Payment Vendor

A payment vendor is a third-party service provider that processes financial transactions on behalf of a business, including credit card processors, payment gateways, digital wallets like PayPal or Stripe, and merchant service providers. From a privacy and compliance perspective, payment vendors play a critical role because they handle highly sensitive financial and personal information. The relationship between a business and its payment vendor must be carefully structured to define data processing responsibilities. Under the GDPR, payment vendors typically act as data processors when processing payment data on behalf of merchants, requiring a data processing agreement. However, when payment vendors also use transaction data for their own purposes (like fraud detection across their network), they may act as joint controllers or independent controllers for those activities. Payment vendors must comply with PCI DSS (Payment Card Industry Data Security Standard) when handling cardholder data. They're also subject to financial regulations like the Gramm-Leach-Bliley Act in the US. Businesses must conduct due diligence on payment vendors, ensure appropriate security measures are in place, and clearly disclose to users how payment information is processed and shared. The CCPA may classify payment processing as a business purpose rather than a sale, but proper service provider agreements are essential.