Top 5 lessons to understand about risk and compliance for software payments

Updated on January 24, 2024

You probably don’t think about risk and compliance initially when diving into embedded payments. But it really should be a key consideration when developing your payment strategy.

Implementing embedded payments brings many exciting benefits to software companies, but there are some risks to mitigate, too. From multifactor authentication (MFA) to working with a good Qualified Safety Assessor (QSA), there’s a lot to think about when it comes to addressing risk and compliance in software payments.

Our recent episode of Payrix’s PayFAQ podcast went deeper into this topic, offering five key pieces of advice software companies need to know.

Understand if your software company will own liability for merchant loss.

When you’re looking into different PayFac-as-a-Service providers, it’s important to understand if your software company will be liable for merchant loss. Some providers require that you are, and some don’t. And while there are advantages and disadvantages to each, it’s something that every software company should think about when they’re looking at different PayFac-as-a-service options. It’s a key component to incorporate into your payments strategy.

Check what safety and protection tools your payments partner has available.

Having a customer go live for software versus with a payments provider requires different strategies and actions. When your software company is researching PayFac-as-a-Service partners, you should understand the provider’s expectations about the tools they have to protect customers. Have an in-depth discussion about the tools and products available to prevent and protect the company and its users from data breaches. Also ask about the resources available to help you make sure you and your users are compliant when it comes to payment security and protecting data.

Maintain compliance with the Payments Compliance Industry Data Security Standards (PCI DSS).

Payment security is critical to business continuity and although PCI is often considered dry, let’s consider a worst case scenario – one of your merchants suffers a data breach and they lose money. If your merchant can’t cover the loss, your software company could be responsible for it. Similarly, when it comes to platform security, software companies need to make sure they have proper security and compliance controls in place. Everyone in the payments ecosystem, whether it’s merchants, processors, acquirers or software companies, has to maintain their compliance with the Payments Compliance Industry Data Security Standards (PCI DSS). These are essentially standards you need to meet to protect your customer’s personal and payment information.

Implement multi-factor authentication (MFA) to keep customer data secure.

MFA is one of the most important controls software companies and their users can implement to keep customer data safe. It keeps data and systems secure by adding roadblocks to stop cybercriminals in their tracks by requiring more than one authentication to access secured information. So, even if someone’s credentials are compromised, the hacker needs a second or third authentication factor to gain access. It’s an effective way to keep data secure.

Don’t underestimate the significance of your role in the payment ecosystem.

Even though many software companies may not be involved in storing sensitive information, they can be seen as a gateway to gain access or a way to introduce fraud to the ecosystem. One way to reduce your risk is by choosing a payment partner like Payrix, who can help reduce your overall PCI scope.

A payment provider can help reduce your PCI scope by encrypting sensitive information like credit card numbers. Remember, this won’t give you a complete pass on your risk and compliance responsibilities, and you’ll still need to demonstrate PCI compliance. However, the right payment partner will give you tools to reduce your compliance burden.

Get your risk and compliance right with Payrix

When you’re choosing a payment partner, it’s exciting to learn about all the efficiencies that you and your users will gain. But you also need to understand where the liability will lie and how you can address any risks. Payrix helps software companies take the compliance headache out of Embedded Payments with PayFac-as-a-Service.

Want to dive deeper into how to manage risk and compliance for your software payments? Check out the full episode of what to understand about risk and security on Payrix’s PayFAQ podcast.

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