Industry Compliance & Regulations for Payment Processors

Payment processors must follow a combination of financial, security, and operational regulations. These protect merchants, customers, and financial institutions.

1. PCI DSS – Payment Card Industry Data Security Standard

• What it is: A global standard that ensures companies safely handle credit card data.

• Who requires it: Credit card companies like Visa, MasterCard, American Express.

• What it covers:

  • Encrypting cardholder data

  • Regular system scanning and testing

  • Access control policies

• Why it matters: Prevents data breaches and fraud when handling card payments.

Any business that stores, processes, or transmits credit card data must comply.

2. NACHA Rules – National Automated Clearing House Association

• What it is: Governs how ACH (bank-to-bank) payments work in the U.S.

• What it includes:

  • Customer authorization requirements

  • Timeframes for ACH processing and returns

  • Data security and fraud prevention

• Why it matters: Ensures secure and accurate ACH transactions.

Merchants must obtain proper authorization before debiting a customer’s bank account.

3. KYC / KYB / AML – Identity & Risk Regulations

• KYC (Know Your Customer)

  • Verifies the identity of individual clients

• KYB (Know Your Business)

  • Verifies the identity and legitimacy of business clients

• AML (Anti-Money Laundering)

  • Prevents illegal activity like fraud, terrorism financing, or hiding stolen money

• Why it matters: Helps payment processors avoid being used for criminal activity.

Payment processors like CSG Forte collect business info, government IDs, bank records, etc. as part of these checks.

4. GLBA – Gramm-Leach-Bliley Act

• What it is: A U.S. law requiring financial institutions to protect consumer data.

• What it includes:

  • Data privacy policies

  • Sharing limitations

  • Safeguards for customer records

Helps ensure your personal and financial information stays private.

5. OFAC – Office of Foreign Assets Control

• What it is: U.S. government agency that enforces sanctions and watch lists.

• Why it matters: Payment processors must ensure they don’t process payments to/from blocked or high-risk individuals or countries.

This protects the U.S. financial system from being used in prohibited transactions.

6. IRS Reporting / Tax Regulations

• Processors are required to report transaction volumes to the IRS (Form 1099-K).

• Helps prevent tax fraud and ensure transparency in income reporting.

Summary Table