Security & Compliance Lingo: EMV, PCI DSS, Tokenization, Encryption, AVS — What Merchants Should Know

Why this matters
Security terms are not just jargon — they define what you must do (or delegate) to reduce fraud, avoid fines, and protect customer trust.

PCI DSS — the baseline for payment security

The Payment Card Industry Data Security Standard establishes technical and operational requirements for any entity that stores, processes, or transmits cardholder data. Merchants’ obligations vary by how they accept payments and the technology used; following PCI guidance reduces breach exposure and liability. The PCI SSC provides merchant resources and lists of approved P2PE solutions and validated vendors. PCI Security Standards Council+1

EMV (chip) and contactless security

EMV specifications govern chip card interactions and are the primary defense against counterfeit fraud in physical commerce. Contactless (NFC) payments and mobile wallets incorporate EMV protections and tokenization to secure transactions. EMVCo maintains the global specs and testing programs. EMVCo+1

Tokenization vs encryption: the difference that matters

Encryption encodes data during transmission and storage; it requires key management.
Tokenization replaces the PAN with a non-sensitive token that cannot be reversed without the token vault. Properly executed tokenization often reduces the amount of cardholder data in merchant systems and therefore reduces PCI scope. Vendor and PCI guidance explain best practices and caveats. Stripe+1

Point-to-Point Encryption (P2PE) and smart terminals

P2PE solutions encrypt card data at the POI (point of interaction) and decrypt only in secure environments at the processor. PCI-listed P2PE solutions reduce merchant scope and are recommended where applicable. Modern smart terminals and semi-integrated architectures increasingly support P2PE, improving security without sacrificing features. PCI Security Standards Council+1

AVS, CVV, 3-D Secure, and fraud controls

AVS and CVV are basic checks that reduce fraud for card-not-present transactions.
3-D Secure (cardholder authentication) shifts fraud liability in some cases and is commonly used for online transactions.
Processors also offer AI/ML fraud scoring, velocity limits, device fingerprinting, and rule-based blocking. A layered approach provides the best protection. Kount | An Equifax company+1

Practical merchant checklist for security & compliance

Use PCI-listed P2PE or tokenization where possible. PCI Security Standards Council
Keep software and terminals up to date; apply vendor patches promptly. PCI Security Standards Council
Use EMV/contactless acceptance for in-store payments. EMVCo
Implement AVS/CVV and consider 3-D Secure for online checkouts. Stripe
Maintain documented incident response processes and work with your processor on breach support. NCCoE

How Bay State Merchant Services supports security

We help merchants choose PCI-listed P2PE/terminal configurations, implement tokenization and modern terminals, and coordinate with acquirers to reduce PCI scope wherever possible. If you want a security review, we can map your current PCI scope, recommend P2PE/tokenization options, and produce an action plan for compliance.