The Importance of Payment Compliance: What You Need to Know About Your Risk

payment compliance

September 3, 2021

The term “compliance” can give a feeling of being forced to abide by a set of rules or orders, despite what your wishes may be. However, payment compliance in the payments industry does not fall under this umbrella of connotation. Rather, payment compliance is one of the most important considerations your company should be making in order to protect your integrity and reputation.

What is Payment Compliance?

What exactly is payment compliance? Being “payment compliant” means that your company follows a certain set of standards of industry best practices and risk avoidance. It exists to protect your company and credit card companies from fraud and risk. Although not legally mandated, payment compliance is incredibly important because it reduces data breaches, protects the data of cardholders, improves your company’s reputation, and avoids fines. There are many different types, but the main and most important kind is the Payment Card Industry Data Security Standard, or PCI DSS.  

Different Types of Payment Compliance

Payment Card Industry Data Standards are a set of standards developed to ensure that all companies that accept, store, process, or transmit credit card information maintain secure methods of doing so. PCI DSS is upheld by the PCI Security Standards Council, a global forum of payments industry stakeholders. These high-level industry standards are incredibly important because they were developed to protect payment processing companies from high-risk merchant accounts. If these high-risk accounts manage to pass the inspection process and are onboarded, these accounts cause all different types of problems for the issuing payment processor, including fraud, data breaches, and loss of funds. 

Making sure your merchant underwriting process is as airtight as possible is one of the best ways to avoid accidentally onboarding a high-risk merchant account. If you want to upgrade your underwriting and onboarding processes, consider Agreement Express’s Merchant ScanXpress software. It automates the underwriting and onboarding process and provides you with a calculated risk scorecard for each merchant to help your business avoid the most risk.

KYC Compliance: “Know Your Customer” Compliance is the process of verifying the identity of a client before opening their account. These verification checks continue to happen periodically after the account has been opened because it’s important to constantly monitor the status of your merchants. KYC Compliance is very important in order to ensure that your customers are who they say they are. Companies can align with KYC Compliance rules with ease if their underwriting and merchant onboarding processes are as risk-free as possible, vetting out the low-risk from the high-risk merchant accounts. The fastest and most risk-free way to underwrite and onboard merchants is Agreement Express’s Merchant ScanXpress software

AML Compliance: Anti-Money Laundering Compliance works to protect companies from fraud and criminal monetary activity in the realm of international transactions and accounts. AML Compliance rules help detect suspicious activity, particularly that of potential money laundering and terrorist financing attempts.  It sounds scary, we know, but the reality of these situations is part of the reason it is so important to have payment compliance: it protects us.

Best Practices to Avoid Fraud and Risk

In the realm of payment compliance, the rules are always changing and there are seemingly always more of them.  As the payments industry is still experiencing many growing pains, it is necessary for the regulations surrounding its operations to change and expand alongside it. Since these compliance standards exist for the benefit of the payment industry as a whole, non-compliance with these regulations is a huge risk factor for your firm.

Keeping up with all of the changing compliance regulations can be very difficult. Agreement Express has software that is a comprehensive and dynamic solution to managing payment compliance rules and regulations to protect your business and its clients.

Payment Compliance Key Takeaways

The bottom line? A few things. Firstly: non-compliance is risky. These regulations are in place and constantly improving to protect your company and your clients. Following them is in a company’s best interest.

Secondly: there are many different types of compliance and ways to avoid fraud and risk. The PCI DSS guidelines alone have 12 different requirements with which to make sure your company aligns. With the ever-changing landscape of the payments industry, staying compliant is like trying to hit a moving target.

Thirdly: software is the best way to make sure your onboarding and underwriting processes are risk-free and wholly compliant. Looking for a change that will keep your company up-to-date with compliance and risk-free? You’re already in the right place. Sign up here to book your demo today.

Payment Compliance FAQs

How much compliance is too much compliance?

There is no such thing as too much compliance. Any adherence to the regulations surrounding the payment processing industry will benefit your company by protecting you from risk and fraud.

What is the cost of PCI Compliance?

It’s more a matter of what PCI Compliance will save your company, but the real cost of PCI Compliance completely varies depending on your organization’s structure and size. Want to learn more? Check out this resource.

How do I improve my firm’s ability to identify high-risk merchant accounts?

Switching to software that automates the process of vetting out high-risk merchant accounts is the first step. Click here to sign up for a demo, or here for a free trial of Agreement Express’s Merchant ScanXpress.