Last editedMar 20232 min read
Between cybersecurity and global regulations, it’s more important than ever for businesses to keep up to speed on all compliance issues. Does your business follow the latest payment compliance standards? If not, you could be at risk both in terms of financial penalties and loss of revenue. In this guide, we’ll cover the basics of digital payments compliance to keep you – and your customers – safe.
What is payment processing compliance?
There’s no singular standard for payment processing compliance. This term encompasses a variety of different regulations. Some apply to specific regions, such as the European Economic Area’s PSD2 standard, while others are more widespread such as PCI DSS standards. These various standards are designed to protect both businesses and their customers from serious issues like fraud. In a global marketplace, it’s a good idea to keep up with compliance standards from around the world.
What are the main categories of digital payments compliance?
Although there’s a vast range of payment processing compliance rules, they fit into a few neat categories for easier implementation. Here are a few of the most important categories to be aware of:
1. Consumer security: The primary example of this category is the Revised Payment Services Directive, or PSD2. This set of regulations is used in the European Union to protect consumer data with tools like Strong Customer Authentication or SCA. If you sell within the EU, you’ll need to follow SCA regulations to reduce fraud with multi-step authentication.
2. Data privacy: These include California’s Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) regulations. Both regulate how businesses can gather, store and transmit a user’s personal data. Personal data in this instance refers to anything identifiable about the person, whether it’s a photo, name, email address, bank details, social media posts, or IP address.
3. Payment network compliance: This includes rules set up by the payment networks themselves, such as individual sets of Visa, MasterCard, and NACHA policies.
4. Payment Card Industry Data Security Standards: Also known as PCI DSS, these compliance standards regulate how businesses must store and transmit credit card data. There are 12 requirements included in this standard. If your business isn’t compliant, you may be charged penalty fees by the PCI SSC, which includes five major payment card companies.
5. IT security: This final category covers standard cybersecurity features, including tools to protect against hackers. Examples would include the Know Your Customer (KYC) and Know Your Business (KYB) verification requirements used to identify customers before accepting payments. The goal is to prevent financial fraud, money laundering, and other IT security issues.
How to improve payment compliance
The first step in improving your business’s payment compliance is to look at your existing systems. It can be difficult to follow all these regulations on your own. Most small businesses will partner with a third-party payment processor that handles compliance on your behalf. After analyzing your existing systems, the next step is to update your website and tech infrastructure as needed. Does your website use encryption? Is your checkout page secure? Do you have a pop-up allowing visitors to opt out of data collection and cookies for privacy reasons? Consult with your development team and implement these compliance updates.
As you can see, there’s a lot to consider when it comes to payment processing compliance. Many of the compliance regulations above involve standards for handling cardholder data, which comes at considerable cost. An alternative is to set up direct ACH debits to collect payments instead. These have strict protections already in place and are regulated by banks to keep customers safe. Using a secure payments solution like GoCardless takes the stress out of payment collection, which is why it’s trusted by over 75,000 businesses worldwide.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.