Imagine being hit with an extra $30,000 in fees one month. $100,000 the next. Money is flying out the door, not because of the products you sold, but because of how you processed the payments. This nightmare scenario is a reality for many businesses, thanks to PCI non-compliance fees.

Every year, companies that accept credit cards collectively pay millions in easily preventable non-compliance fees to their merchant account providers. And the worst part? Many business owners have no idea these charges are even happening until it's too late.

The Payment Card Industry Data Security Standard, or PCI DSS, might sound like confusing jargon. However, understanding PCI compliance is critical for protecting your profits and sensitive customer data.

In this article, we'll explain PCI non-compliance fees and why processors charge them. More importantly, you'll learn concrete steps to get your business compliant, stop those fees from eating into your bottom line, and safeguard your livelihood.

Understanding PCI Compliance and Non-Compliance

Before getting into the nitty-gritty of PCI compliance fees, it's important to understand some key concepts and terminology around payment security.

What is PCI DSS?

The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that all companies that process, store, or transmit credit card information maintain a secure environment. These standards were created by the major credit card brands (Visa, Mastercard, American Express, etc.) to protect sensitive cardholder data and prevent fraud.

Who Needs to Comply with PCI DSS?

PCI compliance is mandatory for any business that accepts credit or debit card payments, regardless of size or transaction volume. This includes:

• Brick-and-mortar retailers
• E-commerce websites
• Service providers
• Nonprofits that accept donations via credit card

Compliance requirements vary based on the number of card transactions a business processes annually. Larger businesses have stricter standards to meet.

What Counts as PCI Non-Compliance?

PCI non-compliance means a business is not meeting the minimum security standards outlined by the PCI DSS. Some common examples include:

• Storing credit card data in an unsecured manner
• Not using proper encryption when transmitting cardholder information
• Failing to perform regular security scans and assessments
• Not having a formal information security policy in place
• Using default or weak passwords

The Consequences of Non-Compliance

While PCI compliance fees are a major focus of this article, it's crucial to recognize that money isn't the only thing at stake. In 2013, retail giant Target suffered a massive data breach that exposed the payment information of 41 million customers. Investigators found that Target was not PCI-compliant at the time. In addition to paying $18.5 million in settlements, Target faced a significant loss of customer trust and a tarnished brand reputation.

A data breach can happen to any business that accepts cards, not just major corporations. Protecting your customers' sensitive data through PCI compliance needs to be a top priority - for your pocketbook and your principles.

PCI Non-Compliance Fees Explained

So what exactly are PCI non-compliance fees? In simple terms, they are additional charges a business must pay to its payment processor if it does not comply with PCI DSS standards. These fees are both a penalty and an ongoing incentive for the business to become compliant as quickly as possible.

Understanding the Source of Non-Compliance Fees

One common misconception is that the PCI Security Standards Council or the credit card companies are the ones levying non-compliance fees. In reality, the payment processors and acquiring banks choose to charge these fees to their merchants in addition to other credit card processing fees. The card brands themselves do not impose monthly PCI non-compliance fees.

Processors have a few main reasons for implementing these charges:

1. To encourage businesses to take PCI-DSS compliance seriously and make necessary security upgrades
2. To protect themselves from the liability and costs that could result from doing business with non-compliant merchants
3. To compensate for the additional resources required to monitor and work with businesses that aren't meeting security standards

How Much Can You Expect to Pay?

PCI non-compliance fees can range anywhere from $10 to $100 per month, with the specific amount depending on several factors:

• The particular credit card processor's fee schedule outlined in their merchant agreement
• The size of the business and its annual card transaction volume
• The severity and duration of the compliance issues

For example, a small business that missed a quarterly security scan deadline might be on the lower end of the fee scale. An enterprise with serious, ongoing security issues could see monthly fees closer to $100.

While $30 here and $50 there may not sound significant, PCI compliance costs can add up over time, especially for small businesses on tight margins. A $50 monthly fee turns into an extra $600 annually - not including any other potential consequences of non-compliance.

The good news is that most processors will stop charging the monthly non-compliance fee as soon as the business addresses the issues and validates its compliance. In the next section, we'll cover concrete steps you can take to make that happen.

The Domino Effect: Other Costly Consequences of Non-Compliance

PCI non-compliance fees are just the tip of the iceberg when it comes to the potential fallout of not meeting security standards. Businesses can face a cascade of consequences that amplify the financial damage.

Card Brand Fines and Penalties

While the card brands don't impose monthly non-compliance fees, they will come collecting if a data breach occurs and the compromised business is found to have been non-compliant with PCI standards. These fines can be steep, often up to $500,000 per incident. That's on top of any fraud losses, legal costs, and settlements that may result from the breach.

Higher Transaction Fees

Some processors impose higher per-transaction fees on businesses that aren't PCI compliant. These "non-qualified" transaction rates can be 1-2% higher than the base rates compliant businesses enjoy. Over time, those higher costs on every sale add up to serious money lost.

Inability to Process Card Payments

In severe cases of ongoing non-compliance, a processor or acquiring bank may decide to cut off a business's ability to accept credit card payments altogether. Being unable to process cards, even temporarily, can dramatically impact cash flow and drive customers to competitors.

Damage to Reputation and Customer Trust

Data breaches make headlines, and customers are increasingly wary of businesses that put their sensitive information at risk. The reputational hit from a compliance failure can linger long after the incident, as Target can certainly attest to. Regaining customer trust is an uphill battle that can take years of PR efforts and increased marketing spend.

5 Steps to Banish PCI Non-Compliance Fees for Good

Now for the good news: PCI non-compliance fees are completely avoidable if you take a proactive, informed approach to payment security. Here's how to do it:

1. Assess Your Current Compliance Status

The first step is to figure out exactly where your business stands with regard to PCI DSS requirements. Determine your compliance "level" based on annual transaction volume and identify which specific requirements and security controls you need to implement. A good merchant services provider will help you understand your compliance scope and walk you through the process. Be sure to ask them for guidance and resources.

2. Implement Necessary Security Controls

With your compliance requirements identified, it's time to put the right safeguards in place. This will likely include:

• Installing and configuring firewalls to protect your network
• Setting up strong encryption for sensitive data, both in transit and at rest
• Implementing strict access controls and unique user IDs for anyone with access to payment data
• Using anti-virus software and keeping it up-to-date
• Only using payment devices and software validated as PCI-compliant
• Securing physical access to areas where card data is stored or processed

It may sound like a lot, but many of these controls can be implemented relatively easily with the right tools and guidance. Your payment processor or security vendor can recommend specific solutions.

3. Fill Out Required Self-Assessment Questionnaire or Schedule External Audit

Depending on your compliance level, you must either complete an annual Self-Assessment Questionnaire (SAQ) or undergo a more formal audit by a Qualified Security Assessor (QSA).

Most small businesses can complete the SAQ themselves. Larger businesses or those with complex payment environments may need to schedule a third-party audit. These assessments are more rigorous but help uncover any gaps to address.

4. Work With Your Payment Processor to Validate Compliance

Once you've shored up your security, contact your payment service provider with documentation of your compliance status (completed SAQ, audit report, etc.) and request that they remove any non-compliance fees going forward. Make sure to get written confirmation of your compliance status and the removal of fees.

5. Make Compliance an Ongoing Priority

PCI compliance isn't a one-and-done proposition. It requires ongoing attention and effort to maintain. Perform periodic checks to ensure all controls are functioning as intended and provide annual PCI compliance training for all employees handling payment data. Continuously look for ways to reduce your compliance scope and make payment processes more secure

Secure Profits and Peace of Mind: Making PCI Compliance Pay Off

PCI non-compliance fees are a painful cost of doing business in an era of data breaches and ever-more sophisticated cybercrime. But they are also a powerful motivator for taking control of your business's payment security.

By understanding the risks, taking clear steps to assess and address gaps, and making compliance an enduring priority, you can protect your customers, your reputation, and your bottom line from the devastation of payment fraud and data breaches.

Don't wait for those non-compliance fees to pile up before taking action. With Zen Payments, we ensure that your payment gateway follows all key PCI-DSS security standards. Contact us today to get started.