PCI DSS for Fintech Startups

This guide addresses the specific compliance challenges fintech startups face, from determining your role in the payment ecosystem to building compliance into your product from day one.

Key Takeaways

Point	Summary
Service provider status	Many fintechs are service providers, not just merchants, with stricter requirements
Higher compliance levels	Service providers face Level 1 or Level 2 requirements only
Build compliance in	Retrofitting PCI compliance is expensive; start early
Multiple frameworks	Enterprise customers expect PCI DSS plus SOC 2, sometimes ISO 27001
Card brand relationships	Some fintech models require direct card brand registration

Are You a Merchant or Service Provider?

This distinction fundamentally changes your PCI DSS requirements:

You're a Merchant If:

• You accept payments for your own products/services
• You're the end-point of the payment transaction
• You don't facilitate payments for other businesses

Examples:

• SaaS company billing customers for subscriptions
• Fintech app charging users a monthly fee
• Neobank charging account fees

You're a Service Provider If:

• You store, process, or transmit cardholder data on behalf of other entities
• You facilitate payment processing for other businesses
• You provide payment infrastructure or services

Examples:

• Payment gateway
• Payment facilitator (PayFac)
• Banking-as-a-Service platform
• Expense management platform with corporate cards
• Invoicing platform processing payments

Both Roles

Many fintechs are both:

• Merchant for your own subscription billing
• Service Provider for payment features you offer customers

You need to address both roles in your compliance program.

Fintech Business Models and PCI Scope

Payment Facilitators (PayFacs)

If you're a PayFac, you enable merchants to accept payments under your master merchant account.

PCI Requirements:

• Level 1 or Level 2 Service Provider
• Full SAQ D or QSA assessment
• Must validate your sub-merchant onboarding and monitoring
• Card brand registration requirements (Visa TPSP, Mastercard PF)

Key obligations:

• Conduct due diligence on sub-merchants
• Monitor sub-merchant transaction activity
• Ensure sub-merchants meet applicable PCI requirements
• Report security incidents affecting sub-merchants

Banking-as-a-Service (BaaS)

BaaS platforms provide banking infrastructure to other fintechs.

PCI Requirements:

• Level 1 Service Provider (typically)
• Full QSA assessment
• Stringent cardholder data controls

Additional considerations:

• Bank partner requirements beyond PCI DSS
• Regulatory requirements (OCC, state regulators)
• SOC 2 and potentially SOC 1 expectations

Expense Management and Corporate Cards

Platforms managing corporate cards and expenses.

PCI Requirements:

• Service provider if handling card data for customer companies
• Scope depends on what card data you handle
• Tokenization can significantly reduce scope

Common scope elements:

• Card number display (masked vs. full)
• Virtual card generation
• Receipt capture (card numbers in images?)

Investment and Trading Platforms

Platforms enabling investment and trading may accept payment cards for deposits.

PCI Requirements:

• Merchant for accepting customer deposits
• Typically can use hosted payment forms (SAQ A)
• May need additional controls for card-on-file

Additional considerations:

• SEC/FINRA requirements
• SOC 2 is typically required
• Additional security expectations from regulators

Neobanks and Digital Banks

Digital-first banks with card issuance programs.

PCI Requirements:

• Issuer requirements (beyond merchant/service provider)
• Card production and personalization
• PIN management
• Typically Level 1 with full QSA assessment

Card brand programs:

• Visa card production standards
• Mastercard card production requirements
• PIN security requirements

Building Compliance Into Your Product

Stage 1: Pre-Launch (Design Phase)

Architecture decisions with compliance impact:

Decision	Compliance Impact
Payment processor selection	Determines integration options, scope
Data storage architecture	PCI scope, encryption requirements
Multi-tenant vs. single-tenant	Segmentation complexity
Cloud provider selection	Inherited controls, compliance support
Tokenization strategy	Scope reduction, SAQ eligibility

Recommended actions:

1. Map expected data flows before building
2. Design with tokenization as default
3. Plan network segmentation from the start
4. Select PCI-compliant infrastructure providers
5. Document security architecture early

Stage 2: MVP / Early Product

Focus areas:

• Implement core security controls
• Use hosted payment forms where possible
• Document what you're building for future assessments
• Start security policies (even if lightweight)

Minimum viable compliance:

• Encrypted data transmission (TLS 1.2+)
• Unique user authentication
• Logging of access to sensitive data
• Basic access controls
• Incident response procedure

Stage 3: Growth Phase

When to formalize compliance:

• Enterprise customers asking for AOC
• Transaction volume approaching thresholds
• Pursuing partnerships requiring compliance validation
• Raising rounds where due diligence includes security

Actions:

• Engage PCI assessor for gap assessment
• Formalize policies and procedures
• Implement remaining controls
• Complete first SAQ or QSA assessment
• Consider parallel SOC 2 program

Stage 4: Scale

Ongoing program elements:

• Annual assessments (SAQ or QSA)
• Quarterly vulnerability scans
• Continuous control monitoring
• Regular penetration testing
• Employee security training
• Service provider management program

Multiple Compliance Frameworks

Enterprise fintech customers typically require multiple certifications:

Framework	Why Fintechs Need It
PCI DSS	Mandatory for handling card data
SOC 2	Enterprise customer trust requirement
ISO 27001	European customers, regulated industries
SOC 1	If you affect customer financial statements

Efficient Multi-Framework Approach

Control overlap:

• ~60-70% overlap between PCI DSS and SOC 2
• ~70% overlap between SOC 2 and ISO 27001
• Build unified control framework

Unified program benefits:

• Single evidence repository
• Combined audits save time
• Consistent security posture
• Lower total compliance cost

Prioritization for Fintechs

Priority	Framework	Reason
1	PCI DSS	Mandatory for payment card handling
2	SOC 2	Most requested by US enterprise customers
3	ISO 27001	European expansion, regulated industries
4	SOC 1	Specific financial reporting impact

Common Fintech PCI Challenges

Challenge 1: Card Data in Application Features

Problem: Your product features require displaying or using card data.

Examples:

• Showing last 4 digits on dashboard
• Virtual card displays
• Card-linked offers requiring BIN matching

Solutions:

• Use tokens where possible
• Display only masked data (first 6/last 4)
• Implement just-in-time data retrieval
• Isolate full PAN access to minimal systems

Challenge 2: API-Heavy Architecture

Problem: Modern fintech = many APIs = many potential entry points.

Impact: Each API handling card data is in scope.

Solutions:

• API gateway with centralized security
• Tokenization at ingestion point
• Consistent authentication across APIs
• API security testing in pen tests

Challenge 3: Third-Party Integrations

Problem: Fintechs integrate with many partners, each a potential scope-expanding connection.

Examples:

• Bank partners
• Card networks
• Other fintechs
• Data aggregators

Solutions:

• Documented service provider management
• Annual compliance verification
• Contractual PCI requirements
• Segmented integration points

Challenge 4: Rapid Development Pace

Problem: Startup speed conflicts with compliance process rigor.

Impact: Security shortcuts, undocumented changes, scope creep.

Solutions:

• Security champions in engineering
• Automated compliance checks in CI/CD
• Security-by-design training
• Lightweight but documented change management

Challenge 5: Limited Resources

Problem: Small team, many compliance requirements.

Solutions:

• Prioritize controls by risk
• Use automation where possible
• Consider managed compliance services
• Build on PCI-compliant infrastructure (AWS, GCP)

Card Brand Registration Requirements

Some fintech models require registration with card brands:

Visa

Third-Party Service Provider (TPSP) Program:

• Required for service providers storing/processing card data
• Listed on Visa's Global Registry
• Annual registration and validation

Mastercard

Third-Party Processor (TPP) / Payment Facilitator (PF) Registration:

• Required for processors and PayFacs
• Approval process through sponsor bank
• Listed on Mastercard's Service Provider Registry

Registration Process

1. Engage with sponsor bank/acquirer
2. Complete PCI DSS validation (typically Level 1)
3. Submit registration application
4. Undergo card brand review
5. Maintain annual compliance

Due Diligence: What Banks and Partners Ask

When partnering with banks or larger fintechs, expect extensive security review:

Document/Question	Purpose
PCI DSS AOC	Verify PCI compliance status
SOC 2 Type 2 Report	Validate operational controls
Penetration test results	Verify security testing
Security policies	Understand governance
Incident response plan	Verify breach preparedness
Insurance certificates	Confirm coverage
Architecture diagrams	Understand data flows
Vendor list	Assess supply chain risk

Preparing for Due Diligence

• Maintain current AOC and SOC 2 reports
• Keep penetration test executive summaries ready
• Have architecture documentation prepared
• Prepare security questionnaire responses
• Document your compliance roadmap

Fundraising and PCI Compliance

Investors increasingly evaluate security posture:

Series A and Beyond

Question	Good Answer
"Are you PCI compliant?"	"Yes, we completed SAQ D/QSA assessment in [date]"
"Do you have SOC 2?"	"Type 2 report issued [date], next audit in [month]"
"How do you handle card data?"	Specific architecture, tokenization, scope explanation
"Have you had security incidents?"	Honest answer with how you responded

Compliance as Competitive Advantage

Early-stage fintech with compliance:

• Faster enterprise sales cycles
• Easier bank partnerships
• Stronger investor confidence
• Lower acquisition risk for buyers

Frequently Asked Questions

How soon should a fintech start PCI compliance?

If you're handling card data, start from day one. Design your architecture with compliance in mind. Formal assessment can wait until you have customers or are approaching enterprise sales, but building securely shouldn't wait.

Can we be PCI compliant without a QSA?

Service providers can self-assess using SAQ D at Level 2 (under 300,000 transactions). However, many bank partners and enterprise customers prefer or require QSA validation.

What's the investment for a fintech to get PCI compliant?

Highly variable based on your architecture and scope. A well-designed system using tokenization might require modest investment. A complex system with stored card data could require significant resources. Get a gap assessment for accurate estimates.

How do we handle PCI for customers outside the US?

PCI DSS is global, but some regions have additional requirements. EU customers may also need ISO 27001. Some countries have local payment regulations. Research specific markets you're targeting.

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Building a fintech product and need compliance guidance? Talk to our team

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Sources

• PCI SSC Guidance for Service Providers - Service provider requirements
• Visa Third-Party Service Provider Program - TPSP registration
• Mastercard Third-Party Processor Program - TPP requirements