The Complete Guide to Credit Card Processing Laws for Merchants

November 6, 2021

Credit card processing laws are notoriously difficult to keep up with. Every year, new legislation is passed that impacts how you process credit cards and the fees involved in doing so. The last thing any business owner needs is to be out of compliance with these complex rules, so it's essential to stay on top of them at all times.

PCI Compliance

The Basics of PCI

The acronym PCI stands for Payment Card Industry. The PCI is in charge of enforcing a strict set of rules known as the PCI DSS (Payments Card Industry Data Security Standards). It's a set of industry-wide guidelines aimed at preventing fraud.

The Data Security Council, which is made up of significant credit card companies such as Mastercard, Visa, American Express, and Discover, created the PCI DSS.

All merchants, financial institutions, payment processors, and merchant services providers are responsible for adhering to the PCI DSS credit card processing laws, which help protect the cardholder's data during a transaction.

PCI compliance will protect your business from data breaches and help you avoid the crippling costs of fraudulent transactions. Furthermore, failure to comply with PCI standards is punishable by large fines, so it's best to learn about them as soon as possible.

Why Is It Important to Know These Laws?

On a fundamental level, understanding these credit card processing laws will help ensure that your business is protected from criminal activity. The fines can be prohibitively high for those who aren't compliant with PCI DSS regulations, so it's vital to make sure you're following the rules as closely as possible.

We see an increasing number of lawsuits being filed against businesses by credit card companies and consumers regarding these laws. We have seen a lot of good information coming out about this topic over the past few years.

However, it is still very confusing for many merchants. Not knowing what you can or cannot do could end up costing your business thousands in fines if you happen to violate these laws.

How Can You Ensure That Your Business Is PCI Compliant?

The first thing you need to do is educate yourself on these laws. Many resources are available, but one of the best places to start your research will be your credit card processing company or merchant services provider because they should have plenty of information about compliance regulations that apply directly to them and their business model.

If you use a third-party payment processor, ensure that your chosen company has worked hard to become PCI compliant. If they haven't done so yet, you may want to look for another provider.

The best way to ensure compliance with credit card processing laws is by following them carefully and staying on top of any changes made each year. It's a time-consuming process, but it's a crucial one.

The Four Levels of PCI Compliance

Level 1 PCI

  • Businesses that process more than six million payments per year are eligible for this program.
  • The most expensive option.
  • It includes the costs of hardware and software and the costs of training an internal auditor.

Validation requirements

  • A Qualified Security Assessor (QSA) or an internal auditor must submit an annual Report on Compliance (ROC) every year.
  • An ASV performs a quarterly network scan.
  • Form for Attestation of Compliance

Level 2 of PCI

  • This program is for companies that process one million to six million payments per year.

Validation requirements

  • Quarterly network scan by ASV 
  • Attestation of Compliance Form 
  • Annual Self-Assessment Questionnaire (SAQ) 

Level 3 PCI

  • For companies that process 20,000 to one million eCommerce payments per year.

Validation requirements

  • Annual SAQ
  • Quarterly network scan by ASV
  • Attestation of Compliance Form

Level 4 PCI

  • Businesses that process up to 20,000 eCommerce payments or one million payments through other channels per year are eligible.

Validation requirements

  • Annual SAQ recommended
  • Quarterly network scan by ASV, if applicable
  • Compliance validation requirements set by the merchant bank

How Do Credit Card Processing Companies Maintain PCI Compliance?

Companies that process credit card payments must adhere to the standards set by PCI DSS. The Payment Card Industry Data Security Standard is a series of requirements for security protection.

It applies to all companies involved in storing, processing, or transmitting customer credit card data. These laws are necessary because they help protect businesses from breaches due to cyberattacks on their systems.

This standard was created specifically for merchants who store sensitive financial information about customers' payment accounts.

The violation fines can be crippling if your business does not meet these compliance rules as outlined, so staying up-to-date with changes each year will ensure you're never caught off guard by something unexpected happening during an audit.


PCI compliance laws are created to protect both merchants and consumers. Merchants must comply with these rules, or they can face hefty fines for noncompliance, so staying up-to-date on changes each year is critical.

Credit card processing companies have an even greater responsibility for PCI compliance because their business model requires that they store payment account data securely at all times.

They are also held accountable by auditors if there is a breach of security that leads to the loss of customer financial information, so you should only work with providers who maintain high levels of service quality standards within their company culture.

Contact BNG Payments to learn more.

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