Whether your app is a full-fledged fintech app like PayPal or a media streaming app like Netflix that asks users to pay in-app for subscriptions, there is one thing you cannot afford to miss: PCI DSS Compliance. A failure to adhere to PCI security standards that leads to a data breach can result in devastating financial consequences such as fees, fines, and even loss of business.
This article encompasses all the basics of PCI compliance mobile app development for fintech to help you move in the right development direction.
What is PCI DSS Compliance?
The PCI Payment Card Industry Data Security Standard (PCI DSS) is a heavily prescriptive technical standard directed at protecting credit and debit card details, referred to in the industry as ‘cardholder data’. The aim of PCI DSS is to prevent fraud in terms of payment cards by securing cardholders’ data inside organizations that accept card payments.
Understanding Cardholder Data
Cardholder data encompasses information that is processed, printed, stored, or transmitted on payment cards, including:
- Primary Account Number (PAN)
- Cardholder Name
- Expiration Date
- Service Code
Additionally, Sensitive Authentication Data includes:
- Full track data (magnetic stripe or chip equivalent)
- CAV2/CVC2/CVV2/CID
- PINs/PIN blocks
Critical Rule: Sensitive authentication data must never be stored after authorization, even if encrypted.
Why is PCI Compliance Critical for Fintech Apps?
A fintech app business which is PCI compliant is legally prepared to work around users’ card details for their processes. Fintech companies which are not PCI compliant are not allowed to work around cardholders’ sensitive data and can face severe financial consequences like fees, fines, and even loss of business.
Consequences of Non-Compliance
- Monthly fines: $5,000 to $100,000
- Data breach costs: Average of $5.9 million in the financial sector
- Loss of payment processing ability: Card brands may terminate merchant accounts
- Legal liability: Lawsuits from affected customers
- Reputation damage: Long-term loss of customer trust
Consequences such as these make PCI compliance software development for fintech apps an absolute must-have.
PCI Compliance Centers Around IT Services
PCI compliance centers around Information Technology services. IT-directed compliance managers who are assigned with the purpose of achieving compliance inside organizations should have the required software developer experience and knowledge to ensure that the PCI compliance mobile app development process meets the PCI DSS requirements checklist.
The PCI DSS Requirements that Affect Fintech App Development
Most of the PCI DSS requirements that affect the fintech app development process fall under Requirements 3, 4, and 6. These requirements cover the storage of cardholder data, encryption practices, access control, and network security. Let’s look into all three of them individually to get a complete understanding of PCI scope guidance.
PCI Development Requirement 3: Protect Stored Cardholder Data
The cardholder’s data denotes information which is processed, printed, stored, or transmitted on payment cards. Fintech apps that take in card payments are bound to protect this data and prohibit unauthorized access, irrespective of whether the data is printed on the card or stored within the chip.
Key Requirements for Requirement 3:
Data Storage Minimization:
- Store only the cardholder data necessary for business, legal, or regulatory purposes
- Data storage and retention time should be limited according to legal and business purposes, as documented in the data retention policy
- All unnecessary data should be purged at least every quarter
Sensitive Authentication Data:
- Sensitive authentication data must not be stored after authorization, even if encrypted
- Issuers may store authentication data only if there is a viable business justification and the data is stored securely
PAN Protection:
- PAN should be masked when displayed – only the first six or last four digits should be shown
- PAN must be rendered unreadable wherever it is stored, including digital media, logs, backup media, and data received from wireless networks
Technology Solutions for Data Protection:
At Taction, we implement several robust technology solutions for protecting cardholder data:
- Strong one-way hash function of the complete PAN
- Truncation (hashing cannot be used to replace the truncated segment of PAN)
- Index tokens and pads (pads must be securely stored)
- Strong cryptography with associated key-management processes and procedures
The minimum account information that must be rendered unreadable includes the PAN. If PAN is stored with other elements of cardholder data, then, as per our recommendation, that data should also be rendered unreadable.
PCI Development Requirement 4: Encrypt the Transmission of Cardholder Data Across Public, Open Networks
This requirement mandates that all cardholder data transmitted over open, public networks must be encrypted using strong cryptography and security protocols.
Key Requirements for Requirement 4:
Strong Cryptography for Transmission:
- Use TLS 1.2 or higher for all data transmission
- Never send unencrypted PANs via end-user messaging technologies (email, instant messaging, SMS, etc.)
- Implement certificate pinning in mobile applications
Examples of Public Networks:
- The Internet
- Wireless technologies (802.11, Bluetooth)
- Cellular technologies (GSM, CDMA, GPRS)
- Satellite communications
Mobile App Specific Considerations:
- Implement SSL/TLS certificate pinning to prevent man-in-the-middle attacks
- Use secure connections for all backend communications
- Never allow cleartext traffic
- Validate SSL certificates properly
- Encrypt sensitive data before transmission
PCI Development Requirement 6: Develop and Maintain Secure Systems and Applications
Requirement 6 is perhaps the most extensive for fintech app developers, covering secure development practices, vulnerability management, and change control procedures.
Key Requirements for Requirement 6:
6.1 Software Asset Register:
Compliance with Requirement 6.1 calls for a properly documented software asset register of libraries and tools used in the software development cycle. Every item inside the software asset register should include:
- Version number
- How and where the software is used
- Clear explanation of the function they provide
Since software libraries and tools are updated frequently, it is of prime importance that the register is reviewed continuously and kept up to date.
6.2 Protection from Known Vulnerabilities:
- Establish a process to identify security vulnerabilities
- Assign a risk ranking to newly discovered security vulnerabilities
- Address critical security patches within one month of release
- Install all applicable vendor-supplied security patches within appropriate timeframe
6.3 Secure Application Development:
- Develop all software securely based on industry standards and best practices
- Incorporate information security throughout the software development lifecycle
- Train developers at least annually in secure coding techniques
- Review custom code prior to release to identify potential coding vulnerabilities
6.4 Change Control Procedures:
- Separate development, test, and production environments
- Implement separation of duties between development, test, and production environments
- Remove test data and accounts before production systems become active
- Document and implement change control procedures for all changes to system components
6.5 Address Common Coding Vulnerabilities:
Developers should be trained to avoid common coding vulnerabilities, particularly:
- Injection flaws (SQL, OS, LDAP injection)
- Buffer overflows
- Insecure cryptographic storage
- Insecure communications
- Improper error handling
- Cross-site scripting (XSS)
- Improper access control
- Cross-site request forgery (CSRF)
- Broken authentication and session management
Mobile App Security Vulnerabilities to Address:
When developing PCI compliant mobile apps, pay special attention to:
- Insecure data storage on mobile devices
- Weak server-side controls
- Insufficient transport layer protection
- Client-side injection
- Poor authorization and authentication
- Improper session handling
- Security decisions via untrusted inputs
- Side channel data leakage
- Broken cryptography
- Sensitive information disclosure
PA-DSS: Payment Application Data Security Standard
The PCI requirements for fintech apps extend to the development of external and internal applications considered to be in scope of PCI DSS mobile app compliance. This applies to every developed app that processes, stores, and transmits cardholders’ data.
Who Needs PA-DSS Compliance?
PCI payment applications created by fintech development companies for use by external organizations should comply with the Payment Application Data Security Standard (PA-DSS) and should be assessed by PA-QSA (Payment Application Qualified Security Assessor).
Note: As of October 28, 2022, PA-DSS has been retired and replaced by the Secure Software Standard and Secure Software Lifecycle Standard. These new standards focus on:
- Software security in design and development
- Secure software development lifecycle practices
- Supply chain security for software components
- Software integrity and authenticity verification
- Vulnerability management throughout the software lifecycle
PA-DSS Compliance Process
To ensure a PCI compliance mobile app, it should be sold, distributed, or licensed to third parties. The compliance of PA DSS is divided into two phases:
Phase 1: Developing the payment application to meet PA-DSS requirements Phase 2: Implementing the payment application in a PCI DSS-compliant manner
Adhering to the requirements of PA DSS is what will help you become PCI DSS compliant.
Is Payment Gateway Integration Enough for PCI Compliance?
No, it is not sufficient. Payment gateway integration does not relieve you of the need to acquire a PCI DSS certificate since you actually manage payment information to a greater or lesser degree. However, the manner in which you add a payment gateway to your application or site will define the degree of compliance required.
SAQ Types Based on Integration Method:
SAQ A (Lowest Burden):
- E-commerce merchants who fully outsource all payment processing
- Cardholder data is redirected to payment gateway
- No electronic storage, processing, or transmission of cardholder data
SAQ A-EP (Moderate Burden):
- E-commerce merchants who partially outsource payment processing
- Website includes payment page provided by third party
- Merchant has some involvement in payment processing
SAQ D (Highest Burden):
- Merchants who store, process, or transmit cardholder data
- All other merchants not fitting into SAQ A or A-EP
- Most comprehensive compliance requirements
The Two Phases of PCI DSS Compliance
The PCI DSS compliance phases can be divided into two parts: achieving PCI DSS compliance status and maintaining PCI DSS compliance status.
Phase 1: Achieving PCI DSS Compliance
This phase involves creating a PCI compliance checklist and implementing all necessary controls and procedures to meet the requirements.
Steps to Achieve Compliance:
- Scope Definition: Identify all systems that store, process, or transmit cardholder data
- Gap Analysis: Assess current state against PCI DSS requirements
- Remediation Planning: Develop roadmap to address identified gaps
- Implementation: Execute remediation plan and implement required controls
- Testing and Validation: Verify all controls are functioning properly
- Documentation: Complete SAQ or undergo QSA audit
- Attestation: Submit Attestation of Compliance (AOC)
Phase 2: Maintaining PCI DSS Compliance
The second phase—remaining compliant in PCI DSS—is a difficult state to achieve, often due to misconceptions that compliance is simply about following the PCI DSS audit checklist.
The Formula for Maintaining Compliance:
Develop processes that deliver a continued PCI-compliant state. Keeping detailed records of security procedures and implementing management oversight is a necessary approach to keep complacency from entering the system and ensuring that a PCI DSS compliance state can be verified at any point in time.
Continuous Compliance Activities:
- Regular Monitoring: Daily review of security logs and alerts
- Quarterly Scans: Vulnerability scans by Approved Scanning Vendor (ASV)
- Annual Assessment: Complete SAQ or undergo QSA audit annually
- Continuous Training: Security awareness training for all personnel
- Change Management: Assess PCI impact of all system changes
- Vendor Management: Monitor third-party compliance status
- Incident Response: Maintain and test incident response procedures
PCI Compliance Checklist for Fintech Mobile Apps
There are 12 main requirements that should be included in your PCI compliance checklist:
Build and Maintain a Secure Network and Systems
1. Install and maintain a firewall configuration to protect cardholder data
- Configure firewalls and routers to restrict connections between untrusted networks and system components in the cardholder data environment
- Build network diagram documenting cardholder data flows
- Review firewall rules at least every six months
2. Do not use vendor-supplied defaults for system passwords and other security parameters
- Change all vendor-supplied defaults before installing on network
- Remove or disable unnecessary default accounts
- Implement security parameters for system components
- Document and implement change control procedures
Protect Cardholder Data
3. Protect stored cardholder data
- Keep cardholder data storage to minimum
- Do not store sensitive authentication data after authorization
- Mask PAN when displayed
- Render PAN unreadable anywhere it is stored
- Document and implement key management procedures
4. Encrypt transmission of cardholder data across open, public networks
- Use strong cryptography and security protocols (TLS 1.2 or higher)
- Never send unencrypted PANs via end-user messaging technologies
- Implement certificate pinning in mobile applications
Maintain a Vulnerability Management Program
5. Protect all systems against malware and regularly update anti-virus software or programs
- Deploy anti-virus software on all systems commonly affected by malicious software
- Ensure anti-virus software is updated regularly
- Configure anti-virus software to perform periodic scans
- Generate audit logs that are retained per PCI DSS requirements
6. Develop and maintain secure systems and applications
- Establish process to identify security vulnerabilities
- Install applicable security patches within one month
- Develop applications based on industry standards and best practices
- Implement change control procedures for all changes
- Review custom code to identify potential vulnerabilities
Implement Strong Access Control Measures
7. Restrict access to cardholder data by business need to know
- Limit access to system components and cardholder data to only those whose job requires access
- Establish an access control system for systems components with multiple users
- Assign unique ID to each person with computer access
- Implement physical and logical access controls
8. Identify and authenticate access to system components
- Assign unique ID to each person with computer access
- Implement multi-factor authentication for all remote access
- Render all passwords unreadable during transmission and storage
- Implement strong password policies
- Lock user ID after not more than six invalid access attempts
9. Restrict physical access to cardholder data
- Use appropriate facility entry controls to limit physical access
- Develop procedures to distinguish between onsite personnel and visitors
- Secure all media containing cardholder data
- Maintain strict control over distribution of media
- Destroy media when no longer needed for business or legal reasons
Regularly Monitor and Test Networks
10. Track and monitor all access to network resources and cardholder data
- Implement audit trails to link access to system components to individual users
- Record audit trail entries for user actions
- Secure audit trails to prevent alteration
- Review logs daily for all system components
- Retain audit trail history for at least one year
11. Regularly test security systems and processes
- Implement processes to test security controls and configurations
- Conduct quarterly internal and external vulnerability scans
- Perform penetration testing at least annually
- Use intrusion-detection and intrusion-prevention systems
- Deploy file-integrity monitoring tools on critical system files
Maintain an Information Security Policy
12. Maintain a policy that addresses information security for all personnel
- Establish, publish, maintain, and disseminate a security policy
- Implement risk-assessment process performed at least annually
- Develop usage policies for critical technologies
- Ensure security policy and procedures clearly define information security responsibilities
- Assign individual or team responsibility for information security management
Transform Your App Development Process with Taction
Steps to Develop a PCI Compliant Fintech Mobile App
Now that we understand the requirements, let’s walk through the practical steps to develop a PCI compliant fintech mobile app.
Step 1: Determine Your Compliance Scope
Define Your Cardholder Data Environment (CDE):
- Identify all systems that store, process, or transmit cardholder data
- Map data flows from capture to storage/processing
- Document network connections and trust boundaries
- Identify all applications and services in scope
Choose Your Integration Approach:
- Payment Gateway Redirect (SAQ A – Minimal scope)
- Embedded Payment Form (SAQ A-EP – Moderate scope)
- Direct Card Processing (SAQ D – Full scope)
Step 2: Design Secure Architecture
Network Segmentation:
- Isolate CDE from other networks
- Implement firewalls between CDE and other networks
- Use DMZ for internet-facing systems
- Document all network diagrams
Data Flow Design:
- Minimize cardholder data touchpoints
- Implement tokenization for stored payment methods
- Use encryption for data in transit and at rest
- Never store sensitive authentication data
Mobile App Architecture:
- No cardholder data storage on mobile devices
- Certificate pinning for API communications
- Secure token storage using platform keychain
- Biometric authentication where available
Step 3: Implement Strong Encryption
Data at Rest:
- AES-256 encryption for all stored cardholder data
- Separate encryption keys from encrypted data
- Use Hardware Security Modules (HSM) or cloud KMS
- Implement key rotation policies
Data in Transit:
- TLS 1.2 or higher for all communications
- Certificate pinning in mobile applications
- Strong cipher suites only
- No cleartext transmission of cardholder data
Step 4: Develop Secure Code
Follow Secure Coding Practices:
- Input validation on all user inputs
- Output encoding to prevent injection attacks
- Parameterized queries to prevent SQL injection
- Proper error handling without information disclosure
- Session management with secure tokens
- Protection against CSRF and XSS attacks
Mobile-Specific Security:
- Code obfuscation
- Anti-tampering mechanisms
- Root/jailbreak detection
- Secure local storage (never store cardholder data)
- Secure inter-process communication
Step 5: Implement Access Controls
Authentication:
- Multi-factor authentication for all access to CDE
- Strong password policies
- Account lockout after failed attempts
- Session timeout (15 minutes maximum)
- Unique user IDs for all users
Authorization:
- Role-based access control (RBAC)
- Principle of least privilege
- Separation of duties
- Regular access reviews
- Immediate revocation when access no longer needed
Step 6: Set Up Logging and Monitoring
Comprehensive Logging:
- Log all access to cardholder data
- Log all administrative actions
- Log all authentication attempts
- Log all access to audit logs themselves
- Log all system events affecting security
Log Management:
- Centralized log collection
- Secure log storage
- Daily log reviews
- Retention for at least one year
- Three months immediately available for analysis
Security Monitoring:
- Real-time alerting for suspicious activities
- Intrusion detection/prevention systems
- File integrity monitoring
- Automated security event correlation
Step 7: Conduct Security Testing
Vulnerability Scanning:
- Quarterly internal vulnerability scans
- Quarterly external scans by ASV
- Scans after significant changes
- Remediation of all high-risk vulnerabilities
Penetration Testing:
- Annual penetration testing by qualified third party
- Test both network and application layers
- Test from internal and external perspectives
- Retest after significant changes
Mobile App Security Testing:
- Static analysis for code vulnerabilities
- Dynamic analysis during runtime
- Reverse engineering resistance testing
- Network traffic analysis
- Authentication and authorization testing
Step 8: Complete Documentation
Required Documentation:
- Network diagrams showing CDE
- Data flow diagrams
- Security policies and procedures
- Software asset register
- Change control procedures
- Incident response plan
- Self-Assessment Questionnaire (SAQ)
- Attestation of Compliance (AOC)
Step 9: Undergo Validation
For Level 1 Merchants:
- Annual on-site audit by QSA
- Quarterly network scans by ASV
- Submit ROC and AOC
For Level 2-4 Merchants:
- Complete appropriate SAQ annually
- Quarterly network scans by ASV
- Submit SAQ and AOC to acquiring bank
Step 10: Maintain Ongoing Compliance
Continuous Activities:
- Daily log reviews
- Quarterly vulnerability scans
- Annual penetration testing
- Annual compliance assessment
- Regular security awareness training
- Change management for all system modifications
- Vendor compliance monitoring
- Incident response testing
Ready to Build Your Mobile App with Agile Excellence?
Common Challenges in PCI Compliance
Challenge 1: Scope Misunderstanding
Many organizations underestimate the scope of their CDE, leading to incomplete compliance efforts.
Solution: Conduct thorough scope assessment with data flow mapping, involve all stakeholders, and document everything.
Challenge 2: Resource Constraints
Small teams often lack dedicated security personnel and expertise.
Solution: Partner with experienced fintech development companies, use managed security services, and prioritize security spending.
Challenge 3: Maintaining Compliance Over Time
Compliance drift occurs as teams change, systems evolve, and requirements update.
Solution: Implement continuous monitoring, automate compliance checks, conduct regular internal audits, and maintain updated documentation.
Challenge 4: Mobile App Specific Challenges
Mobile platforms present unique security challenges around local storage, reverse engineering, and network security.
Solution: Never store cardholder data locally, implement certificate pinning, use code obfuscation, conduct regular mobile security testing.
Challenge 5: Third-Party Dependencies
Modern apps rely on numerous third-party services, each with compliance implications.
Solution: Maintain vendor inventory, verify vendor PCI compliance, include compliance requirements in contracts, regularly review third-party security.
Best Practices for PCI Compliant Fintech Development
1. Design Security In from Day One
Don’t treat security as an afterthought. Integrate security requirements into every development phase from architecture to deployment.
2. Minimize PCI Scope
The less cardholder data you handle, the easier compliance becomes. Use tokenization, payment gateway redirect, and network segmentation.
3. Leverage Cloud Security
Use cloud-native encryption services, managed databases with built-in security, and cloud WAF solutions.
4. Automate Security Testing
Integrate SAST, DAST, and SCA tools into your CI/CD pipeline. Make security testing part of every build and deployment.
5. Implement Defense in Depth
Layer multiple security controls. Don’t rely on a single point of protection.
6. Document Everything
Maintain comprehensive documentation of architecture, policies, procedures, and compliance activities.
7. Invest in Training
Train all team members in security awareness and developers in secure coding practices.
8. Plan for Incidents
Develop and test incident response plans. Assume breach and prepare accordingly.
Continuous Compliance: Beyond the Checklist
Continuous compliance ensures that your working environment is up to standard and fit for guarding client information. Compliance includes more than meeting all requirements on a checklist. You need to consider how these necessities apply to your particular agenda so that you can change operations appropriately.
Stages to Guarantee Continuous Compliance:
Regular Security Assessments:
- Conduct periodic internal security audits
- Review and update security policies regularly
- Assess new technologies and integrations for compliance impact
- Monitor industry trends and emerging threats
Ongoing Training and Awareness:
- Provide regular security training for all employees
- Update training materials with new threats and requirements
- Conduct phishing simulations
- Foster a security-conscious culture
Continuous Monitoring:
- Implement 24/7 security monitoring
- Set up alerts for suspicious activities
- Review logs daily
- Track compliance metrics and KPIs
Change Management:
- Assess PCI impact before implementing changes
- Test security controls after changes
- Update documentation to reflect changes
- Communicate changes to relevant stakeholders
Vendor Management:
- Conduct annual reviews of service providers
- Verify ongoing compliance of third parties
- Monitor vendor security incidents
- Ensure contracts include compliance requirements
The Cost of PCI Compliance
Understanding the financial investment required for PCI compliance helps in proper planning and budgeting.
Initial Compliance Costs
For Level 3-4 Merchants:
- Security assessment and gap analysis: $5,000 – $15,000
- Remediation and implementation: $15,000 – $50,000
- Security testing: $5,000 – $15,000
- Documentation and SAQ completion: $3,000 – $10,000
- Total: $28,000 – $90,000
For Level 2 Merchants:
- Security assessment: $15,000 – $30,000
- Remediation and implementation: $50,000 – $150,000
- Security testing: $15,000 – $30,000
- Documentation: $10,000 – $25,000
- Total: $90,000 – $235,000
For Level 1 Merchants:
- QSA gap analysis: $25,000 – $50,000
- Remediation: $150,000 – $500,000+
- Penetration testing: $25,000 – $75,000
- QSA audit and ROC: $30,000 – $100,000
- Total: $230,000 – $725,000+
Annual Ongoing Costs
- Quarterly vulnerability scans: $4,000 – $12,000
- Annual penetration testing: $15,000 – $50,000
- Annual assessment: $10,000 – $100,000
- Security monitoring: $12,000 – $60,000
- Training and awareness: $5,000 – $20,000
- Total Annual: $46,000 – $242,000
Cost Reduction Strategies
- Build Compliance In: Start with secure architecture to avoid expensive retrofitting
- Minimize Scope: Use tokenization and payment gateway redirect to reduce CDE
- Automate Testing: Use automated tools for continuous security testing
- Leverage Cloud: Use cloud provider security services and managed solutions
- Partner Wisely: Work with experienced fintech development companies
Frequently Asked Questions
A: PCI DSS is a set of standards required by law directed at securing cardholders’ data within applications and organizations. It’s important because non-compliant companies cannot legally process card payments and face severe financial consequences including fines up to $100,000 monthly and potential loss of payment processing ability.
A: No. While payment gateway integration reduces your compliance scope, you still need PCI DSS certification. The manner in which you integrate the payment gateway determines your compliance level (SAQ A, A-EP, or D).
A: The main requirements are:
- Requirement 3: Protect stored cardholder data
- Requirement 4: Encrypt transmission of cardholder data
- Requirement 6: Develop and maintain secure systems and applications
A: PA-DSS (now Secure Software Standard) is the standard for developers of payment applications. It’s required for apps sold, distributed, or licensed to third parties that process card information for authorization and settlement.
A: Timeline varies based on starting point:
- New app with compliant architecture: 2-4 months
- Existing app with minor changes: 3-6 months
- Existing app requiring major remediation: 6-12 months
- Complex enterprise app: 12-18 months
A: Consequences include:
- Forensic investigation costs
- Fines from card brands and regulators
- Elevation to Level 1 compliance
- Potential loss of payment processing ability
- Legal liability and lawsuits
- Severe reputation damage
A: No. You should never store cardholder data on mobile devices. Use tokenization and store only tokens. Sensitive authentication data (CVV, PIN) must never be stored anywhere after authorization.
A: Minimum annually, but compliance is ongoing:
- Annual: Complete SAQ or undergo QSA audit
- Quarterly: Vulnerability scans by ASV
- Continuous: Maintain all 12 requirements daily
