The Importance of PCI DSS Compliance for High-Risk Merchants

If you’re responsible for managing payment processing for a high-risk business, you’re probably on edge about meeting the tough security standards while avoiding big penalties. We get where you’re coming from – and we’re here to help. From dealing with much higher levels of fraudulent activity to navigating a minefield of complex regulations, we know what it takes to guide high-risk merchants like yours through the process of getting PCI DSS compliant. PCI DSS (Payment Card Industry Data Security Standard) compliance for high-risk merchants is not just a nice-to-have, it’s a must-have. It protects against data breaches, keeps merchant accounts in good standing, and ensures you stay in business by avoiding all the problems that come with being a target for would-be hackers and chargeback artists.   These enhanced security requirements go way beyond what most merchants need to worry about. High-risk merchants need to be prepared for Level 1 validation, no matter what their transaction volume, plus quarterly vulnerability assessments, and continuous monitoring systems that keep both customers and your business assets safe.   TL;DR Summary: We’ll be looking at who gets classified as a high-risk merchant, what the core PCI DSS requirements are (think annual QSA assessments, quarterly ASV scans, and more), what happens if you don’t comply (fines ranging from $5,000 to $100,000 per month and multi-million dollar breach costs), the unique challenges you’ll face (think heightened scrutiny from your acquirer and dealing with complicated data environments), and share actionable steps for keeping your compliance on track.   Essential Tip: Don’t wait until it’s too late – start building PCI DSS security into your business processes from the start. This “baked-in” approach can save you up to 40% on compliance costs, and gives you a rock-solid security foundation that will grow with your business.

What Defines a High-Risk Merchant in the Context of PCI DSS?

When we talk about high-risk merchants in the context of PCI DSS, we’re talking about businesses that get automatically classified as Level 1, no matter how small their transaction volume might be – and for which an annual Report on Compliance (ROC) is required by a Qualified Security Assessor (QSA). These merchants face a whole lot of extra risks when it comes to fraud and chargebacks – plus all the extra regulatory scrutiny that comes with it.   Businesses that are naturally high-risk include gaming, adult content, pharmaceuticals, travel services, and financial institutions. Payment processors classify these sectors as high-risk because they’re more likely to be subject to fraud, have complex regulatory environments, and handle sensitive financial data.   The following sections take a closer look at how payment processors classify high-risk merchants, and the specific types of businesses that are considered high-risk.

How Are High-Risk Merchants Classified by Payment Processors?

High-risk merchants are classified by payment processors based on transaction volume, chargeback rates, and regulatory complexity. Level 1 merchants get classified as high-risk if they process over 6 million transactions annually, or if they’ve suffered a data breach. And for those merchants, quarterly network scans by an Approved Scanning Vendor (ASV) are mandatory.   High-risk merchants also have to keep their security systems continuously monitored, with any identified vulnerabilities needing to be fixed right away. Payment processors look at all sorts of factors to determine how much risk a merchant poses – from the industry codes they use to historical patterns of fraudulent activity to the characteristics of their business model.

What Types of Businesses Are Usually Considered High-Risk?

Typically, the businesses that get classified as high-risk include gaming and gambling, adult content, pharmaceuticals, travel services, and financial institutions. Gaming and gambling businesses need to deal with massive transaction volumes and even more complex state and federal regulations to boot.   Adult content businesses have to contend with much higher chargeback rates – around 2-3% on average, compared to a standard 0.6%. Pharmaceutical companies get close scrutiny from the FDA and DEA when it comes to the controlled substances they have to distribute, while travel businesses often see cancellation rates of 15-30% – which results in a whole lot of chargebacks and revenue volatility. And financial services – well, they’re pretty much always dealing with sensitive customer data.   All these sectors require extra protection to address the specific threats and elevated risk levels they face – which is why they need PCI DSS controls that are specifically tailored to their needs.

What Are the Core PCI DSS Requirements High-Risk Merchants Must Meet?

The core PCI DSS requirements that high-risk merchants must meet include annual Reports on Compliance (ROC) and quarterly network vulnerability scans.   The core PCI DSS requirements high-risk merchants must meet include:

• Annual Report on Compliance (ROC) by a Qualified Security Assessor (QSA).
• Quarterly network vulnerability scans performed by an Approved Scanning Vendor (ASV).
• Continuous monitoring of systems with prompt remediation of any vulnerabilities.
• Annual Self-Assessment Questionnaire (SAQ) for Level 2–4 merchants (when applicable).

How Do PCI DSS Requirements Address Cardholder Data Security?

PCI DSS requirements address cardholder data security by establishing technical and operational standards that safeguard payment account information. It’s all about integrating security controls into your business culture from day one.   Security is not an afterthought – it’s an integral part of your business model.According to a 2024 Schellman Report on PCI implementation, the rule of thumb is that PCI needs to be thoroughly integrated into a payment system – not just slapped on – if you want to achieve effective security. Standards are a constantly evolving beast to keep up with emerging threats. PCI DSS v4.0 introduces even more stringent requirements for customised security approaches, allowing merchants to implement controls that are tailored to their specific risk profiles while still maintaining solid cardholder data protection.  

What PCI DSS Controls Are Going to Give You the Most Headaches If You’re a High-Risk Merchant?

The most difficult PCI DSS controls for high-risk merchants typically include:

• Network segmentation — separating sensitive systems to limit breach scope.
• Isolating the cardholder data environment (CDE) — maintaining strict boundaries.
• Continuous monitoring systems — ensuring real-time detection and remediation.

In the past, outdated software systems created vulnerabilities that allowed massive breaches like the ones at Target in 2013 and Home Depot in 2014. A 2020 SecurityMetrics analysis of breach forensics found that at the time of a breach, companies were only averaging 43% compliance with PCI DSS requirements. These challenges serve as a stark reminder of the gap between what’s required of us and what we actually do in high-risk environments that need sophisticated security architectures.

What Are the Dangers of Non-Compliance with PCI DSS for High-Risk Merchants?

Non-compliance with PCI DSS leaves high-risk merchants exposed to some pretty severe financial penalties, some dodgy legal consequences, and a whole lot of reputational damage that can literally threaten your business. High-risk merchants are looking at monthly fines of anywhere from $5,000 to $100,000 for non-compliance, and breach-related costs are averaging an eye-watering $4.44 million globally. The following sections break down the specific financial and reputational impacts of non-compliance.

What Kind of Financial Penalties and Legal Consequences Are We Talking About Here?

The financial penalties and legal consequences of PCI DSS non-compliance can be severe, ranging from monthly fines to multi-million-dollar breach settlements.   According to a 2025 IBM report, the average U.S. data breach cost shot up to a record high of $10.22 million. For the financial services sector, breaches are costing between $4.45 million and $5.97 million per incident.   We’ve seen some big retailers suffer some pretty severe financial impacts from non-compliance in the past. For example, Target’s 2013 breach cost them $18.5 million plus another $202 million in legal fees. Home Depot’s 2014 breach led to a $19.5 million settlement with consumers, and their total pre-tax expenses came to $161 million. And then there’s Equifax’s 2017 breach, which affected 145 million Americans and cost them $425 million to settle.   Card brands impose some pretty hefty fines for non-compliance violations.

Violation Type	Fine Range	Example Impact
Initial non-compliance	$5,000–$10,000/month	Early warning stage
Continued violations	$25,000–$50,000/month	Repeated failure to validate
Severe breaches	Up to $100,000/month	Negligence or data leak
Per-incident breach	Up to $500,000	Major data compromise

These penalties get compounded with forensic investigation costs, customer notification expenses, and potential class-action lawsuits. And let’s not forget the legal consequences, which can include regulatory sanctions and even criminal liability for executives if there’s been gross negligence.

How Will Non-Compliance Affect Your Reputation and Customer Trust?

Non-compliance severely damages reputation and customer trust, often resulting in account termination and long-term revenue loss. Data breaches can trigger an instant reputational hit that extends way beyond direct financial losses to threaten your business’s long-term viability. Payment processors may terminate your merchant account on the spot if they discover non-compliance, effectively shutting down your payment processing capabilities.   Customer trust erosion manifests in some pretty measurable business impacts, including:

• Immediate customer attrition rates of 20-30%
• Reduced new customer acquisition for 12-24 months
• Decreased transaction volumes and revenue
• Increased customer service costs from breach inquiries

Non-compliance costs extend way beyond fines to include legal fees, forensic investigations, and mandatory customer notifications. These indirect costs are often way higher than the direct penalties, with forensic investigations alone ranging from $10,000 to $100,000 depending on the breach scope.   High-risk merchants are at even greater risk from reputational damage due to the existing industry skepticism in their sectors. Gaming, adult content, and pharmaceutical sectors are already navigating consumer wariness, making trust recovery even tougher after a breach.   The combination of financial penalties and reputational damage creates a pretty existential threat that underlines why PCI DSS compliance remains essential for high-risk merchant survival.

What Are the Unique PCI DSS Challenges for High-Risk Merchants?

High-risk merchants face some pretty unique PCI DSS challenges due to the heightened scrutiny they’re under, the complex operational environments they have to manage, and the elevated fraud exposure. These challenges require some pretty sophisticated security controls and continuous compliance monitoring beyond what standard merchants need.

Why Do High-Risk Merchants Face Greater Scrutiny from Acquirers?

High-risk merchants face greater scrutiny from acquirers because risk-based pricing models impose stricter security requirements and closer monitoring. Acquirers impose stricter validation requirements, including more frequent compliance assessments, compared to standard merchants. Payment processors require additional security controls and reserves for high-risk merchant accounts.   The degree of scrutiny is directly tied to transaction risk profiles. Gaming operators, pharmaceutical companies, and adult content providers undergo enhanced due diligence processes. Acquirers require quarterly validation reports instead of annual submissions for these merchants. How Do Risk-Based Pricing Models Create a Growing Burden for Merchants? High transaction volumes strain PCI DSS compliance because they trigger Level 1 merchant classification and increase data environment complexity. Rather than just being an optional extra, acquirers are now insisting on advanced security measures like real-time transaction monitoring and enhanced authentication protocols as a matter of course.   Acquirers have also had to get in on the act, with dedicated risk management teams being set up for merchants who are classed as high-risk. These teams will be responsible for conducting regular portfolio reviews and implementing stricter underwriting criteria to make sure that merchant is kept on the straight and narrow.   Merchants will be expected to produce evidence of robust internal controls and have higher reserve requirements in place for the duration of their relationship with the acquirer.

How High Transaction Volumes Can Put A Strain On PCI DSS Compliance

High transaction volumes have a knock-on effect on PCI DSS compliance in that they automatically trigger the most stringent compliance measures, ie Level 1 merchant classification. Merchants who process over 6 million transactions annually are going to have to produce an annual Reports on Compliance (ROC) from a Qualified Security Assessor. The sheer volume of data is also going to create a complex cardholder data environment that requires some very sophisticated segmentation strategies.   And it gets worse – as transaction volume grows, the challenges multiply exponentially. Real-time monitoring systems have to be able to process thousands of transactions per second while also keeping track of security logs. Network architectures become increasingly complex with multiple payment channels, APIs and third-party integrations.   Some of the unique technical hurdles that large-scale operations face include:

• Database encryption performance impacts
• Network latency caused by security controls
• Storage requirements for transaction logs
• Backup and recovery complexity

The attack surface also expands as transaction volume increases – each additional payment endpoint, server and network segment introduces new potential vulnerabilities. High-volume merchants will need to implement automated security scanning and continuous vulnerability management to maintain compliance across their expanded infrastructure.

How High-Risk Merchants Can Achieve And Maintain PCI DSS Compliance

High-risk merchants can achieve and maintain PCI DSS compliance through systematic implementation of security controls, continuous monitoring and regular assessments. Annual compliance costs for large enterprises range from $70,000 to over $500,000.   And while that sounds like a lot, it’s actually cost-effective compared to the average breach cost of $4 million. Achieving compliance requires engaging qualified security assessors, implementing continuous monitoring systems and maintaining comprehensive documentation. Integration of security measures into business processes from day one is more effective than just throwing them in as an afterthought.   The following sections will go into more detail on the essential steps for assessment preparation, control review frequency and tools that can streamline compliance processes.

What Steps Should Merchants Take To Prepare For A PCI DSS Assessment?

Merchants need to first determine their compliance level based on annual transaction volume and risk classification. Level 1 merchants are those who process over 6 million transactions annually. High-risk categories include gaming, pharmaceuticals and financial services.   One thing that’s absolutely essential is the engagement of a Qualified Security Assessor (QSA) for Level 1 merchants and high-risk categories. QSAs will conduct a formal validation assessment. Pre-assessment gap analysis can also help identify non-compliant areas before the formal validation even takes place.   Some key preparation steps include:

• Documenting current security controls and processes
• Mapping cardholder data flows across all systems
• Reviewing network segmentation effectiveness
• Verifying vulnerability scanning schedules
• Compiling evidence for each PCI DSS requirement

Organisations will also benefit from conducting regular internal readiness assessments. These assessments ensure continuous compliance between formal validations.

How Often Should High-Risk Merchants Review And Update Their PCI DSS Controls?

High-risk merchants will need to review and update PCI DSS controls at least quarterly. Quarterly vulnerability scans by Approved Scanning Vendors (ASVs) are mandatory for all Level 1 and high-risk merchants. These scans will help identify network vulnerabilities that need to be remediated.   Annual Report on Compliance (ROC) documentation is also required for Level 1 merchants. Continuous monitoring of systems is a must between assessments. As Lauren Holloway from the PCI Security Standards Council puts it in 2024: “the standards must remain relevant” to fulfill the mission of protecting payments worldwide.   To keep compliance consistent, high-risk merchants should plan updates on a regular cadence aligned with PCI DSS v4.0 standards. The table below outlines a recommended schedule of reviews and updates.

Activity	Frequency	Purpose
Network vulnerability scans & policy reviews	Quarterly	Identify and fix security gaps
Access control audits & training updates	Semi-annually	Reinforce staff awareness and tighten access
ROC assessment & security awareness training	Annually	Maintain PCI Level 1 compliance
Continuous system monitoring & incident response	Ongoing	Detect and mitigate real-time threats

  Regular updates will ensure that controls address emerging threats and stay effective against changing attack methods.

Which Tools And Resources Can Help Streamline Ongoing Compliance?

Tools and resources that can help streamline ongoing compliance include automated scanning platforms, compliance management systems and industry-specific frameworks. Approved Scanning Vendor (ASV) tools can automate quarterly network vulnerability assessments. These tools will also generate reports that are required for compliance validation.   Compliance management platforms can track control implementation across multiple requirements. These platforms will generate required documentation automatically. Some of the features that you can look out for include workflow automation, evidence collection and audit trail maintenance.

Tool Type	Key Feature	Compliance Value
ASV Tools	Quarterly network scans	Detect and report vulnerabilities
ASV Tools	PCI-approved report templates	Standardize compliance documentation
Management Platforms	Automated evidence generation	Simplify audit readiness
Management Platforms	Real-time dashboards	Track control performance continuously
Industry Frameworks	Sector-specific controls	Align PCI DSS with industry regulations

Industry-specific compliance frameworks address unique requirements for gaming, pharmaceuticals and financial services sectors. These frameworks will align PCI DSS requirements with sector regulations.   High-risk merchants can achieve sustainable compliance through systematic approaches that combine qualified assessments, continuous monitoring and automated tools that are tailored to their specific industry requirements.

How Can You Approach PCI DSS Compliance for High-Risk Merchants with 2Accept?

Achieving PCI DSS compliance for high-risk merchants with 2Accept requires understanding specialized payment processing solutions designed for complex regulatory environments. High-risk merchants face stricter validation requirements from acquirers, with compliance costs ranging from $70,000 to $500,000 annually according to industry data.    2Accept provides payment infrastructure specifically engineered for businesses in gaming, pharmaceuticals, and financial services sectors that require Level 1 PCI DSS compliance measures.

Getting PCI DSS Compliance Right for High-Risk Merchants With 2Accept

Getting PCI DSS compliant for high-risk merchants with 2Accept requires understanding the payment processing solutions that have been specifically engineered to manage complex regulation. High-risk merchants face some pretty tight restrictions from their acquirers – there’s a big price tag attached to getting compliant too, with costs ranging from $70k to over half a million dollars a year according to industry figures.   2Accept comes in with a special payment infrastructure that’s been made to serve businesses in the gaming, pharmaceuticals and financial services sectors – the ones that need to meet the strict Level 1 PCI DSS compliance standards.

Does 2Accept Have What It Takes to Support High-Risk Merchants with PCI DSS Compliance?

Yes, 2Accept has the infrastructure and compliance tools to fully support high-risk merchants in achieving PCI DSS compliance. The platform knows how to tackle the extra challenges that high-risk merchants face such as quarterly ASV scans and annual QSA assessments that are a must for Level 1 classification.   2Accept’s solutions build in security controls right into the payment workflows, because, as Schellman pointed out in 2024, PCI should be an integral part of the system, not slapped on as an afterthought.   2Accept supports PCI DSS compliance for high-risk merchants by providing:

• Automated quarterly vulnerability scans through trusted ASVs.
• Pre-integrated Level 1 frameworks for gaming and pharmaceutical sectors.
• Real-time fraud detection and monitoring systems.
• Cardholder data environment segmentation tools to secure complex payment flows.
• Pre-validated PCI DSS v4.0 security controls to reduce compliance workload.

2Accept’s infrastructure takes a lot of the stress out of compliance by providing pre-validated security controls that meet PCI DSS v4.0 requirements. It also keeps a continuous eye on things for high-transaction-volume operations, a problem that companies averaged only 43% PCI DSS compliant at the time they experienced a breach according to SecurityMetrics data from 2020.

4 Key Takeaways About PCI DSS Compliance for High-Risk Merchants

The key takeaways about PCI DSS compliance for high-risk merchants boil down to four critical principles:

• PCI DSS compliance is vital for high-risk merchant survival and growth – it’s not just something you need to tick off. Non-compliance fines can be a real killer – think $5k to $100k per month, with breach-related fines potentially running as high as $500k per incident.
• The cost of getting compliant is a small fraction of the average cost of a data breach, which is around $4.44 million globally. The average breach cost in the US has actually gone up since then – we’re talking over $10 million in 2025, which shows just how essential it is to get proactive with compliance.
• High-risk merchants need to meet Level 1 compliance standards – that means annual QSA assessments and quarterly ASV scans. These are the regulations that apply to gaming, adult content and pharmaceutical businesses because of their inherent susceptibility to fraud – regardless of how many transactions they do.
• Getting security woven into core business processes means you’re more likely to build in effective protection than trying to do compliance retroactively. Take the example of Target’s 2013 breach which cost them $202 million in legal fees and Home Depot’s 2014 breach which cost a staggering $161 million – both of these show just what can happen when you don’t get security right.

Getting PCI DSS compliance right with 2Accept is all about using specialized payment processing infrastructure that’s been designed to meet high-risk merchant requirements, while also keeping on top of security monitoring and documentation practices that are essential for protecting your business and keeping your customers on board.