Canada: Cardholder Security Guidance for Third-Party Service Providers

Last Updated: December 19 2014
PCI Security Standards Council (PCI SSC) published an information supplement entitled Third-Party Security Assurance (the Guidance), which provides guidance to organizations in relation to their engagement of third-party service providers (TPSPs) with whom cardholder data is shared or that could impact the security of cardholder data. The Guidance assists organizations and TPSPs in understanding how to meet new requirements for managing service providers in version 3.0 of the Payment Card Industry Data Security Standard (PCI DSS).

As we reported in our December 2013 Blakes Bulletin: New Standard Provides Guidance on Cardholder Data Security, PCI DSS version 3.0 became effective on January 1, 2014 (with the exception of certain requirements that are not effective until July 1, 2015). PCI DSS was developed to enhance cardholder data security and facilitate the broad adoption of consistent data security measures globally. PCI DSS applies to all entities involved in payment card processing, including merchants, processors, financial institutions, and service providers, as well as all other entities that store, process, or transmit cardholder data and/or sensitive authentication data.

The Guidance is intended as supplemental and does not supersede, replace or extend PCI DSS requirements.


The Guidance will benefit all organizations – including issuers, merchants, acquirers and service providers – that engage TPSPs for the storage, transmission, or processing of cardholder data, or for services that control or impact the security of cardholder data. Further, the Guidance is intended to assist TPSPs in understanding their responsibilities to the organizations that have engaged them, as well as how best to engage with downstream service providers engaged by the TPSPs themselves. 


The Guidance provides a number of examples of the different types of TPSPs an organization may engage. Four categories of TPSPs are identified:

  • Organizations involved in the storage, processing and/or transmission of cardholder data, such as call centres, e-commerce payment providers, gateway processors and credit reporting service providers
  • Organizations involved in securing cardholder data, such as secure storage facility providers and companies that tokenize or encrypt cardholder data
  • Organizations involved in the protection of the cardholder data environment, such as infrastructure service providers and data centre hosting providers
  • Organizations that may have incidental access to cardholder data or cardholder data environments, such as software developers and application maintenance providers

The four categories underscore how broad an organization's spectrum of TPSPs may be.


The Guidance urges organizations to develop an appropriate due diligence program for TPSPs that it is seeking to engage to understand the overall risk assumed by the organization.

Scope of Services

The Guidance emphasizes the importance of determining the scope of the services to be provided by the TPSP with regard to storing, processing or transmitting cardholder data and the effect on the security of the cardholder data environment.

Due Diligence Research

Once the scope of services to be provided by the TPSP has been determined, an organization is to undertake due diligence research to determine the impact the TPSP will have on the organization's PCI DSS compliance.

Acquirer/Payment Card Brands

An organization is encouraged to inquire with its acquirer or payment card brand to ensure that the services to be provided by the TPSP have been approved for use and that no restrictions have been imposed by the acquirer or payment card brand with respect to the engagement of the TPSP.

Validation Documentation

The Guidance proposes that an organization consider requesting documentation from the TPSP that demonstrates the TPSP has achieved PCI DSS compliance. The payment card brands define how and whether a TPSP must validate PCI DSS compliance; hence the required validation documentation may vary. The documentation should confirm that the services to be provided to the organization are covered by the TPSP's PCI DSS assessment and identify the PCI DSS requirements that were assessed to be in place. The Guidance provides a helpful list of documentation that an organization may wish to obtain from a TPSP in order to validate the TPSP's PCI DSS compliance and explains how such documentation should be reviewed by the organization.

If the TPSP has not attained compliance with PCI DSS, the organization must determine whether or not to accept the risk of engaging that TPSP. The organization should understand the gap and its impact on the organization's own environment. If the organization's environment is affected, the organization should establish a plan of action with the TPSP for remediation. The organization may wish to consult with its acquirer at this point to ensure the gap does not present any issues.

If an organization engages a TPSP that does not intend to validate PCI DSS compliance or that is not required to do so, the organization will be required to cover the applicable systems and processes of the TPSP under the organization's own PCI DSS compliance assessment.

Risk Assessment

The Guidance suggests that an organization perform a thorough risk assessment on its TPSPs based on an industry-accepted methodology. A high-level list of some of the questions and subject matter that may be appropriate for consideration in such a risk assessment – including security, governance and risk management, human resources practices, physical security, logical security and malware controls – is provided.

Documenting Results

An organization is encouraged to fully document the results of its due diligence of a TPSP's compliance status.


Following completion of due diligence, organizations are instructed to consider a number of specific items when first engaging a TPSP and during the term of the engagement, including:

  • Setting expectations with respect to the engagement, including with respect to the parties' respective PCI DSS compliance, the TPSP's responsibility to safeguard the organization's cardholder data in the possession of the TPSP in an agreed-upon manner, the services to be provided by the TPSP and the primary points of contact at both the organization and the TPSP
  • Gaining clarity and transparency of the scope of the TPSP's responsibility in safeguarding the organization's cardholder data or cardholder data environment and validating that the scope presented by the TPSP is applicable, appropriate and accurate
  • Establishing effective communication between the organization and the TPSP, including changes made by the TPSP
  • Requesting evidence to validate that changes made by the TPSP followed appropriate procedures and were subject to appropriate controls
  • Obtaining information about the TPSP's PCI DSS compliance status
  • Reviewing the engagement items set forth above on a regular basis and as changes occur
  • Mapping services to be provided by the TPSP to the applicable PCI DSS requirements so that the organization can determine the security impact to its cardholder data environment


Once due diligence has been completed and a TPSP has been selected for engagement, an organization is encouraged to document its agreement with the TPSP in writing.

Where a TPSP claims that its services are PCI DSS compliant, an organization should, according to the Guidance, document such compliance in its written agreement with the TPSP by attaching a copy (or a redacted copy) of the applicable validation documentation.

Where a TPSP has not established its own PCI DSS compliance, an organization will need to include some of the TPSP's cardholder data environment in the organization's own PCI DSS assessment. As a result, an organization should consider including in its agreement with the TPSP:

  • Processes and mechanisms that allow the organization to have access to systems, facilities and processes, along with the right to review the applicable policies, procedures and other documentation of the TPSP
  • Provisions to clarify which portions of the cardholder data environment managed by the TPSP are in-scope for the organization's PCI DSS compliance assessment and to allocate responsibility for handling and securing cardholder data in a compliant manner
  • The agreement between an organization and its TPSP should also reflect appropriate legal and regulatory requirements, industry-specific considerations, requirements mandated by an organization's acquirer related to engaging a TPSP and requirements mandated by the applicable payment card brand's compliance programs.

Other items highlighted in the Guidance for such agreements include:

  • The use of a "responsibility matrix" to set out in detail the respective roles and responsibilities of both parties
  • Data breach notification and followup obligations
  • Post-termination obligations of the TPSP, including storing or destructing cardholder data and keeping the organization's sensitive information confidential

Finally, an organization's agreement with a TPSP that claims its services are PCI DSS compliant should address what happens in the event the TPSP loses its PCI DSS compliant status. The Guidance urges an organization to consider mechanisms intended to keep it apprised of changes in the TPSP's compliance status and to allocate responsibility for loss of compliance status. Suggested mechanisms include notification of changes in compliance status being provided by the TPSP, plans and procedures for remediation by a set date, and other measures intended to help ensure accountability and responsibility for non-compliance. 


The Guidance emphasizes the importance of establishing and maintaining a program to monitor TPSP compliance. The purpose of the monitoring program is to allow an organization to monitor the compliance status of the applicable TPSP and determine whether a change in status requires a change in the relationship. The PCI SSC reminds all organizations that outsourcing services to a TPSP does not relieve an organization of its responsibility for the security of its cardholder data.

According to the Guidance, a TPSP monitoring program should be fully documented to ensure there is a common understanding of the program across the organization, facilitate delegating portions of the process if required and allow outside parties to review the process when necessary. The program should include processes, policies and procedures, and assignment of responsibility to specific people within the organization. Program documentation should be revisited regularly, reviewed at least on an annual basis and approved by management. The Guidance identifies a number of areas that should be covered by the program documentation, including defining the cardholder data environment scope and the role of each TPSP, maintaining a current list of TPSPs and setting out the TPSP monitoring procedure.


The Guidance assists organizations to better understand the requirements in PCI DSS version 3.0 dealing with managing service providers. 

An organization's procurement and risk functions should take note of the practical guidelines regarding the performance of due diligence on TPSP candidates.

An organization's legal function should familiarize itself with the portions of the Guidance that sets out items that should be considered for inclusion in agreements with TPSPs. While a number of the points are common to outsourcing agreements generally, there are other points covered in the Guidance that are unique to agreements with TPSPs, particularly those relating to compliance status.

Organizations that seek to engage with TPSPs should endeavour to investigate TPSPs and develop future agreements with the Guidance in mind.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Contact the Author?
Click here to email the Author
View Template
Click to View the Template
In Association with
In Partnership with
Supporting Documents
Other Canada Advice Centres
Competition and Antitrust
Mergers and Acquisitions
Labour and Employment
More Advice Centers
Significant Recent Cases
A list of the most recent and notable Blakes cases that gives you an overview of the firm's depth of knowledge and experience.
Useful Resources
Organizations should take preventative steps prior to a breach occurring by having reasonable policies and procedural safeguards in place, and conducting necessary training.
This checklist is intended to help organizations take the appropriate steps in the event of a privacy breach and to provide guidance in assessing whether notification to affected individuals is required.
Organizations subject to the Personal Information Protection Act (PIPA) are required to report a breach of personal information to the Commissioner.
An Act to support and promote electronic commerce by protecting personal information that is collected, used or disclosed in certain circumstances, by providing for the use of electronic means to communicate or record information or transactions and by amending the Canada Evidence Act, the Statutory Instruments Act and the Statute Revision Act.
Designed as one of the most stringent anti-spam regimes in the world, the legislation imposes important restrictions on the use of electronic messages to encourage participation in commercial activities.
Upcoming Events
Our professional development seminars provide legal and other professionals with access to programs that have been accredited by those governing bodies in various jurisdictions across Canada that have set educational credit requirements.
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions