There’s hardly a day that goes by when a data breach isn’t making the news, while the cost to organizations across the globe continues to skyrocket. In 2020 the average cost of a data breach was $3.86 million. Equally as concerning is the amount of time it takes for a company to identify and contain the breach – which in 2020 was an incredible 280 days! You may be wondering – What is billing compliance and what does this have to do with my billing system?
Legacy billing systems and manual processes such as spreadsheets don’t provide the encryption or security features that are mandatory today. This leaves you and your customers vulnerable to a cyberattack. What’s the answer? This is where a cloud-based billing system is instrumental in helping keep data secure and achieve regulatory billing compliance.
Data Security and Regulatory Compliance Require a Billing System Built for Today
Does your billing system support ever-changing compliance requirements or the functionality needed for data security? If not, read on for the five data security and compliance features that a recurring billing platform needs to provide.
1) Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS specifies security requirements for businesses related to credit card transactions. This standard covers how organizations should accept, process, store, and transmit cardholder information to prevent fraud and data breaches.
As a subscription-based business, credit card payments are frequent and non-compliance can have severe consequences. This includes $500,000 per incident, increased audit requirements, negative public image, loss of customer confidence, among many others. To ensure compliance, be sure your billing platform offers secure digital processing and enables customers to take advantage of PCI-compliant, electronic payment gateways. This not only enables you to protect sensitive customer data but accelerates account receivable processes.
2) SOC 1 & SOC 2
SOC 1 and 2 are compliance frameworks designed to help organizations assess whether or not they have proper controls in place for both data reporting and data management. SOC 1 focuses on the financial side, while SOC 2 evaluates how companies protect consumer information.
There are two different types of SOC 1 reports. Type 1 reports demonstrate that organizations have proper internal financial controls in place. Type 2 reports confirm that those controls are effective over a period of time. SOC 2 emphasizes security controls for private data and comes with similar reports.
Your billing platform needs to provide support for both SOC 1 and SOC 2. This helps ensure financial reporting transparency and protects confidential information from security breaches.
3) Payment Service Directive 2 (PSD2)
PSD2 is a European Union (EU) regulation that enhances digital payment security standards and fosters transparency within the financial services ecosystem. The framework, called Strong Customer Authentication for Merchant-Initiated Transactions (MITs), helps to prevent fraud related to recurring billing models.
Billing systems support this regulation by enabling companies to establish secure gateways around any transactions that they initiate. Additionally, the billing platform needs to be able to extend to other financial systems and facilitate rejected payment recovery, as well as handle exemptions that would otherwise require complicated workarounds or manual effort.
4) California Consumer Privacy Act (CCPA) & General Data Protection Regulation (GDPR)
Similar in nature, the CCPA and the EU’s GDPR were designed to protect consumers by bolstering data privacy requirements. To adhere to these regulations, the billing system must be able to seamlessly integrate with CCPA and GDPR compliance programs.
For the most part billing systems don’t directly collect personal consumer information, other than the information used for billing purposes. Therefore, finance leaders who wish to store confidential customer data in their billing solution should be able to do so by making a few minor configuration adjustments. This capability, as well as providing customers with the ability to choose which personal information will be stored in the billing platform. This allows them to configure security and access rules keeps you in compliance with both the CCPA and GDPR regulations.
5) ASC 606
Although this standard doesn’t apply to issues of security, ASC 606 and IFRS 15 are requirements that companies must satisfy before they can recognize revenue. Both private and public companies must adhere to ASC 606 and IFRS 15. This is challenging for those who deploy dynamic and complicated pricing tactics such as recurring revenue models.
The right billing system should enable companies to easily configure how they recognize revenue for various products. They should be able to align any pricing model to globally accepted accounting principles using a rules-based engine for any industry, geography, and business model.
Ensure Data Security and Regulatory Compliance
While data breaches do happen, you need to do everything possible to lessen exposure. As an industry-leading cloud-based billing solution provider, BillingPlatform delivers the protection organizations need to keep confidential data secure and minimize regulatory risk. As a company, we continually monitor the regulatory environment in order to provide our customers with the capabilities and expertise needed to adhere to data security measures and maintain regulatory compliance.