TL;DR
PCI compliance isn’t technically a law, but it is a legal requirement through your merchant agreement with credit card companies and payment processors. In other words, if your business accepts credit cards, you’re contractually obligated to follow PCI DSS. Not complying can result in fines, legal liability, and reputational damage.
Understanding PCI compliance
PCI DSS stands for Payment Card Industry Data Security Standard, or simply PCI. It’s a set of rules and requirements designed to protect credit card information during transactions. In simple terms, PCI DSS is a security framework that companies handling payment card data must follow to keep sensitive information safe from hackers and unauthorized access by employees.
Important: Following PCI DSS helps prevent data breaches, protect your customers, and keep your payment systems secure.
The purpose of PCI compliance is to safeguard cardholder data and reduce the risk of fraud and identity theft. It demonstrates that your business takes data protection seriously—helping you maintain customer trust and avoid the financial and legal fallout of a security breach.
Is PCI compliance a legal requirement?
Technically, no U.S. federal or state law explicitly mandates PCI compliance. However, it is contractually required by Visa, Mastercard, American Express, Discover, and JCB through their agreements with acquiring banks and payment processors.
That means that when you accept credit card payments, you are legally obligated by contract to comply with PCI DSS.
In practice, non-compliance can still have serious legal consequences, because it violates your merchant agreement and exposes you to liability if a data breach occurs.
Regulatory implications for non-compliance
While PCI DSS itself isn’t legislation, many U.S. data protection and consumer privacy laws—such as the California Consumer Privacy Act (CCPA), the New York SHIELD Act, and various state breach notification laws—require businesses to take reasonable steps to secure personal information.
Failing to meet PCI DSS standards could be seen as negligence or failure to meet industry standards, which can increase your legal exposure in the event of a data breach.
Consequences of non-compliance
1. Potential penalties and fines
Card networks can impose fines ranging from $5,000 to $100,000 per month on acquiring banks for merchants who fail to comply. These costs are often passed down to the merchant.
In severe cases, you may also face higher transaction fees, account suspension, or even termination of your ability to process card payments.
2. Impact on business reputation
A single data breach can have devastating consequences for your business reputation. Consumers may lose trust, sales can drop, and recovering from the incident can take years—especially for small businesses without dedicated security teams.
3. Legal actions and lawsuits
If a breach occurs due to PCI non-compliance, you may be held liable for fraudulent charges, face lawsuits from affected customers, and be responsible for forensic audits and notification costs under state data breach laws. The legal and financial impact can easily exceed the cost of maintaining compliance.
Steps to achieve PCI compliance
To achieve PCI compliance, businesses must meet 12 core requirements that fall under six main objectives:
- Build and maintain a secure network
- Protect cardholder data
- Maintain a vulnerability management program
- Implement strong access control measures
- Monitor and test networks regularly
- Maintain an information security policy
