The beauty of Software as a Service (SaaS) businesses is that they can go global from the start. Anyone with an internet connection can become a customer, so any country could be a potential market for your products.
The SaaS industry is full of opportunities. But it’s also a massive, complex environment.
When COVID-19 moved much of our lives online, a rise in new global data regulations quickly followed. Over 132 countries have now put in place their own laws and regulations.
Are you up to speed with the latest policies? Work through our SaaS audit checklist to start the journey towards becoming a privacy-compliant business.
‘Compliance’ means that your business or product meets a certifying organization’s set of regulations, which organizations depend on both where you and your customer are based.
Being a global data privacy-compliant business can be relatively simple in a local context. But if your reach is broader, things become more complex. For example, if you trade in several markets, this could require adhering to many different sets of laws, policies, and regulations based on both your and your customers’ location.
In the SaaS industry, global data privacy involves how your business engages with present and prospective customers and their data — i.e., how you handle their sensitive information and maintain their privacy rights.
Every day, millions of customers share their personal details with businesses across the globe. This is vital for most SaaS applications and businesses, as information must be captured for subscriptions and account services.
However, capturing this data places a lot of responsibility on companies. Today’s organizations must ensure that their client’s personal data is stored and handled securely and that they maintain appropriate levels of privacy. Failing to do this can make the information vulnerable to security breaches and hacks. It can also lead to legal troubles and a lack of trust from customers.
When it comes to data privacy, today’s consumers want their personal information to be secure. Customers are increasingly calling for tighter data security, as demonstrated by a 2019 Cisco survey which indicated that 32% of respondents care deeply about privacy. In addition, customers are willing to act when dissatisfied and often do so by changing providers.
Many governments are responding by implementing stricter policies, laws, and regulations, so for SaaS applications, the pressure is on to ensure they meet the relevant requirements.
Not complying with privacy and data laws and regulations could cost your SaaS solution dearly. Failing to follow privacy policies and regulations for specific countries or specific industries may lead to:
→ Hefty fines
In some cases, failure to comply with privacy policies and data regulations may result in your product’s use or business operation being banned in certain areas, jurisdictions, or countries.
A helpful example of a global business that’s facing non-compliance litigation is TikTok.
This popular video-sharing platform is owned by Chinese company ByteDance and has more than 800 million users worldwide. In 2020, the U.S. labeled TikTok a national security threat over concerns that users’ data wasn’t secure.
The issue brought to court was the collection of children’s data without parental consent. This data included phone numbers, videos, exact locations, and biometric data.
The original class action complaint claimed that TikTok didn’t gain consent or notify users about collecting their biometric data. It also alleged that TikTok shared and profited from the data.
The claim was made on behalf of all underage users, whether they had active accounts or not. In April 2021, TikTok requested a settlement of $92 million (but this hasn’t been approved yet).
Although TikTok isn’t a SaaS company, its global reach and the collection of personal data parallels that of any SaaS solution. From this case, it’s clear that data privacy issues can have costly consequences.
It’s vital to stay up-to-date with the latest data privacy regulations to become or remain compliant. This is particularly important if you’re looking to expand your business to other countries or regions or within a specific industry, as regulations can differ widely.
We’ve included some of the most common and widely known for you to take a closer look at, but this is just a small selection of the data privacy regulations around the world that can affect your business.
Examples of Important SaaS Compliance Regulations and Standards
→ Service Organizational Control 2 (SOC 2)
Service Organizational Control 2 is an auditing process based on the American Institute of Certified Public Accountants (AICPA) ‘Trust Services Criteria.’ Companies can use it to check whether their information systems adhere to the SOC 2 principles.
SOC 2 is specifically designed for organizations that store customer data in the cloud. It’s therefore applicable to nearly all SaaS applications and is one of the most common compliance frameworks. To become SOC 2 compliant, your business will need to establish and follow strict data policies. These cover the security, availability, processing integrity, and confidentiality of any data stored in the cloud.
→ E.U. General Data Protection Regulation (GDPR)
The General Data Protection Regulation is a comprehensive European Union legislation that provides data rights for individuals and increases compliance responsibilities for organizations and businesses. GDPR stops companies from overreaching and provides citizens with the assurance that businesses are handling their data correctly. The core function of the GDPR is to give citizens more control over their data. It also gives regulators more power to fine organizations that break this law.
Under the GDPR, EU citizens can access their data, correct errors, erase their data, object to processing their data, and export their data. Conversely, the GDPR requires companies to provide information on the purpose, nature, and storage duration of data.
Companies operating within GDPR guidelines must also inform their customers if there’s a breach in security as soon as they become aware of it. Protections must be in place to prevent these breaches, and If not, the company can face massive fines.
Even if your software as a service business is based in the U.S. or elsewhere, GDPR remains vital to understand, as you may have some reach in European countries or with European customers.
→ Payment Card Industry Data Security Standard (PCI DSS)
Launched in 2006, the Payment Card Industry Data Security Standard is a set of requirements intended to ensure all companies that process, store, or transmit credit card information maintain a secure environment. The standard was created to increase controls around cardholder data and reduce credit card fraud by introducing strict security standards and improving account security throughout the transaction process.
PCI DSS is administered and managed by the PCI SSC (Security Standards Council), an independent body formed by Visa, Mastercard, American Express, Discover, and JCB. PCI DSS applies to any organization that accepts, stores, or transfers cardholder information, regardless of their size or the number of transactions they handle.
While there are 12 clear conditions to obtaining PCI DSS, each comes with many specific sub-requirements. Compliance also requires adopting and adhering to a specific information security policy, making it incredibly difficult to obtain. There are four different PCI compliance levels, each of which are assigned to a business based on the number of transactions it processes annually.
→ California Consumer Privacy Act (CCPA)
The California Consumer Privacy Act of 2018 provides Californian consumers with enhanced privacy rights and consumer protection. CCPA regulations provide guidance on implementing privacy law rights for California consumers and give greater control over what information companies collect about them and how they are used and stored.
It also provides consumers with the right to delete personal information collected about them, the right to opt-out of having their personal information sold, the right to non-discrimination for exercising these rights, and the right to notices explaining their privacy policies.
→ The International Organization for Standardization (ISO)
The International Organization for Standardization prepares standards through the use of ISO committees. It also works with the International Electrotechnical Commission (IEC) on electrotechnical standardization matters and provides criteria for Information Security Management Systems (ISMSs). These look at information risks and help companies identify and manage them.
ISO/IEC isn’t a regulation as such, but rather a set of standards that you can use to manage your security risk compliance. You can use it as a starting point for a formal assessment to get official accreditation from certified auditors. This requires submission of an information security policy, a risk assessment process, and evidence of security monitoring.
SaaS companies can use the ISO/IEC standard. What’s more, it can be applied to any industry, size, and market.
→ Industry-Specific Regulations in the U.S
Beyond the more general or commonly encountered regulations and standards mentioned above, you’ll need to be familiar with all other specific rules that apply to your SaaS applications in any country in which you operate. In the U.S, for example, you may need to consider the following:
• Health Insurance Portability and Accountability Act
• New York Cybersecurity Regulation
• Federal Financial Institutions Examination Council
On PayPro Global’s blog, discover the complete audit checklist for your SaaS and our compliance tips, so that you can make sure your company is compliant with the latest data privacy regulations, as well as protected from a multitude of security threats and risks facing the eCommerce world today.