What Is PCI Compliance? A Guide for Small-Business Owners

Payment card industry (PCI) compliance standards help businesses keep cardholders' data safe. Every business that takes credit card payments must be PCI compliant. If your business isn’t, it can lead to serious problems — including fines.

PCI requirements include encrypting data, managing firewalls and updating antivirus software. The PCI Security Standards Council manages these security standards. But card networks and credit card processing companies enforce them.

While requirements are universal, their implementation can vary. You can contact payment processors or card networks about their specific programs.

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Businesses should take the following steps to ensure their PCI compliance:

• Know whom you work with. The type of payment service you use can affect the compliance process. Payment service providers — like Square or Stripe — often take on some responsibilities themselves. You may not need to do anything. Check with your PSP to be sure. 

• Review your contract. Businesses that use individual merchant accounts will likely have more work to do. Your PCI compliance requirements should be in the terms and conditions of your account agreement. 

• Determine your merchant level. PCI compliance rules divide businesses into four groups (levels 1-4). How many transactions you process yearly determines your level. Larger businesses may need to hire a third party to audit them.

• Find the appropriate paperwork. Smaller businesses can assess themselves. There are multiple self-assessment questionnaires. You can find them in the PCI Security Standards Council’s document library. Which you use depends on how you handle card data. 

• Complete the self-assessment questionnaire. Your merchant bank or payment processor should be able to help if you run into issues. That includes if you’re unsure which form to use. 

• Repeat the process. PCI compliance isn’t a one-time exercise. Businesses should complete this task each year.

No, the government does not require PCI compliance. Your payment processor or merchant service provider does.

These companies act as de facto administrators of PCI compliance for businesses. They include specific PCI compliance requirements in your contract or agreement.

Businesses must meet the following 12 requirements to be PCI compliant:^[0]

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Yes. The latest version of the PCI Data Security Standard went into effect March 31, 2024.^[0]

For more details, visit the PCI DSS Summary of Changes in the council’s document library.

The PCI Security Standards Council creates the broad security standards. American Express, Discover, JCB International, Mastercard and Visa founded this council in 2006.^[0]

But each card network sets its own requirements, too. For instance, Mastercard and American Express have different cutoffs for level 1 merchants.

Mastercard puts businesses with more than 6 million annual Mastercard and Maestro transactions in that bucket.^[0]

Many popular payment processors for small businesses do not charge PCI compliance fees. These include Square, Stripe and PayPal.

Others only require non-compliant businesses to pay. For example, Dharma Merchant Services charges a $39.95 monthly fee for this situation.^[0]

There may be more costs involved, though. Level 4 merchants may need to pay third parties to scan and test their networks, for instance. Other fees may be associated with completing the questionnaire and fixing existing issues.

Becoming PCI compliant may seem challenging given the technical nature of data security. But taking the following steps can make the process easier.

Lots of this advice is similar to best practices for securing your own personal devices. It includes:

• Use strong passwords.

• Keep software updated. Older point-of-sale terminals can be particularly vulnerable. Newer cloud-based systems are built with strong encryption, and typically receive updates automatically.

• Store only what you need. You probably don’t need physical copies of receipts, for instance.

• Don’t click on suspicious links.

• Only use card readers and payment software validated by the PCI Security Standards Council.

• Educate employees about protecting cardholder data.

Take your time completing the self-assessment questionnaire. Your information should be accurate in case there's a compliance violation in the future. If you need help, ask your payment processor. You can also consult an outside agency.

To reduce security risks, make sure your POS system’s software is up to date. It 's also helpful to opt for a solution with built-in payment processing and in-house hardware.

End-to-end systems are usually secure and low maintenance. Plus, they often include PCI compliance support.

• Find out which level your business falls under. How many transactions your business completes each year determines this. You can ask your payment processor for details or visit the PCI Security Standards Council’s website for more information.

• Find out which assessment to use.

• Understand the specific compliance requirements in your contract.

• Ask for consultant recommendations should you need help.

• Check whether you are paying a PCI compliance fee.

• Find out if it provides or recommends compliance services.

Use resources on the PCI Security Standards Council website to learn more about securing customer data.