Payments Compliance Essentials

Credit card transactions have become the norm of doing business. Likewise, credit card fraud has become more common too. Ensuring payment compliance is critical to ensure that companies and financial institutions are safe from credit card fraud and data breaches. 

What is Payments Compliance?

Standards set by the payments industry for security are also known as payments compliance. However, understanding the ins and outs of payment compliance can take time and effort. This is because different regulations apply depending on the method of payment, type of business involved, purchase amount and type, and where the purchase is taking place. 

Fortunately, organizations such as PCI Security Standards Council provide global payment compliance standards. Such standards require companies to maintain high levels of security to protect against fraud. Violating these standards comes with steep fines and a much greater risk of fraud. Unsurprisingly, companies have invested heavily in ensuring payments compliance and security. 

Businesses that gather customer information must meet specific data security requirements depending on their business jurisdiction. These include the General Data Protection Regulation, California Consumer Privacy Act, and Personal Information Protection and Electronic Documents Act

In recent years there has been a significant increase in credit card fraud, making payment compliance more critical than ever. Credit card fraud reaches billions of dollars. Additionally, the US accounts for 36% of credit card fraud despite only representing 22% of global card transactions. While fraud can occur for card-present and card-not-present transactions, it is much more prevalent

Importance of KYC

The Know Your Customer (KYC) process is critical to payment compliance. This occurs when payment processors onboard new merchants to their service. KYC ensures that the business is legitimate and is not a fraudulent front. This can be a complex process, but new Fintechs such as do offer solutions to help alleviate this process. 

Benefits of Meeting PCI Compliance

There are numerous benefits to meeting payments compliance and PCI. By completing these high-security standards, customers can trust the business to keep their information safe and boost its reputation. Additionally, meeting these standards will improve the overall IT security of a company and be less vulnerable to other data breaches

Downsides of Not Meeting PCI Compliance

On the flip side, there are various downsides to not meeting payments compliance standards. Costly data breaches are the most obvious of these. But there is also the issue that customers and partners will be less confident in trusting a business with their information if they know there has been a recent data breach. 

Additionally, the company that has a data breach can be liable for any losses from customers or partners. Not meeting these payment compliance standards can also open a company to lawsuits and government fines. By not meeting PCI compliance, a business can face fines of up to $500,000 per security breach incident

When fraud occurs, a chargeback is initiated, which is costly for a business to deal with. It is common for a company to lose twice the amount of the original transaction during a chargeback. This is a problem that all companies have to deal with, but those that are not PCI compliant dramatically increase the likelihood that they will have to deal with chargebacks

PCI Requirements

PCI and Payments compliance is not one-time and requires yearly renewal to ensure up-to-date security. In addition, twelve basic standards must be met for a business to be PCI compliant.

  • Have a firewall that prevents access by untrusted network connections.
  • Altering default passwords and security settings in addition to encrypting access. 
  • Ensure that cardholder data is protected by properly disposing of it and limiting the types of data collected.
  • Never send cardholder data over unprotected networks such as text or email; always ensure encryption when sending cardholder data. 
  • Operate and have up-to-date antivirus software that routinely monitors for any breaches. 
  • Ensure adequate security protocols to find and reinforce any weak points in data security. 
  • Have cardholder data on a need-to-know basis to limit access to the data. 
  • Implement user IDs for employees with computer access to verify who has access to data. 
  • Limit physical access to data to those who need to know and provide adequate physical security to ensure this. 
  • Maintain a robust audit trail to verify who has had access to cardholder data. 
  • Conduct routine testing of security systems to check for vulnerabilities. 
  • At least once a year, publish a publicly available information security policy. 

To be PCI compliant, a company must ensure it meets the above PCI requirements and conduct an assessment of system security. In addition, a business will need to test the security of the network used in the payment process. A company will need to conduct an annual self-assessment to verify payments compliance and quarterly scans of systems connected to the internet to remain PCI compliant.

PCI Merchant Levels 

Various levels of businesses are essential to consider when it comes to payments compliance under PCI. Level 1 merchants process over 6 million Visa transactions a year. Level 2 processes 1 to 6 million transactions per year. While Level 3 processes 20,000 to 1 million a year and Level 4 less than 20,000 a year. 

Who is Responsible for Payments Compliance?

There are various entities that are involved in the PCI compliance process. These include card networks like Visa, PCI Security Standards Council, payment processors, and business owners. Each one has a critical role in ensuring payments compliance across the payments space. In addition, coordination among these entities allows customers to use their credit card information to conduct transactions securely. 


Despite the complexities of payments compliance, some useful standards and resources can navigate this critical aspect of modern business. Conversely, the costs of not meeting standards such as PCI compliance can be devastating for a business. 

Implementing PCI data security standards, robust monitoring, and KYC procedures all protect businesses and financial institutions from the risks of fraud and data breaches. New technologies and companies do offer solutions that make this easier to manage, and anyone seeking to maintain payments compliance should investigate these alternative solutions.

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