In Brief: Payment integration offers a streamlined customer experience but also introduces PCI compliance responsibilities to the software provider. The level of compliance required depends on how the software handles cardholder data. Utilizing a trusted payment partner, implementing encryption and tokenization, and following security best practices will help minimize the compliance burden.
Many software providers are choosing to integrate payments directly into their platform. There are a host of benefits to doing so, not the least of which are creating a more streamlined transaction process for customers and introducing new revenue streams. Regardless of whether they’re a SaaS provider, an ERP software, or an ecommerce platform, integrating a payment infrastructure brings with it extra responsibility, specifically in terms of compliance with the Payment Card Industry Data Security Standard, or PCI DSS.
So the question arises, when it comes to payment integration, does PCI compliance matter to software providers?
The answer is a resounding, YES! But the level of responsibility that falls on the the software developers depends on how the payments are integrated. To fully understand that, it’s important to first review what PCI compliance is.
Understanding PCI Compliance
PCI DSS is a set of security standards designed to ensure that all companies processing, storing, or transmitting credit card information maintain a secure environment. These rules are enforced by the Payment Card Industry Security Standards Council (PCI SSC), which is backed by major card networks like Visa, Mastercard, and American Express.
If software platforms incorporate integrated payments, they fall under PCI DSS requirements in some capacity. However, the scope of compliance obligations depends on how deeply their system interacts with cardholder data.
Levels of PCI Compliance for Software Providers
1. Directly Handling Cardholder Data (Full PCI Scope)
If software providers collect, process, or store payment card information, they are fully responsible for PCI DSS compliance. This means they will need to:
- Implement robust security measures such as encryption, firewalls, and access controls.
- Undergo regular security assessments, including penetration testing and vulnerability scans.
- Maintain secure networks and systems to prevent unauthorized access.
- Comply with all 12 PCI DSS requirements to ensure data protection.
For most software providers, this level of responsibility is complex, costly, and risky. As a result, many choose to offload payment processing to a third-party payment processor (like Wind River Payments) to reduce their PCI scope.
2. PayFac Model (Higher PCI Responsibility)
Some software providers operate under the Payment Facilitator (PayFac) model, where they onboard their customers as sub-merchants under their own merchant account (rather than requiring each business to set up their own). While this approach may offer flexibility and control, it also increases PCI responsibilities significantly.
If software providers choose this path, they are more involved with handling transactions. As such, they must:
- Comply with more extensive PCI DSS requirements.
- Provide security controls like end-to-end encryption, tokenization, and fraud prevention.
- Undergo audits and validation assessments to prove compliance.
Obviously, this option requires substantial investment in compliance, security, and risk management.
3. Using a Third-Party Payment Processor (Limited PCI Scope)
The option many software providers chose is to integrate with a partner like Wind River that can handle transactions securely. Third-party processors are already PCI compliant, which reduces their direct exposure to cardholder data.
If software providers use hosted payment fields such as an iFrame or a redirect solution, card data never touches their servers. This means:
- They are still responsible for ensuring the implementation follows best practices and does not introduce any security vulnerabilities, but they don’t have to undergo full PCI DSS certification.
- They may need to complete a PCI Self-Assessment Questionnaire (SAQ), which is a much simpler compliance process.
- SAQ A – Required if the integration uses a hosted payment page
- SAQ A-EP – Required if an iFrame or JavaScript-based payment fields are used
- SAQ D – Required if there are direct API calls to the payment processor
Using a third-party processor is the easiest way to reduce PCI scope while still providing seamless payments.
How to Minimize PCI Compliance Burdens
Regardless of how software providers choose to integrate payments, it’s best to minimize PCI scope while maintaining a secure and seamless payment experience. Here are a few things to keep in mind.
1. Leverage a Trusted Payment Processor
Partnering with a payment processor that manages PCI compliance will shift most security responsibilities to them and ensure that your integration method doesn’t expose cardholder data to your servers.
2. Use Tokenization and Encryption
Tokenization replaces sensitive card data with a unique identifier, ensuring that even if data is intercepted, it remains useless to attackers. Many payment processors offer built-in tokenization to reduce PCI scope.
3. Follow Secure Coding and Best Practices
Even if a platform doesn’t store card data, weak security practices such as unprotected API keys or poor authentication methods can lead to vulnerabilities. Secure coding, regular security updates, and penetration testing are essential.
4. Complete the Necessary PCI Self-Assessment (SAQ)
Depending on the integration method, the software provider may be required to complete a Self-Assessment Questionnaire (SAQ). A payment processing partner can help determine which SAQ applies to the business.
PCI Compliance Should be Top of Mind for Software Providers
The moment software providers integrate payments into their platform, PCI compliance should become an active concern. With that said, by choosing the right integration approach, they can significantly reduce their PCI burden. Leveraging a trusted payment partner, using secure methods like tokenization and encryption, and following best practices will ensure that they meet compliance requirements without unnecessary risk.
For most software providers, the goal should be to minimize PCI scope while ensuring a seamless and secure payment experience. By doing so, they protect both their business and their customers from potential data breaches and compliance issues.
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