Most founders view payment fraud as a security bug. It’s not. It’s an infrastructure cost.
A typical example: your gateway is PCI-compliant, your database is encrypted, yet chargebacks spike after a festive sale because support agents approved refunds based on spoofed screenshots. Nothing “broke.” Everything worked as designed.
In India, we operate in a high-trust, low-consequence environment. We have the world’s most advanced real-time rails (UPI), yet we still treat security like a 2005 checkbox exercise. If you are searching for a “PCI-DSS checklist,” you are likely trying to solve a systemic hemorrhage with a legal band-aid.
Compliance tells you how to build the vault. It says nothing about who has the keys or why the back door is propped open for “developer productivity.”
The “Security vs. Conversion” Fistfight
Every security protocol is a friction tax on your checkout.
- The reality: If you add one extra step to verify a user, your drop-off rate climbs.
- The founder’s dilemma: You are constantly balancing ‘Loss to Fraud’ against ‘Loss to Friction.’
If your “Payment Fraud” line item is growing, it’s rarely because your encryption failed. It’s because your system design prioritizes “happy path” throughput over adversarial resilience. Fraud shows up when systems scale faster than controls—it’s a lagging indicator of technical debt.
Audit Your Payment Stack in 10 Minutes
4 specific questions to ask your CTO to find the hidden leaks in your infrastructure.
[Donwloadable Asset] Zwitch Blog | A checklist for PCI-DSS compliance and data encryption
The PCI-DSS Paradox: Protecting the Bank, Not Your P&L
PCI-DSS exists to protect the banks and the card networks, not your startup. It ensures that if you get breached, the blast radius is contained, so the networks don’t lose sleep. It is a baseline for liability shift, not a strategy for fraud prevention.
The infrastructure trade-off:
The moment you touch a raw Card Number (PAN), your operational overhead 10x’s. You are now in “Scope.” This means your database, your logs, your VPC, and even your office Wi-Fi could technically be under the auditor’s lens.
- The winning move: Don’t touch the data. Use tokenization.
- The systemic benefit: You shift the liability to a specialized third party. Your servers only see “tokens”—useless strings of characters that a hacker can’t buy a MacBook with.
- The failure mode: Tokenization doesn’t stop social engineering. In India, most fraud happens at the “Authorized” level. The user willingly gives up the OTP. PCI-DSS is useless here because the protocol worked perfectly—the human failed.
Data Encryption: Confidentiality is Not Correctness
Encryption is often treated as a “solved” problem. You turn on AES-256 at rest in AWS RDS and think you’re safe.
The reality of key management:
The strength of the algorithm is rarely the point of failure. The fragility lies in the Key Management Service (KMS).
- Access creep: Over time, more services need access to the keys.
- Rotation slippage: Keys that are never rotated become permanent vulnerabilities.
- Internal misuse: Encryption protects you from a hacker stealing your hard drives from a data center. It does nothing to protect you from an internal API call made by a compromised service account.
Encryption protects confidentiality (who can see the data). It does not protect integrity (i.e., whether the data is being used correctly).
The India Reality: UPI and the “AFA” Shield
India’s Additional Factor of Authentication (AFA) is the strongest fraud deterrent globally. But it creates a false sense of security for founders.
- The ghost in the machine: Fraudsters in India don’t “crack” encryption. They exploit logic flaws.
- The “Collect” exploit: A “Collect Request” on UPI that looks like a “Refund.” This isn’t a security breach; it’s a UI/UX exploit. Your PCI-DSS certificate won’t help you when a user clicks “Pay”, thinking they are clicking “Receive.”
- The trade-off: You can spend exorbitant money on a PCI audit, but if your Customer Support dashboard allows a junior agent to trigger an unverified refund to a new VPA, your “Security” is a theater.
The Infrastructure Checklist
| Component | The “Checkbox” Approach | The Systems Approach |
| Encryption | Encrypt the DB and hide the keys. | Assume the DB will leak. Use field-level encryption where the app doesn’t even have the keys. |
| Access | Give devs “Admin” to move fast. | JIT (Just-In-Time) Access. No one has access to the production DB by default. Access is an expired exception. |
| Logging | Log everything for “visibility.” | Redact by default. Logs are the #1 source of accidental data leaks (PII/Card data). |
| Audits | A yearly painful ritual. | Continuous Compliance. If a security group changes in AWS, an alert should fire in 10 seconds. |
Operational Realities: When Protocols Predictably Fail
- The “Emergency” override: During a massive production outage, your Lead Engineer disables a security check or opens a CIDR block to “debug.” They forget to turn it back on. This is how 80% of major breaches start.
- The internal rogue: Encryption doesn’t protect you from the person who wrote the encryption logic. In fintech, the threat is often inside the house. You need mTLS (Mutual TLS) between your internal microservices to ensure Service A can’t talk to Service B without a valid certificate.
- The silent failure: Your fraud detection engine is only as good as your data. If your “Risk Engine” has a 500ms latency, your Ops team will eventually bypass it to “save the UX.” This is where the fraudster wins—by being faster than your checks.
The Founder’s Path Forward
A founder should ideally stop asking “Are we compliant?” and start asking “What is our Mean Time to Detection (MTTD)?”
Compliance is just a snapshot, whereas security is a stream. If a bad actor enters your system today, how many hours will it take for your infrastructure to notice? If the answer is “Until the bank calls us about a surge in chargebacks,” you haven’t solved for fraud; you’ve just documented your vulnerability.
The Strategy here is to use PCI DSS to reduce your liability surface. Use Encryption to minimize the blast radius. But use system observability to actually protect your revenue.
