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The increasingly globalised nature of our economy, the growth of e-commerce, and the widespread adoption of cloud computing have essentially turned every company into an international business, regardless of size or industry.
The rapid speed at which digital technology advances and the constant flux of new data security laws have many businesses scrambling to stay compliant.
Fortunately, with the right strategies, tools, personnel, and partnerships, it’s possible to overcome data sovereignty challenges and ensure your employees’ and customers’ sensitive data is protected.
What is data sovereignty
Data sovereignty refers to the concept of data collection, processing, transferring, and storage needing to adhere to the laws and regulations of the country and/or region where it’s occurring.
It goes beyond the ethical and business incentives behind data privacy and security, covering the legal frameworks that dictate how data must be handled in accordance with local laws.
As businesses and organisations of all types and sizes increasingly store data in the cloud and transfer data across borders, understanding data sovereignty is more important than ever.
Across industries and sectors, more companies are hiring data protection officers and analysts to oversee data sovereignty and determine how the often vague and complex data security regulations of different geographic locals apply to the company’s specific operations.
What’s driving data sovereignty concerns?
Why is data sovereignty such a hot topic for business and tech leaders? What’s behind the growing urgency to address it? The following are the key factors driving data sovereignty concerns for modern businesses:
- The globalised, digitised economy
Prior to the Internet and our modern-day digital infrastructure, the vast majority of companies conducted business only within their own borders. Now, thanks to advances in e-commerce technology, it’s much easier to be an “international business,” serving customers in multiple countries and regions. Although this globalised, digitised economy has opened up many lucrative opportunities for companies across the world, it has also increased security vulnerabilities and made data handling much more complex.
- Cloud computing
Although, on the whole, cloud computing has significantly enhanced data security by centralising data storage within an encrypted digital space, it’s also led to a rise in data sovereignty concerns for international businesses. Since cloud computing works by processing and storing data across servers, often across multiple countries, it can be challenging to ensure that you’re meeting the requirements of laws in all relevant jurisdictions.
- Increase in government regulation
The rise of data protection laws and regulations—from well-known and widespread regional frameworks like Europe’s GDPR to more localised legislation like Brazil’s LGPD—is the primary cause of data sovereignty concerns for businesses today. As technology advances and consumer behaviour changes, every year brings with it new data protection mandates and updates to existing ones. Businesses are always chasing their tail trying to keep up with the latest data sovereignty challenges.
- Consumer awareness of data security threats
Another key factor driving data sovereignty concerns for businesses is the legitimate concern that today’s consumers have surrounding data protection. As rates of fraud and data theft rise ever higher, consumers are rightly worried about their data being compromised. In addition to legal penalties, a company that fails to adequately safeguard its customers’ data risks losing the trust of its customers and suffering irreversible reputational damage.
Key data security and privacy regulations
GDPR (General Data Protection Regulation)
One of the most consequential data security laws in place currently is the GDPR, which sets comprehensive guidelines for businesses processing, storing, and/or transferring personal data within the European Union.
GDPR requires businesses that collect or process sensitive data in the EU to obtain clear consent and to protect data privacy. It also covers a range of other requirements, such as reporting breaches within specific timeframes and being transparent about the way in which data is being handled.
Even if a business isn’t based in Europe, GDPR still applies if the business collects or processes personal data from EU residents. For example, if a company in the United States has an e-commerce website that sells products to customers based in Europe, the company must comply with GDPR requirements.
Chinese Cybersecurity Law
Another crucial piece of data security legislation to which international businesses must carefully comply is China’s Cybersecurity Law.
The law mandates that sensitive data collected in China must be stored on servers located within the country’s borders. It also places strict rules on data sharing and requires security assessments for any data being transferred outside of China.
Depending on the volume and nature of the data being transferred, these security assessments may need to be reviewed and approved by the Chinese government before the company can move forward with the data handling process.
PCI DSS (Payment Card Industry Data Security Standard)
One of the most consequential data security frameworks for today’s businesses is PCI DSS, a global standard which dictates how companies must handle, process, and store sensitive payment card data to protect against breaches, fraud, and theft.
PCI DSS applies to any business that accepts, transmits, or stores payment card information, regardless of their geographical location. Although not technically a law, PCI DSS is compulsory and enforced by the major credit card networks.
Failing to comply with PCI DSS can result in large fines, higher transaction fees, and even a ban on processing card payments. Companies that process card payments must consider PCI DSS on top of local and regional data security laws to analyse areas of overlap and ensure that any compliance gaps are covered.
National and hyper-local legislation
In addition to well-known data protection regulations like PCI DSS and GDPR, companies must also adhere to lesser-known, but equally crucial, localised regulations, such as:
- Australia’s Privacy Act
- Brazil’s Lei Geral de Proteção de Dados (LGPD)
- Sapan's Act on the Protection of Personal Information (APPI)
- Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA)
- India’s Information Technology Act
- South Africa's Protection of Personal Information Act (POPIA)
- California’s Consumer Privacy Act (CCPA)
- New York’s Stop Hacks and Improve Electronic Data Security (SHIELD) Act
- Virginia’s Consumer Data Protection Act (VCDPA)
These regulations are just a sample of the many security laws that now exist around the world. The sheer volume of legislation globally highlights the need for businesses to have a thorough compliance strategy in place, particularly as they grow and expand to new markets.
Data sovereignty for hospitality
Data sovereignty is a concern for hotels for several reasons, the primary being that hotels handle large volumes of sensitive guest data, including guest profiles, booking details, and payment information.
Other data sovereignty challenges in hospitality include:
1. Global operations and international guests
Even for hotels headquartered in a single country, the international nature of travel means that guests are booking and paying for their stays from locations across the globe. This opens hotels up to a range of data sovereignty challenges that they must overcome to remain compliant and safeguard guest data.
2. Emphasis on guest loyalty
Nowhere is trust and loyalty more fiercely sought after than in the hotel industry. Today’s hotel chains recognise the important role that repeat business plays in their profitability and work diligently to gain the loyalty of their guests through reward schemes and personalised experiences. If a hotel experiences a data breach, it could be devastating to its reputation and bottom line.
3. Cloud-based property management systems (PMS)
Switching to a cloud-based property management system is one of the best ways a hotel can enhance data security. It offers stronger encryption and is less prone to human error. However, storing data on the cloud rather than on local servers can require greater oversight regarding data sovereignty, as sensitive guest information may be stored in data centres across multiple countries, each with its own set of regulations.
4.Data localisation
Also known as data residency, data localisation laws are regulations that require businesses to store and process data within the borders of the country where it was collected. For hotels, this means that guest data must sometimes be housed on servers within the country where the booking was made. This can lead to various operational and technical challenges for hotels with customers located across the globe.
Data sovereignty for retail
Data sovereignty is a concern for retailers, as they collect, process and store a vast array of consumer data, including sensitive information regarding payment methods, purchase history, customer demographics, and customer preferences.
Other data sovereignty challenges in retail include:
1. Growth of cross-border payments
Adding complexity to retailers’ data sovereignty concerns is the fact that so many today, particularly e-commerce retailers, perform cross-border transactions. Online retail platforms typically operate across multiple jurisdictions, requiring compliance with a variety of data security regulations, which can vary significantly between countries and, in some cases, even seem to contradict each other.
2. Cloud-based retail platforms
As with hospitality businesses, the retail industry also relies on cloud infrastructure for storing customer data. This presents a challenge for data sovereignty, as cloud storage providers often distribute data across servers in different countries, each with its own set of data security standards.
3. Reliance on third-party vendors
Many retailers rely on third-party vendors for their payment gateways, customer service platforms, and analytics tools. These vendors may store or process data in various locations, adding more potential compliance requirements and legal vulnerabilities.
Data sovereignty strategies
Although the complex regulatory landscape is a constant and ever-evolving challenge, keeping up with compliance laws it’s not an impossible task. Fortunately, the proliferation of data security regulations has led to greater awareness of security risks and increased the technical expertise available to help businesses navigate complex legislation.
Companies can use the following strategies to meet data sovereignty challenges head-on:
1. Routine compliance audits
Data security is an ongoing process. To stay ahead of new and changing regulations, it’s crucial to conduct regular reviews of local laws and standards and to audit your operations accordingly.
Partnering with compliance experts or even hiring in-house compliance analysts can help ensure you remain compliant across multiple jurisdictions.
2. Vendor oversight
Most modern businesses rely on third-party vendors for cloud services, payment processing, customer relationship management, analytics, accounting tools, and much more. It’s critical to ensure that these vendors meet local data sovereignty requirements and comply with all relevant regulations.
Companies must work closely with each vendor to verify that data storage, processing and storage practices align with the specific requirements of each jurisdiction in which they operate.
3. End-to-end, encrypted payment processing
Many of the chief data security concerns in the modern era surround sensitive payment data, as breaches of payment data can lead to significant financial losses for customers. One of the best ways retailers, hotel owners, and businesses in all industries can address these concerns is by partnering with an end-to-end payment service provider.
Using a comprehensive, integrated payment platform that encrypts data from point-of-sale to final processing is more secure than relying on fragmented systems. An all-in-one payment processing system provides better protection and compliance with local, regional, and global regulations.
4. Contingency planning
Even companies that take all precautions to protect consumer data and comply with all relevant regulations can still experience hacking and breaches. This is why it’s essential to have incident response plans ready in case of a cyberattack. Businesses should develop detailed contingency plans that include data recovery procedures and a communication strategy for alerting customers if a breach event occurs.
Balancing compliance and innovation
Navigating the shifting landscape of data sovereignty isn’t just about checking compliance boxes—it’s about future-proofing your business in a world where privacy, trust, and global reach go hand in hand. By investing in integrated, secure technologies that improve operations and reduce regulatory friction, businesses can protect sensitive data while continuing to grow confidently across borders.
Whether you operate in hospitality, retail, or beyond, choosing the right partners makes all the difference. From fully integrated payment solutions to cloud-based PMSs or OMSs—and tools that support PCI compliance—Planet helps businesses simplify complexity, secure customer trust, and stay compliant at every touchpoint.
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