A lack of financial penalties and a mandate to publicly admit data breaches may be clouding the real state of credit card payment and customer information security in Australia, according to a senior executive from the Payment Card Industry (PCI) Security Standards Council.

In Australia for the AusCERT conference this week, Bob Russo, general manager at the Security Standards Council, said the industry group had identified Australia as lagging behind in the adoption of its Data Security Standard (DSS) aimed at protecting customers and brand reputations from credit card breaches.

“Australia is one of the countries we have targeted this year to make sure there is awareness here, and better adoption in the area,” he said.

Russo said a major contributor to the lag in DSS adoption was the lack of local laws mandating that an organisation must publicly declare any breaches in the security of its customer records.

"One of the biggest differences between North America and here is that [North Americans] tend to publicise all the breaches we have," he said. "Consequently, there is a lot of awareness in North America, as opposed to Australia, where breaches are not well publicised at all,” he said.

Additionally, a lack of significant fines, levied by financial institutions on their merchants for any breach in the security of customer records, has resulted in there being no impetus for adopting the PCI security standard, Russo said.

“[Merchants] haven’t seen any fines yet, so there is really no ROI there for them when they go to management and say they have to spend money to comply with the [PCI standard],” he said. “As there doesn’t seem to be any reports on [security] compromises, then the ability to affect brand reputation isn’t there.”

However, Russo said it was likely that financial institutions would soon begin levying fines on merchants for non-compliance of the PCI standard.

“Consumers are getting smarter and if they find out their information has been breached by a merchant at some point there is a good possibility that they will not frequent that merchant,” he said. “Merchants should be looking at this as a grace period to get themselves prepared and compliant.”

Internationally, increasing numbers of financial, and related organisations -- such as network providers -- were realising the benefits of the PCI standard, Russo claimed.

When the PCI Council formed in September 2006 it had five core members -- American Express, Discover Financial Services, JCB, MasterCard Worldwide and Visa. , Russo says the organisation now has some 500 participating organisations.

“We have found in the US that no merchant who has been compliant has been breached, and if they have been breached they were not compliant at the time of the breach,” Russo said.

See also the Security Standards Council's Six steps towards PCI DSS compliance.