Why Do Merchants Have Compliance Thresholds?

Merchants need to stay compliant with thresholds set by their Processor and Card Associations. When Merchants breech compliance, they run the risk of heavy fines and a potential loss of their Merchant account. 

These thresholds are used by players upstream to manage their own reputation, regulation, compliance, litigation risk exposure. Like Merchants, Processors and Card Associations have their own compliance requirements to guard against; when breeched, they risk fines and the potentially devastating loss of reputation. 

Compliance thresholds are your Processor’s way of managing their Merchant risk exposure. They can incentivize Merchants to stay safe and healthy. 

Why do my compliance thresholds change? In short, nothing is free when taking payments. All of those ever-changing fees and new processes trickling down from the top can eventually be baked into your compliance thresholds. A few reasons for changing thresholds can include:  

  • Evolving Threats – Updates to security standards
  • Shifting Regulation – Data protection laws and Association rules
  • Evolving Best Practices – Updating processes to follow new advancements
  • Technology – Card Associations and Processors implementing new technology or security measures

Compliance thresholds keep the entire payment ecosystem safe and flourishing. Keeping on top of yours can help prevent costly setbacks. 

March 18, 2024

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