Payment security for merchants in 2026: An in-depth guide

Payment security covers everything that keeps a transaction and the data behind it from being intercepted or used by someone it shouldn’t be. Payment security is more relevant than ever, given that card-not-present fraud is set to hit EUR24 billion globally this year. 

Combined with the rise in AI-powered attacks and tighter compliance regulations, merchants who fall behind on securing their payment processes are leaving themselves (and their customers) vulnerable to fraud, steep regulatory fines, and loss of brand trust.

What is payment security?

Payment security encompasses a set of technologies, processes, and standards that protect transactions and payment data from fraud, interception, and unauthorised use. The umbrella term payment security covers elements like encryption, Tokenization, authentication, fraud prevention, and regulatory compliance across both card-present and card-not-present environments.

Payment security is essential for protecting cardholder data, but it’s also a top business concern for merchants who can be held responsible if a customer’s payment information is exposed during a transaction. Secure payments are paramount for protecting merchants from liability, especially regarding chargebacks, regulatory exposure, and overall brand risk.

In 2026, the stakes for payment security are higher than ever. Online fraud is more prominent than ever, and AI-driven attacks are harder to detect. Merchants who consider payment security as an afterthought are looking at an increased number of chargebacks, regulatory fines for non-compliance, and reputational damage that can take years to bounce back from. 

How payment security works

Understanding payment security means having a grasp on who’s involved in transactions and where liability shifts in the event of a breach. 

Key players in payment security 

There are five players in every card transaction:
 

1. Cardholder – The person making the purchase. They’re the ones whose data needs protecting and the ones most exposed if something goes wrong during a transaction or data breach. 
2. Merchant – The business accepting payments. Merchants are responsible for handling card data securely on their end and carry liability for breaches that happen within their environment. 
3. Acquirer – The bank or payment processor that handles transactions on behalf of the merchant. The acquirer routes the transaction to the card network and credits the merchant account. 
4. Issuer – The bank that issued the card to the cardholder. They’re also responsible for approving or declining transactions based on available funds, risk scoring, and customer authentication. 
5. Card network or scheme – Visa, Mastercard, Amex, Discover, and others. Card networks set the rules that all players have to follow, which cover security standards, liability shifts, and authentication requirements. 
    

Risk and liability for secure payments

When something goes wrong during a transaction, the number one question is who’s liable? But liability in payments doesn’t fall on one party; it shifts depending on the type of transaction and the security measures used.

For card-present transactions, EMV chip technology shifts liability to whoever hasn’t adopted the most secure technology. For example, if a merchant accepts a chip card on a magnetic stripe terminal and the transaction turns up as fraud, the merchant carries the liability.

Card-not-present transactions can be a bit more complex. When properly implemented, 3D Secure authentication shifts liability for fraudulent chargebacks from the merchant to the issuer. But merchants without 3DS tend to carry the liability.

In general, a merchant’s liability risk depends on the payment security measures taken. Tokenization, encryption, and strong customer authentication all factor into this risk, as well as the compliance burden needed to align with regulatory frameworks like PCI DSS and PSD2.

In simple terms, the better payment security a merchant has, the less they’re liable for.

The payment security stack

Payment security isn’t a single element, but rather a collection of protocols that work together to create robust safeguards for transactions. These include:
 

• Encryption – Scrambles card data so it can’t be read if intercepted in transit or at rest. Point-to-point encryption (P2PE) is the most secure for card-present transactions. 
• Tokenization – Replaces card data with a token (random string of letters and numbers) that has no value outside of its intended use. Tokens are used to complete transactions without exposing the customer’s primary account number (PAN) and other payment information. There are multiple types of tokens, and token storage is just as paramount to payment security as Tokenization itself. 
• Authentication – Verifies the cardholder is who they say they are. There are many types of authentication used for payment security, like 3D Secure (3DS2), Strong Customer Authentication (SCA), multi-factor authentication (MFA), biometrics, and passkeys. 
• Fraud prevention and risk scoring – Sets of rules that flag suspicious transactions before they’re approved. Most modern providers score transactions in real time based on signals like device, geolocation, and transaction history. 
• Compliance frameworks – These are the sets of rules and standards that govern payment security across industries, including PCI DSS, PSD2, GDPR, and specific regional regulations. 
• Operational controls – Behind-the-scenes work that keeps everything secure, including access controls, key management, incident response, and staff training. 

Security for in-person payments

In-person payment security covers card-present transactions and ensures payment data isn’t skimmed while completing transactions. This is done through various protocols like:
 

• EMV chip and contactless payments – Chip payments and tap to pay generate a unique cryptogram for every transaction, which, unlike traditional magstripe cards, makes it nearly impossible to clone. 
• P2PE and device-level encryption – This encrypts card data as soon as it enters the terminal, and keeps it fully encrypted until it arrives at the payment processor. Merchants who implement P2PE have a reduced compliance scope. 
• Terminal management – Keeping firmware up to date, monitoring for tampering, and retiring old hardware in a secure fashion. Don’t neglect your terminals!
• Consistent omnichannel experience –  Security should be a top priority across all channels. The same Tokenization, fraud screening, and authentication standards should apply across all in-store and online purchases. 

Security for online payments

On the other hand, security for online payments covers card-not-present (CNP) transactions. These types of transactions carry greater inherent risk, with CNP fraud losses projected to reach a global EUR24 billion this year (up 40% from 2023). This figure will only continue to grow as e-commerce takes centre stage; however, these losses can be mitigated with the proper online payment security protocols like:
 

• 3D Secure and SCA – 3DS2 (the current version of 3D Secure) adds an authentication step to online card transactions, which helps reduce fraud and shifts the liability for chargebacks from merchants to the issuer. 
• Wallets, passkeys, and biometrics – Digital wallets like Apple and Google Pay, along with passkeys, bring biometric authentication into the flow on top of tokenised payment credentials. Beyond offering a frictionless checkout experience, this online payment method is one of the most secure due to the multiple layers of protection. 
• Network tokens – Tokens issued directly by card schemes replace customer PANs at a network level. This helps reduce fraud for online transactions, improves authorisation rates, and updates automatically when a card is reissued.

When searching for the most secure online payment method, the strongest stack combines network tokenised payment credentials, SCA authentication using 3DS2 or delegated authentication, and merchant fraud screening. For customers shopping online, digital wallet payments and other passkey-backed payment flows are considered highly secure because of the biometric authentication layered on top of network tokens. 

The role of PCI DSS in payment security  

Payment security is in large part governed by a set of regulations created by the Payment Card Industry Data Security Standard (PCI DSS). It was designed for consistent cardholder protection across industries and to standardise payment security.

PCI DSS evolves with the ever-changing payments landscape. The most recent version is PCI DSS 4.0.1, and requires multi-factor authentication (MFA) to access the cardholder data environment (CDE), stronger password rules, continuous compliance, and payment page scripts to protect against Magecart attacks.

There are four compliance levels that fluctuate with transaction volume, and compliance is mandatory for all merchants processing payments. However, the scope of compliance can vary, especially if a business reduces its compliance burden with added security layers like Tokenization, P2PE, and iframe checkout flows. 

Best practices for secure payments 

There are a number of best practices for secure payments that merchants can implement to protect themselves and their customers from breaches. Whether you’re working with in-person, online, or omnichannel payments, this is what’s essential to keep in mind:
 

• Enable 3DS2 across all online card flows – This helps cut fraud and shifts liability away from the merchant.
• Use P2PE on all in-person terminals – When you encrypt card data at the point of capture, you keep it out of your merchant environment altogether. This drastically cuts down on your compliance scope while protecting payment data. 
• Layer biometrics on top of authentication – Modern authentication methods provide a better user experience and a more secure transaction. 
• Monitor fraud rate per acquirer – This is especially useful for bypassing extra security steps for acquirers with low fraud levels, while making transactions faster for customers and keeping the merchant free from liability.  
• Maintain continuous PCI DSS compliance – Rather than only focusing on compliance once a year for audits, build it into your everyday operations. If you’re struggling with your compliance burden, Planet can help. 
• Have a documented incident response plan – Don’t wait for a breach to figure out what to do. Having a well-documented response plan ahead of time that your staff is well-versed in can keep a security catastrophe contained. 
• Review payment data monthly – It’s worth regularly reviewing payment data to see patterns in authorisation rates, reasons for declines, fraud rates, and chargebacks. It’s better to catch the security gaps in the data rather than in your merchant revenue. 

Choosing a secure payment provider

Choosing the right payment provider goes a long way in protecting your transactions as a merchant. It’s worth carefully weighing your options to choose one that can both handle your business volume and protect payments as you scale.

At a minimum, choose a payment service provider with:
 

• PCI DSS Level 1 attestation – This is the highest level of PCI compliance. If you select a PSP with a lower compliance level, you’re taking on risk that your provider can (and should) be carrying. 
• 3DS2 server certification – Required for SCA compliance and meaningful 3DS implementation. 
• Network Tokenization support – Beyond standard Tokenization and vaulting, it’s recommended to choose a PSP with network Tokenization that directly integrates with Visa, Mastercard, and other schemes for token provisioning and lifecycle management. 
• Multi-acquirer routing – This lets you route transactions to the acquirer that’s most likely to approve them, leading to better authorisation rates.
• Fraud prevention integrations – PSP can have fraud integrations built into their product or rely on a third-party tool. Either way, this is an essential element when choosing a secure payment provider. 
• PSD3 readiness – PSD3 is on the way, and the provider you choose should be ready to implement it instead of scrambling when it’s time.

It’s also worth considering a provider who prioritises a frictionless experience for both you as a merchant and your customers and provides end-to-end payments, secured the entire way.

For an integrated platform that works at scale, Planet offers a fully secure and compliant payment experience across hospitality, retail, and F&B with multi-acquirer architecture. 

Looking to the future of payment security 

A lot of changes are on the horizon when thinking about the future of payment security, both from a regulatory and technological standpoint. 

As online and CNP transactions continue to increase, so does the threat of fraud. But just as breaches evolve in sophistication, especially with the rise of AI, so does payment security, which continues to be optimised for robust coverage across all transactions.

Some recent changes and ones on the horizon include:
 

• PSD3 and payment services regulation – In the EU, PSD2 is set to transition to PSD3 to tighten up rules around SCA, open banking, and customer protections. In the near future, there will be stricter requirements around authentication, fraud reporting, and payee verification, extending beyond only Eurozone countries by 2027.
• AI-driven fraud and AI-driven defence – AI is being used more and more to run fraud campaigns and takeover attacks. As AI becomes more advanced by the day, we’re expecting to see more synthetic identity fraud and bot-driven card testing. But AI can be leveraged for payment security as well, with modern fraud engines catching patterns that are impossible to spot with the human eye. 
• Agentic commerce – On the topic of AI, digital agents are beginning to make purchases on behalf of humans, which brings up questions about authentication and consent. The payment industry is still working out how SCA applies when the transaction is not only CNP but also lacks a human, too. 
• Passkeys, FIDO, and authentication shift – We’re already seeing passkeys replacing passwords across major platforms, and the same shift is coming for payments. Fast Identity Online (FIDO) based authentication is much quicker, harder to breach, and increasingly likely to become the default for online payments over the next few years.

Whatever the next few years bring for payment security, Planet is building for it now. Learn more about our payment security features and how we can get your business ready for what’s ahead. 

FAQs about payment security 

Why is payment security important?

Payment security is important because it protects both businesses and customers from fraud, data breaches, and financial losses, while keeping companies compliant with regulations like PCI DSS and PSD2. Without payment security, a data breach can lead to stolen card data, chargebacks, regulatory fines, and a serious rift in customer trust. 

What payment methods offer additional security measures?

Payment methods that offer additional security measures include digital wallets like Apple Pay and Google Pay, EMV chip cards, and 3D Secure-enabled card payments, all of which use Tokenization, biometrics, or an extra authentication step. These methods replace raw card data with tokens or require buyer verification, making it much harder for bad actors to use stolen details. 

What are the benefits of AI in payment security?

The benefits of AI in payment security include real-time fraud detection, faster risk scoring, and the ability to spot patterns across millions of transactions that a human team would miss. AI models also adapt as fraud tactics change, so they keep getting better at catching new attack types over time. 

How does Tokenization enhance payment security?

Tokenization enhances payment security by swapping sensitive card data for a randomly generated token that’s useless if intercepted. Even if a fraudster gets their hands on a token, they can’t reverse engineer it into a usable card number, making stored payment data way less attractive to attackers. 

What are the latest trends in payment security?
The latest trends in payment security include AI-led fraud detection, a shift from passwords to passkeys and FIDO authentication, tighter regulations under PSD3, and new questions surrounding agentic commerce. Tokenization and biometric authentication are also becoming standard across online checkouts.

What are common payment security vulnerabilities?
Common payment security vulnerabilities cover weak authentication, unencrypted card data, phishing scams, outdated software, and poorly secured APIs. CNP transactions are especially exposed since there’s no physical card or in-person check to verify the buyer.