Compliance and Security for Disputes Management

Nick Daigneau · 2 hours ago

Objective

This article provides an overview of how ServiceNow's Disputes Management solution addresses two critical areas for financial institutions: PCI-DSS compliance through our integrated tokenization capabilities and regulatory compliance through SLA management, auditability, & workflow automation. Whether you're evaluating the solution or preparing for implementation, this article will help you understand how we keep your card data secure while helping you meet your regulatory obligations.

Overview

Financial institutions face significant compliance challenges when managing payment disputes. Card data flows through multiple systems during the dispute lifecycle—from initial intake through card network communications to final resolution. At the same time, regulations like Reg E and Reg Z impose strict timeframes and notification requirements that must be met to avoid penalties and protect consumers. ServiceNow's Disputes Management solution addresses both challenges:

PCI-DSS Compliance: Our integrated tokenization solution ensures sensitive card data (Primary Account Number or PAN) is securely handled when communicating with internal bank systems and card networks.
Regulatory Compliance: SLA management, automated timers, and workflow capabilities help you meet the requirements of US regulations (Reg E, Reg Z), with the flexibility to extend for global regulatory requirements.

Understanding PCI Data and Tokenization

Why PCI Compliance Matters for Disputes

Dispute workflows frequently involve cardholder data, making them subject to PCI-DSS requirements:

Case Intake: Disputes begin with a card number from the cardholder or core banking system.
Compelling Evidence: Documents from merchants and acquirers (receipts, statements, screenshots) may contain PANs.
Card Network Integrations: APIs from Visa, Mastercard, and other networks may contain PANs.
Logs and Traces: Without proper controls, PANs can inadvertently appear in system logs.

Any system that stores, processes, or transmits cardholder data falls under PCI-DSS scope—even if the data is encrypted. Encryption alone is not sufficient because encrypted PANs are reversible and still classified as cardholder data under PCI-DSS.

How ServiceNow Achieves PCI Compliance

ServiceNow has integrated a tokenization solution, called Card Data Security, directly into the Disputes Management product. This solution ensures that PANs never enter ServiceNow—only non-reversible tokens are stored in the platform.

The tokenization solution is:

PCI-DSS Level 1 Certified — the most stringent standard for handling payment card data
SOC 2 Compliant — independent verification of security, availability, and confidentiality controls
ISO 27001 Certified — internationally recognized information security certification

Key Tokenization Capabilities

Initial PAN Intake from Core Banking

When creating a Dispute in ServiceNow, a specific card must be selected for the given cardholder so the proper transactions can be retrieved. For this card to be visible within ServiceNow, the PAN must first be retrieved from the issuer's core banking system.

As noted in previous sections, ServiceNow never stores the clear-text PAN locally. Instead, a tokenized version of the PAN (received from the tokenization solution) is stored. To facilitate retrieving a PAN from core banking and sending it to the tokenization provider, we recommend using the MID Server to orchestrate this process:

The MID Server (which sits behind the customer's firewall) retrieves the PAN from core banking
The MID Server sends the PAN to the tokenization solution
The tokenization solution returns a token
Only the token is persisted in ServiceNow

Because the code executes on the MID Server within the customer's secure environment, PAN is handled in-memory and never enters ServiceNow. For detailed implementation guidance, refer to the best practice documentation available on the Community: Leverage MID Server to Retrieve and Tokenize PAN

Pass-Through Tokenization for Card Network APIs

The next capability of our Card Data Security solution is pass-through tokenization. ServiceNow has native integrations with card networks including Visa (VROL) and Mastercard (Mastercom). When API calls contain sensitive data (such as PANs in the request or response), the call is routed through the tokenization solution:

Outbound requests: ServiceNow passes the token to the tokenization solution, which detokenizes (retrieves the actual PAN), executes the API call to the card network, and returns the response.
Inbound responses: If the card network response contains a PAN, the tokenization solution swaps it for a token before returning the data to ServiceNow.

For API calls that do not contain sensitive data, ServiceNow communicates directly with the card networks—no intermediary is needed.

Result: PAN never touches ServiceNow at any point in the transaction lifecycle.

Secure Document Storage and Rendering

In addition to data elements within API calls, documents received from card networks during the disputes process may also contain sensitive data. Rather than storing these documents in ServiceNow, they are stored in the tokenization solution's secure vault and rendered to dispute analysts through an embedded UI component.

Key capabilities include:

Seamless User Experience: Documents appear within ServiceNow Financial Services workspace and portal as if they are native but are actually rendered securely from the tokenization provider’s vault.
Auto-Unzip: Mastercard requires documents to be transmitted in ZIP format. The tokenization solution automatically unzips these documents within the vault so analysts can view individual files directly—no need to download and extract locally.
Document Redaction (Optional): The solution can automatically detect and redact sensitive data within documents before rendering. This capability is optional and can be enabled based on your organization's requirements.

PAN Reveal and Search

While ServiceNow only stores tokens, dispute analysts sometimes need to view or search by the actual PAN:

View/Hide PAN: An embedded UI component allows authorized analysts to temporarily reveal the full 16-digit PAN during investigations. The PAN is rendered in real-time from the vault and is never persisted in ServiceNow. All reveal events are logged for audit purposes.
Search by PAN: An embedded search widget allows analysts to enter a 16-digit PAN. The tokenization solution returns the corresponding token, enabling ServiceNow to perform local searches (e.g., find all disputes associated with that card). This enables use cases like global search by PAN without ever storing PANs in ServiceNow.

Data Security Details

Encryption in Transit: All data transfers between ServiceNow, the tokenization solution, and external payment networks are encrypted using TLS/mTLS.
Encryption at Rest: Data within the vault is encrypted using AES-256 encryption.
Access Controls: Fine-grained policies govern who can view data in different formats (masked, last-4, or full PAN). By default, analysts cannot see full PAN—only explicitly authorized roles may reveal it.
Audit Logging: All sensitive data access events are logged for compliance and audit purposes.
Data Retention: Customers retain full control over data retention policies through available APIs.

Learn more: Configuring Card Data Security | Managing Card Data Security | Card Data Security Reference

Understanding Regulatory Compliance

US Regulations: Reg E and Reg Z

The two primary US regulations governing payment disputes are:

Regulation E (Electronic Fund Transfer Act): Governs disputes for debit cards and electronic fund transfers. Establishes timeframes for provisional credits, investigation windows, and customer notification requirements.
Regulation Z (Truth in Lending Act): Governs disputes for credit cards. Establishes similar requirements around investigation timeframes and consumer protections.

Both regulations impose strict deadlines that financial institutions must meet. Missing these deadlines can result in regulatory penalties, financial losses, and reputational damage.

ServiceNow Dispute Content Pack for US Regulations

ServiceNow provides the Dispute Content Pack for US Regulations to help financial institutions meet Reg E and Reg Z requirements out-of-the-box. This content pack includes:

Pre-configured SLAs: Timeframes aligned with regulatory requirements for investigation windows and resolution deadlines.
Provisional Credit Timers: Automated tracking of provisional credit deadlines to ensure timely issuance.
Workflow Automation: Rules and notifications to help teams stay on top of regulatory deadlines.
Compliance Visibility: Dashboards and reporting to monitor compliance status across your dispute portfolio.

Learn more: Dispute Content Pack for US Regulations

Global Regulatory Flexibility

ServiceNow is a global company, and we recognize that financial institutions operate across jurisdictions with varying regulatory requirements. While the Dispute Content Pack provides out-of-the-box support for US regulations, the underlying SLA management and workflow capabilities are fully configurable and extensible.

This means institutions operating in other regions can:

Configure SLAs to align with local regulatory timeframes (e.g., PSD2 in Europe, regional consumer protection laws in APAC).
Customize Timers and Notifications to meet jurisdiction-specific requirements for provisional credits, customer communications, and investigation windows.
Extend Workflows to incorporate region-specific processes and documentation requirements.

This flexibility allows global financial institutions to leverage a single platform across regions while maintaining compliance with each jurisdiction's unique requirements.

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Labels: Financial Services Operations, Banking, FSO, Implementation, Disputes, Card Data Security, Tokenization, Compliance, Regulations, Reg E, Reg Z