliance?

    In 2004, with eCommerce and credit card fraud reaching disruptive levels, five major payment card brands – American Express, Discover Financial Services, JCB International, MasterCard and Visa – came together to form the PCI Security Standards Council. They developed the Payment Card Industry Data Security Standard (PCI DSS) with the goal of creating a more secure payment ecosystem. 

    While compliance doesn’t guarantee security, it provides a structured foundation to mitigate risk and protect cardholder data. Today, every business that handles, processes, stores or transmits payment card information must comply with the PCI DSS. 

    There are 12 PCI compliance requirements, organized into six categories:

    Build and maintain a secure network and systems

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

    Protect account data

    1. Protect stored account data.
    2. Protect cardholder data with strong cryptography during transmission over open, public networks.

    Maintain a vulnerability management program

    1. Protect all systems and networks from malicious software.
    2. Develop and maintain secure systems and software.

    Implement strong access control measures

    1. Restrict access to cardholder data by business need-to-know.
    2. Identify users and authenticate access to system components.
    3. Restrict physical access to cardholder data.

    Regularly monitor and test networks

    1. Log and monitor all access to system components and cardholder data.
    2. Test security of systems and networks regularly.

    Maintain an information security policy

    1. Support information security with organizational policies and programs.

    The evolution of PCI standards

    In order to stay relevant, the PCI DSS must continuously evolve. The security council periodically updates the requirements to reflect advancements in both digital payments innovation and the threat landscape. 

    Here’s a timeline of that evolution, from 2004 until today, by the Merchant Risk Council:

    December 2004: PCI DSS 1.0 is released
    September 2006: Version 1.1 adds requirements for web-facing application firewalls and professional code reviews
    October 2008: Version 1.2 introduces new antivirus and wireless network defense requirements
    August 2009: Version 1.2.1 provides clarity and consistency updates
    October 2010: Version 2.0 adds data encryption guidelines and user access restrictions
    November 2013: Version 3.0 addresses emerging security concerns, cloud technologies, and penetration testing
    April 2015: Version 3.1 offers short-term updates for upcoming 3.2 compliance
    April 2016: Version 3.2 introduces multi-factor authentication guidelines and more
    May 2018: Version 3.2.1 provides clarifications and standard requirement changes
    March 2022: Version 4.0 is released with significant updates
    March 2025: Version 4.0 is officially in effect

    Meeting PCI compliance

    Meeting PCI compliance isn’t a one-size-fits-all playbook. Businesses fall into one of four compliance levels based on annual transaction volume:

    • Level 1: More than 6 million transactions per year
    • Level 2: 1 to 6 million transactions per year
    • Level 3: 20,000 to 1 million transactions per year
    • Level 4: Fewer than 20,000 transactions per year

    For level 1-classified businesses to demonstrate compliance with the standards, they must develop an annual Report on Compliance (ROC) performed by a Qualified Security Assessor (QSA), work with an Approved Scanning Vendor (ASV) to conduct quarterly network scans, complete an Attestation of Compliance (AOC) form and perform annual penetration testing and regular internal vulnerability scans.

    Businesses that are levels 2 or 3 must complete an annual Self-Assessment Questionnaire (SAQ), an AOC form and conduct quarterly network scans by an ASV. Level 4 businesses must do the same, except they are exempt from completing the AOC form. 

    Failing to meet PCI standards can be financially devastating. Fines range from $5,000 per month for early offenses to $100,000 per month for persistent non-compliance. And, that doesn’t include the potential costs of data breaches, which also include loss of customer trust and damage to your brand reputation.

    What’s New in PCI DSS 4.0?

    PCI DSS 4.0 was introduced in March 2022, giving merchants and service providers a full two years to familiarize themselves with the changes, update reporting templates and forms and implement changes to comply with the requirements. This version addresses four main objectives – keep pace with the changing payment industry, promote continuous security, provide flexibility in maintaining payment security and improve validation methods and procedures.

    PCI DSS 4.0 marks a shift in how merchants and businesses should view and meet PCI compliance in three significant ways.

    Phased implementation

    Unlike past releases, version 4.0 introduced a phased timeline. Implementing this version’s complex technical changes, especially around encryption, authentication and software development practices, would require some significant resource planning and budgeting.

    The phased approach followed this timeline:

    • March 2024: Implementation of critical security controls
    • June 2024: Role documentation, encryption, software security and authentication controls (Phase 1)
    • September 2024: Asset inventory, TLS implementation, security assessments and logging enhancements (Phase 2)
    • December 2024: System hardening, data retention, key management and vulnerability management (Phase 3)
    • March 2025: All DSS 4.0 requirements fully implemented

    Implementation flexibility

    In years past, there was little room for interpretation in how merchants and businesses could demonstrate compliance to the PCI standards. New in version 4.0, organizations can now develop their own security controls that meet specific requirements, rather than following the prescribed methods exactly as written. 

    While an outcomes-based approach gives businesses more flexibility, it also adds more responsibility and rigor – businesses must provide significantly more documentation in order to justify their compliance to QSAs. 

    Expanded testing requirements

    PCI DSS 4.0 looks at compliance as an ongoing responsibility vs. meeting requirements at a moment in time. Instead of just regular testing at defined calendar dates, businesses must conduct more rigorous and frequent security testing, especially after any significant changes to their environment. 

    Version 4.0 also introduces targeted risk assessments for specific requirements and enhanced penetration testing of both application and network layer security. Overall, the focus is now on measuring effectiveness of measures – not just whether or not they’re in place.

    Embracing the new approach to PCI compliance

    The shift from point-in-time compliance to continuous security monitoring represents a huge change in how businesses must approach payment security. While maintaining compliance in this way may seem overwhelming, the flexibility introduced in version 4.0 acknowledges that security solutions aren’t one-size-fits-all. Aurora has a number of solutions that can help you strengthen your payment security processes.  

    Disclaimer: This guide is for informational purposes and does not constitute legal or PCI QSAC advice.

  • What Is Network Tokenization? How It Works & Why Your Business Needs It

    What Is Network Tokenization? How It Works & Why Your Business Needs It

    Reading Time: 3 minutes

    Digital payments are now the preferred choice for most consumers.In fact, only 9% of Americans use cash as their everyday, primary payment method. It’s not even an option anymore at half of all U.S. concerts and events, where only digital payments are accepted. What the majority of consumers are using in its place are debit and credit cards, which dominate the transaction landscape. 

    It’s no surprise that as usage increases, credit card fraud does too. From 2019 to 2023, digital transactions increased by 90% – while suspected digital fraud grew by 105%. That threat is even more concerning for online merchants and sellers, who have experienced a 140% increase in credit card fraud attacks over the past three years.

    Fortunately, the evolution of technology is allowing for more robust security solutions. In this post, we’ll explore network tokenization—an innovative approach to payment security that’s reshaping how businesses protect sensitive customer data while improving the overall payment experience. 

    Network tokenization vs. Traditional Tokenization

    What is Traditional Tokenization?

    Traditional tokenization is a security process that securely stores the primary account number (PAN) and other sensitive cardholder information and replaces it with a unique identifier, called a token, when a digital transaction takes place. 

    Tokenization has one very important advantage over encryption, another type of security measure. While tokens are randomly generated characters that hold no intrinsic value, encryption converts data into an unreadable format using algorithms; however, it is possible for that data to be decrypted by sophisticated hackers and stolen.

    That said, traditional tokenization has limitations. Typically, the tokens that merchants or payment processors generate are static, and because they’re static, the same token is used over time, which could create some potential security risks. Second, the tokens only protect sensitive card data within a single merchant or transaction context, so they can’t be used across merchants or companies. And third, when cards expire or are stolen, new tokens must be manually generated.

    What is Network Tokenization?

    Network tokenization varies from traditional tokenization in a few distinct ways.

    • Network tokens are issued by card networks (like Visa or Mastercard) vs. merchants or payment processors
    • Network tokens are automatically refreshed in the case of lost, stolen, or expired cards
    • Network tokens change after each use, dramatically reducing fraud risks
    • A single network token can be used across multiple merchants.

    Benefits of Network Tokenization

    Increased Security

    When compared to traditional online card transactions with PANs, token-based transactions reduce fraud by 30%. In the event of a security breach, tokenization reduces the scope of that breach by 60%. 

    Network tokens, specifically, offer even more security. When tokens are generated dynamically, or created anew for each transaction, they provide 20% more security than static encryption. 

    Reduced Declines

    Payment declines can be devastating to businesses. Consider this example: if a subscription service experiences even a 1% failure rate due to outdated card information, it could lead to significant monthly losses – up to $100,000 for a company with 1 million subscribers.

    The stakes are even higher when you consider consumer behavior. Research shows that 35% of cardholders abandon a merchant completely after experiencing a card decline. Network tokenization helps prevent both of these scenarios by ensuring payment information remains current, and is responsible for increasing approval rates by nearly 5%.

    Cost Savings and Avoidance

    Implementing network tokenization delivers a slew of financial benefits. First, it greatly reduces fraud costs – fewer fraudulent transactions mean fewer chargebacks and associated fees. It can even help to lower interchange rates. Visa’s network token can reduce interchange rates by up to 10 basis points compared to non-tokenized rates. 

    Improved Checkout and User Experience

    All consumers expect fast, seamless transactions. Network tokenization delivers this by eliminating friction points in the payment process. With network tokens, there’s no need to update payment methods or verify cards with CVV/CVC codes. This streamlined experience leads to higher customer satisfaction and increased conversion rates.

    Streamlined Recurring Payments

    For SaaS businesses and subscription-based models, network tokenization offers significant advantages when it comes to processing recurring payments. By automatically updating card information when it changes, businesses gain recurring billing stability and card lifecycle continuity.

    This means fewer interrupted subscriptions, reduced customer service inquiries about failed payments, and more predictable revenue streams.

    Reduced PCI Burden

    Because network tokens hold no intrinsic value, they enable businesses to reduce their PCI DSS compliance scope, effectively lowering both the costs and the security risks. According to one report, 90% of financial institutions consider tokenization a key strategy for compliance. 

    Implementing Network Tokenization

    Implementing network tokenization begins with choosing the right payment platform. Some solutions, like ARISE, come seamlessly integrated with network tokenization capabilities. In the case of ARISE, this can be achieved with minimal disruption. Adoption requires no development work, hardware updates, or operational downtime. 

    For merchants and SaaS companies concerned about payment security, customer experience, and operational efficiency, network tokenization is quickly becoming an essential component of a comprehensive payment strategy.

    Learn more about adopting network tokenization through our ARISE platform by reaching out to our team today. 

  • Chargeback Prevention Strategies: How to Stop Fraud and Protect Your Business

    Chargeback Prevention Strategies: How to Stop Fraud and Protect Your Business

    Reading Time: 6 minutes

    If you’ve ever had to deal with a chargeback, you know how frustrating, and costly it can be. You’re not just losing a sale. You’re facing fees, lost inventory, and the very real risk of getting labeled as high-risk by your payment processor. It feels unfair, especially when you’ve done everything right.

    Chargebacks were meant to protect customers from fraud, but more and more, they’re being used in ways that hurt businesses like yours. That’s why chargeback prevention is so important. It’s not just about fixing problems after they happen. It’s about setting up smart systems that help you avoid disputes in the first place—so you can focus on growing your business without worrying about lost revenue.

    For businesses, managing and preventing chargebacks is an ongoing challenge, and one that’s only predicted to get worse. A 2025 Davos Insights and Microsoft report projects chargebacks to increase by 24% by 2028, costing North American merchants and online companies $41.6 billion.

    The good news? Many chargebacks are avoidable. Understanding the different types of chargebacks, implementing measures to prevent them, and formalizing a plan to dispute them will help lessen their negative impact on businesses.

    What are Chargebacks?

    A chargeback occurs when a customer successfully disputes a transaction with their bank or credit card company instead of seeking a refund directly from the merchant or online business that provided the product or service. 

    Chargebacks typically fall into one of three categories: criminal fraud, merchant error, and friendly fraud. 

    Criminal Fraud

    The numbers on online fraud are hard to comprehend. In 2024, online scammers stole a record $16.6 billion – up 33% from 2023 – according to the FBI’s 2024 Internet Crime Report. The sharp rise of card-not-present (CNP) transactions is one trend worth noting, with research indicating these transactions made up 73% of all credit card payment fraud in the U.S. last year.

    What does credit card fraud look like? Today’s malicious actors are using sophisticated methods to commit fraud. Here are just a few examples.

    • Account takeover fraud: accounts are compromised and used to make purchases
    • Identity theft: criminals pose as genuine customers
    • Card testing fraud: purchases are made to verify stolen card details 
    • Synthetic identity fraud: purchases are made under new identities created with both fake and real information
    • Clean fraud: stolen cards are used and the transactions are undetected by fraud prevention tools
    • Triangulation fraud: real customers make a purchase from a third-party marketplace, like eBay or Amazon, but the seller purchases the product from another merchant

    These criminal activities lead to legitimate chargebacks when cardholders discover unauthorized charges on their accounts, or, in the case of triangulation fraud, when a fraudulent product arrives.

    Merchant Error

    Chargebacks can result from a myriad of issues within the merchant’s own operations. These can be actual mistakes made by the merchant or business, or practices that lead to customers receiving damaged products or the wrong ones altogether. Here are some of the more common examples of merchant error.

    • Processing duplicate transactions for one order
    • Sending orders to incorrect addresses
    • Processing transactions without proper credit card authorization
    • Charging the wrong amount during payment
    • Shipping delays or tracking mixups
    • Shipping wrong or defective items
    • Publishing inaccurate product descriptions

    These errors are often the most preventable causes of chargebacks.

    Friendly Fraud

    The most challenging chargebacks to prevent occur as a result of friendly fraud, where customers accidentally or intentionally dispute transactions they made. Unfortunately, it’s also the most common – Visa reports that friendly fraud now accounts for up to 75% of all chargebacks.

    Here are some common reasons that lead consumers to dispute charges with their bank or credit card companies vs. directly with merchants.

    • Billing descriptors on statements are unclear
    • Purchases are made by family members without the cardholder’s knowledge
    • Customers forget about a recurring subscription or are unclear about its terms
    • Customers falsely claim dissatisfaction after fully using a product
    • Customers sign up for free trials with no intention of paying for the service
    • Customers use buyer’s remorse as an excuse for a refund

    H4: It’s worth elaborating on return fraud. According to the NRF and Happy Returns 2024 Consumer Returns in the Retail Industry, 13.5% of all returns – worth $101 billion – were cases of return fraud last year.

    Chargeback Prevention Strategies

    The good news is that many chargebacks are preventable with the right approach. Here are some strategies for merchants and businesses to consider.

    Authenticate Customers

    Strong customer authentication methods ensure that the person making the purchase is the legitimate cardholder. Some considerations include 3D Secure 2.0, two-factor authentication, Address Verification Service (AVS) verification, Card Verification Value (CVV) verification, device fingerprinting, and behavioral biometrics. While these methods add layers of security, it’s important to ensure they don’t significantly impact the customer experience. 

    Adopt Technology Tools

    Depending on needs, transaction complexity, and budget, businesses can implement specific tools or a full suite of solutions to provide a layer of protection. Aurora Security’s comprehensive security solutions are an example. These tools can be adopted individually or as needed to provide real-time chargeback alerts, instant refunds to resolve issues before chargebacks are filed, and even digital receipts and financial support in the event of disputes.

    Confirm Orders

    A formal order confirmation process can prevent many chargebacks. This can be as simple as a detailed email that clearly specifies what the customer has purchased and when it’s expected to be delivered and follow up emails with shipping notifications and confirmation of delivery. This communication trail reduces customer confusion – and serves as valuable evidence should a dispute arise.

    Ensure Digital Payment Security

    Adopting the latest card security practices helps prevent unauthorized transactions. One example of this is network tokenization, which replaces sensitive card data with a unique identification token. It’s just one of the security features built into the ARISE Payment platform.  Other measures worth implementing include maintaining strict PCI DSS compliance, utilizing end-to-end encryption, implementing fraud screening rules, and enabling velocity checks to detect unusual patterns, such as multiple purchases in rapid succession from a single account.

    Manage Shipping Expectations

    The more information businesses can provide to customers during the fulfillment process, the better. Best practices include providing realistic delivery timeframes, using tracking numbers to monitor progress, communicating delays, requiring signature confirmation for high-value items, and maintaining accurate inventory management to ensure you’re not selling products that are out of stock. When customers know when to expect their purchase, they’re less likely to file chargebacks out of frustration or confusion about order status.

    Obtain Proof of Receipt

    Documentation is your best defense against friendly fraud as it provides essential evidence in the event of a dispute. Beyond requiring signatures for valuable items, consider photographing packaged items before shipping to document condition and contents, especially for fragile or valuable products. Merchants can also consider using delivery services with proof-of-delivery options.

    Optimize Billing Descriptors

    Confusing or unrecognizable billing descriptors were the leading cause of chargebacks, according to the 2024 Cardholder Dispute Index. Ensure it identifies your business in a recognizable way, matching your store name or website rather than a corporate entity name. Some other best practices include providing contact information to allow customers to inquire about charges, keeping your descriptors consistent across all channels, and including a brief purchase description to help customers recognize the charge.

    Make Your Return, Refund and Cancellation Policies Clear

    Transparent policies help set appropriate customer expectations. Make them easy to understand to eliminate any potential for misunderstanding, and include them prominently on the website and within all order communications. Some merchants also require customers to acknowledge the policies by checking a box during the online checkout process as well. When customers understand your policies before purchasing, it makes it more likely that they initiate a refund directly through approved channels rather than filing chargebacks.

    Be Accessible to Customers

    Don’t underestimate the value of great customer service. Oftentimes customers request refunds from their bank or credit card company only after being unable to get their issue resolved with a merchant or business. Offer multiple contact channels including phone, email, and online chat to accommodate different customer preferences, provide 24/7 online support, and respond to customer inquiries promptly. 

    Cancel Recurring Transactions Promptly

    We’ve all been frustrated at one time or another while trying to cancel a subscription. Making it difficult to do so can force customers’ hands to file chargebacks – and ensure they never buy your product or service again. Subscription-based businesses should process cancellations – and document doing so – immediately upon request, rather than waiting until the end of a billing cycle. This can help preserve your brand reputation and leave the door open to future business.

    Post-Chargeback Action Plan

    Despite all of these prevention efforts, some chargebacks are inevitable. When they occur, merchants and online businesses typically have 7-10 days to respond. To dispute a chargeback effectively, follow this four-step process.

    1. Review the chargeback reason code
    2. Gather relevant evidence specific to that reason code, which might include transaction receipts and invoices, delivery confirmation or proof of service, customer communication records, agreed-upon terms and conditions, and the IP address and device information
    3. Write a rebuttal letter that clearly addresses the specific dispute reason
    4. Submit all documents through your payment processor’s portal before the deadline, as late submissions are often automatically rejected

    Chargebacks represent a significant threat to businesses. Merchants must navigate the complex dispute resolution procedures, potentially face financial penalties, and manage the administrative burden of responding to chargeback claims. However, with a comprehensive prevention strategy and a clear action plan for when disputes arise, merchants can be ready to face the challenge head on.