How payment compliance regulations impact global payments

Understanding the complexities of payment compliance regulations related to electronic payments can be a real headache! The speed of regulatory changes, innovation, and cross-border activity in the payments industry means it's a constantly evolving and growing challenge for modern businesses.

In this article, we explain how major payment services regulations drive security, transparency, and operational excellence in payment transactions, and why it is worth taking a little time to understand their impact.

What is payment compliance?

Payment compliance is the process that ensures all payments and processing operations conform to local and international rules, as well as regulations governing payments.

It covers a wide range of requirements - including data security protocols, anti-fraud measures, and legal obligations - that apply to any payment processing companies involved in processing payments, such as banks, payment service providers (PSPs), and merchants.

Payment Initiation Service Providers (PISPs) also play a role in streamlining payment processes by allowing businesses to initiate payments directly from customer accounts for greater efficiency.

Key stakeholders in payment compliance include regulatory bodies that establish and enforce consumer protection laws and financial laws, service providers that implement compliant technologies, and merchants that must uphold these standards in day-to-day transactions.

By maintaining a robust compliance program and strong compliance practices, these parties collectively deliver more secure, transparent, and trustworthy global payments. These practices change over time in line with global commerce, fraud patterns and other factors.

What are payment compliance regulations?

Payment compliance regulations are the set of laws, standards, and guidelines that govern how payment systems must operate to ensure security, legality, and transparency in financial transactions within the complex regulatory landscape.

These regulations underpin consumer protection, prevent fraud, and enforce data protection across local and global markets. Ultimately, they are there to ensure customer confidence in electronic payments.

They include frameworks like PCI DSS for data security, AML (anti-money laundering) laws, and KYC (know your customer) requirements within the financial services industry.

Regulators, such as central banks, are responsible for enforcing these rules, while payments providers and merchants must conduct risk assessments and implement them.

Below are some of the major regulations that impact the industry.

PCI DSS (Payment Data Industry Data Security Standard)

PCI DSS is the global security standard developed by the PCI Security Standards Council (PCI SSC) to protect cardholder data during payment transactions. Achieving PCI DSS compliance is mandatory for businesses handling cardholder data, as it ensures adherence to the framework established by the PCI SSC.

The PCI SSC sets compliance processes, technical and operational requirements for organizations that store, process, or transmit debit and credit card information.

PCI compliance aims to protect consumer data and prevent breaches, fraud, and identity theft by enforcing strict security protocols among all financial institutions.

PSD2/PSD3 (Revised Payment Services Directives)

PSD2, and its upcoming successor PSD3, are EU regulations designed to increase transparency, competition, and innovation in payments, particularly involving third-party providers. These directives are enforced by EU regulators like the European Central Bank (ECB) and the European Banking Authority (EBA), and mandate strong customer authentication (SCA), improve consumer rights, and require open banking through secure APIs.

One significant innovation driven by PSD2 is the rise of electronic fund transfers and mobile payments, which play a crucial role in modernizing transactions and meeting changing consumer demands.

The aim is to protect consumers but provide a more integrated and competitive European payments market.

AML/KYC (Anti-Money Laundering/Know Your Customer)

Anti-Money Laundering AML/Know Your Customer KYC regulations combat financial crime, requiring banks and other payment providers to verify customer identities and monitor transactions for fraud or other suspicious activity.

A critical component of KYC protocols is the customer identification program, which mandates the collection and verification of essential customer information to assess risks and ensure adherence to anti-money laundering (AML) regulations.

These regulations are overseen by international bodies like the Financial Action Task Force (FATF) and national regulators like FinCEN in the United States.

These rules aim to prevent money laundering, terrorist financing, and other illicit activities, ensuring greater transparency and integrity in the financial systems.

GDPR (General Data Protection Regulation)

GDPR is the EU’s comprehensive data protection law that came into force in 2018. It governs how organizations collect, store and access personal data, including sensitive financial data.

GDPR ensures that individuals have control over their data and that businesses implement safeguards to prevent misuse and breaches, thereby strengthening consumer trust.

In the event of a data breach, GDPR mandates that organizations follow strict notification procedures to inform both authorities and affected individuals promptly.

How do these shape the global payments landscape?

The regulatory bodies are instrumental in setting standards and ensuring that payment service providers and merchants comply with laws that protect consumers and maintain the integrity of financial systems.

By setting clear standards for data protection, fraud protection and transparency, trust is built among customers, businesses and financial institutions.

Payment network rules are crucial in ensuring secure transactions, as they set the policies and guidelines that payment processors must follow to avoid service interruptions and protect against fraud.

Payment regulations also promote innovation by generating a level playing field where traditional banks and fintechs can compete fairly, particularly under frameworks like PSD2/3, which mandate open banking and stronger customer authentication.

Regulations such as the EU’s Instant Payments Regulation are accelerating transaction speeds and driving interoperability, making real-time payments the new standard.

These developments not only enhance user experience and customer due diligence, but also expand opportunities for cross-border commerce.

How payment compliance regulations mitigate risks

Mitigating risk from payment processes is good news for consumers and stakeholders across the industry ecosystem for reasons that extend beyond immediate financial losses.

Payment compliance regulations help businesses mitigate a wide spectrum of risks that can severely impact operations, finances, and brand reputation. These include fraud, such as unauthorized transactions or identity theft; money laundering, where illicit funds are funneled through legitimate payment systems; data breaches, which expose sensitive customer and payment information; and reputational harm, which can lead to loss of customer trust and market share.

Internal controls play a critical role in reducing data exposure risks and ensuring adherence to evolving regulatory requirements.

Compliance frameworks address these threats by requiring robust safeguards, such as strong customer authentication (SCA) to prevent fraud, real-time transaction monitoring to detect suspicious activity, and data protection mandates like GDPR to minimize breach risks.

Non-compliance can result in substantial financial penalties, operational disruption, and regulatory scrutiny. For example, in 2023, a GDPR fine surpassing 1.2 billion Euros was given to Meta (formerly known as Facebook), marking a significant moment in data protection enforcement.

Other examples are companies that have failed to implement adequate AML controls can face sanctions and legal action. By understanding and adhering to these regulations, businesses not only reduce risk but also gain a competitive edge through improved security, customer confidence, and regulatory resilience.

Payment processing compliance

Payment processing compliance refers to the comprehensive set of processes and procedures that payment processors implement to ensure adherence to regulatory requirements, payment security, and industry standards. This includes the implementation of strong access control measures to restrict unauthorized access to sensitive data, as well as vulnerability management programs to identify and address potential security weaknesses.

Ongoing monitoring is another critical component of payment processing compliance. Payment processors must continuously monitor transactions to detect and prevent financial crimes, such as fraud and money laundering. Compliance with data protection regulations, such as the General Data Protection Regulation (GDPR), is also essential to protect sensitive customer data and maintain consumer trust.

By implementing these compliance measures, payment processors can ensure the secure processing of payment transactions, protect payment data, and adhere to regulatory requirements.

How businesses can implement strong compliance strategies

To effectively manage payment compliance, businesses should adopt a proactive and technology-driven approach. Integrating automation, AI-powered monitoring, and real-time reporting can streamline compliance workflows, flag anomalies quickly, and reduce manual errors. Building adaptive compliance frameworks that evolve with changing regulations ensures long-term resilience and responsiveness.

Compliance audits play a role in maintaining compliance with standards like PCI DSS. These audits should be conducted regularly, involving both internal assessments and external reviews to ensure sensitive data is securely stored and accessible for review.

Cross-functional collaboration is also essential - compliance should not operate in isolation, but in close coordination with IT, operations, and risk management teams to embed controls across the payment ecosystem. Regular training programs keep staff up to date on regulatory developments, while internal audits help identify gaps and ensure continuous improvement.

How evolving regulations impact cross-border transactions

Businesses must comply with a patchwork of jurisdiction-specific regulations, each with distinct rules, data handling standards, and reporting requirements. This regulatory fragmentation can lead to delays, increased costs, and heightened compliance risk.

Recent EU initiatives - such as PSD3 and the Instant Payments Regulation - are reshaping this landscape by pushing for faster, more transparent transactions, while imposing stricter data security and authentication requirements. These changes affect everything from how data is shared between countries to how quickly funds must settle, raising the compliance bar for international transactions.

Additionally, compliance with the Office of Foreign Assets Control (OFAC) regulations is important. The OFAC manages economic and trade sanctions, and non-compliance can lead to severe legal consequences.

To manage these challenges, businesses should adopt global compliance platforms that centralize regulatory updates, streamline due diligence, and support multi-jurisdictional reporting.

How can Nuvei help?

Nuvei's payment compliance ensures adherence to the Payment Card Industry Data Security Standard (PCI DSS). Nuvei also handles compliance related to various card schemes and regulatory programs, such as the Visa Integrity Risk Program (VIRP) and PSD2/3.

Conclusion

Regulations governing payments will continue to evolve in step with global commerce and emerging threats. To remain in step, businesses must stay informed and meet varying legal and operational requirements across regions.

Payment compliance refers to the policies and procedures that organizations implement to meet regulatory standards and best practices aimed at mitigating risks associated with payments. These frameworks are essential for reducing risk, preventing fraud, protecting customer data, and maintaining legal and financial stability.

Regulatory updates like PSD3 and the Instant Payments Regulation are not just rule changes - they directly impact how businesses operate, from transaction speed to cross-border capabilities. By adopting effective compliance strategies, investing in scalable systems, and encouraging collaboration between teams, companies can ensure seamless, secure, and compliant payment operations.

A clear understanding of these frameworks is not only a safeguard - it’s a foundation for sustainable growth and competitive advantage. Talk to Nuvei to take away the headache of understanding the complexities of regulatory compliance.

‍