Last reviewed: October 2026.
Key takeaways
- Payment compliance covers data security, anti-fraud measures and legal obligations for banks, payment service providers (PSPs) and merchants.
- PCI DSS applies to entities that store, process or transmit cardholder data.
- GDPR has applied since 25 May 2018.
- Under the US Bank Secrecy Act, financial institutions report cash transactions above $10,000 (daily aggregate amount) and suspicious activity.
- Best for merchants that accept cards in more than one region: start with PCI DSS, then add the rules that apply in each market you sell to.
Payment compliance is the set of laws, card network standards and internal controls that govern how you take, process and store payments. The main frameworks are PCI DSS, PSD2, AML and KYC rules, and GDPR, which has applied since 25 May 2018 (European Commission).
The speed of regulatory change, innovation, and cross-border activity in the payments industry means compliance is a constantly evolving and growing challenge for modern businesses.
In this article, you will see 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 simplifying 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 strong 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.
| Framework | Set by | Applies to | What it requires |
|---|---|---|---|
| PCI DSS | PCI Security Standards Council | Entities that store, process or transmit cardholder data | Protect cardholder data |
| PSD2 | EU, Directive 2015/2366 | Payment service providers in the EU | Strong customer authentication and secure communication |
| Bank Secrecy Act | US, overseen through FinCEN | US financial institutions | Report cash transactions above $10,000 (daily aggregate) and suspicious activity |
| GDPR | EU | Organizations that collect, store and access personal data | Safeguard personal data; applies since 25 May 2018 |
| Instant Payments Regulation | EU, adopted 13 March 2024 | Payment service providers | Speed up the provision and uptake of instant payments |
| OFAC sanctions | US Department of the Treasury | Sanctioned countries, regimes and parties | Economic and trade sanctions are administered and enforced |
- PCI DSS: Set by the PCI Security Standards Council. Applies to entities that store, process or transmit cardholder data. Requires protection of cardholder data.
- PSD2: Set by the EU in Directive 2015/2366. Applies to payment service providers in the EU. Requires strong customer authentication and secure communication.
- Bank Secrecy Act: US law overseen through FinCEN. Applies to US financial institutions. Requires reports of cash transactions above $10,000 (daily aggregate amount) and of suspicious activity.
- GDPR: Set by the EU. Applies to organizations that collect, store and access personal data. Has applied since 25 May 2018.
- Instant Payments Regulation: Adopted by the EU on 13 March 2024. Applies to payment service providers. Aims to speed up the provision and uptake of instant payments.
- OFAC sanctions: Administered by the US Department of the Treasury. Applies to targeted foreign countries, regimes and other parties. Economic and trade sanctions are administered and enforced.
PCI DSS (Payment Card 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. It applies to entities that store, process or transmit cardholder data (PCI SSC). The Council was founded in 2006 by American Express, Discover, JCB International, MasterCard and Visa (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 and PSD3 (Payment Services Directives)
PSD2 is the EU's Directive 2015/2366 on payment services. Its rules on strong customer authentication (SCA) and common and secure open standards of communication are set out in Delegated Regulation (EU) 2018/389 (European Commission). PSD3 is the planned successor; Nuvei's guide to PSD3 compliance explains what to watch.
One significant innovation driven by PSD2 is the rise of electronic fund transfers and mobile payments, which play an important 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 key customer information to assess risks and ensure adherence to anti-money laundering (AML) regulations.
In the United States, FinCEN's customer due diligence rule requires covered financial institutions to identify and verify the identity of the beneficial owners of legal entity customers when those customers open accounts (FinCEN).
Under the US Bank Secrecy Act, financial institutions must report cash transactions above $10,000 (daily aggregate amount) and report suspicious activity that might signify money laundering, tax evasion or other criminal activities (FinCEN).
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. It entered into force on 24 May 2016 and has applied since 25 May 2018 (European Commission). 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 important 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, which mandates stronger customer authentication.
Regulations such as the EU's Instant Payments Regulation, adopted on 13 March 2024, are aimed at speeding up the provision and uptake of instant payments (European Central Bank).
These developments not only enhance user experience and customer due diligence, but also expand opportunities for cross-border commerce.
How do payment compliance regulations reduce risk?
Mitigating risk from payment processes is good news for consumers and stakeholders across the industry 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 strong 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. By understanding and adhering to these regulations, you reduce risk and improve security and customer confidence.
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 important 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 simplify 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 important. Compliance should not operate in isolation, but in close coordination with IT, operations, and risk management teams to embed controls across payment operations. Regular training programs keep staff up to date on regulatory developments, while internal audits help identify gaps and ensure continuous improvement.
How do evolving regulations affect cross-border payments?
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.
In the EU, the Instant Payments Regulation affects how quickly payments move, and PSD3 is the planned successor to PSD2. Both are worth tracking if you sell into the EU.
OFAC, part of the US Department of the Treasury, administers and enforces economic and trade sanctions against targeted foreign countries and regimes, terrorists and others (OFAC).
To manage these challenges, businesses should adopt global compliance platforms that centralize regulatory updates, simplify due diligence, and support multi-jurisdictional reporting.
How Nuvei handles this
If you sell in several markets, you carry several rule sets at once. Nuvei offers local acquiring in 52 markets and more than 720 alternative payment methods, so you can accept payments locally instead of routing them cross-border. Nuvei's fraud and risk tools use predictive analytics to reduce fraud losses by 20%. Your compliance obligations still depend on your business model and markets, so confirm scope with your own compliance team.
Frequently asked questions
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.
Who must follow PCI DSS?
PCI DSS applies to entities that store, process or transmit cardholder data.
When did GDPR start to apply?
GDPR entered into force on 24 May 2016 and has applied since 25 May 2018.
What does the Bank Secrecy Act require?
Financial institutions must report cash transactions above $10,000 (daily aggregate amount) and report suspicious activity that might signify money laundering, tax evasion or other criminal activities.
What does OFAC do?
OFAC, part of the US Department of the Treasury, administers and enforces economic and trade sanctions against targeted foreign countries and regimes, terrorists and others.
What to do next
- List the markets where you accept payments and the rules that apply in each.
- Confirm whether you store, process or transmit cardholder data, which brings PCI DSS into scope.
- Check your KYC and sanctions screening against the AML and OFAC rules above.
- Review how you collect, store and access personal data under GDPR.
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 important 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 affect 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 run secure, compliant payment operations.
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.
A clear understanding of these frameworks is not only a safeguard, it is a foundation for sustainable growth. Talk to Nuvei about the compliance requirements in the markets you sell to.
