ERP and Payments: PCI Compliance Nightmare

A PCI Compliant ERP solution doesn’t make a merchant PCI Compliant. The features of the payment integration drive customer decisions to use or not use the an ERP payment module. When payment vendor choices are restricted artificially by using technology to control merchant services options, merchants often enter ERP relationships with a level of dissatisfaction right from the start.

Severely restricted payment gateway options, especially for business to business, results in either the merchant using an alternative non-integrated payment solution, thus sacrificing efficiency, or using the integrated solution, and failing to meet PCI 3.0 requirements or other payment needs. How can I make this statement? B2B companies that accept credit cards  typically have a portion of their sales via the telephone. To mitigate risk of fraud, they use paper credit card authorization forms. However, the forms are inherently risky in many ways.

  • Sensitive authentication data, which includes the security code (CVV/CID), can never be stored.
  • Forms offer option to send via email. Unprotected data cannot be sent via messaging technologies such as e-mail, instant messaging, chat, etc. (PCI section 4.2). Even if the form doesn’t offer it, customers sometimes ignore instructions and send via email.

In the absence of a best practice, employees will revert to whatever is necessary to get their job done and reduce the risk of looking bad (fraud losses). If the ERP payment module doesn’t help merchants eliminate credit card authorization forms, the entire operation may be at risk of a potential data breach.

For retail, data breaches have become commonplace. Few ERP Point of Sale (POS) solutions are using Point to Point (P2P) encryption and other best practices to reduce data breach risk. They raced to bring mobile to market, and many now have neither EMV chip terminals nor P2P, both increasing financial risk to merchants.

Why does an ERP restrict options for merchant services? Because it’s part of their revenue stream. When competition is eliminated, there’s almost no chance of having the best solution in the marketplace. The proof is a long string of failures to meet business needs. Failure to offer electronic bill presentment and payment, which would increase cash flow and efficiency. Failure to offer US EMV chip card acceptance solution prior to liability shift. Failure to offer level 3 processing for all sales channels. Failures reduce cash flow, profits, and security as companies attempt to work with the ERP limitations, or find ways to work around them.

The argument that it’s to protect merchants from data breaches is only partially true. For any modern payment gateway integration, the payment activity is usually outside the ERP to reduce PCI scope. That won’t change from one gateway to another, so the risk doesn’t change, provided the third party gateway is level 1 PCI Compliant.

Examples of ERP’s that restrict payment gateway and merchant services choices are Netsuite and Sage. Additionally, consultants are often compensated for payment gateway recommendations. Consulting with an independent payment specialist,¬†like blog author Christine Speedy, can expose pros and cons of different options.

ERP’s holding onto merchant services and gateway revenue streams are short sighted, as these business practices that anger customers. Can you imagine if an ERP wouldn’t communicate with any other software, for example, Magento? ERP’s focused on delivering the best business software for all facets of a business, and enabling the merchant to follow best practices for PCI Compliance must give users the flexibility needed to run their business with their own financial partners.

If an ERP relies so much on their revenue stream from merchant services revenue share that they won’t let you choose your own financial partners, I’d think seriously about whether it’s the best ERP for your business.

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