I keep seeing the mention of these fines. Who has the power to levy these fines on places that are non compliant? What makes them think they will actually be able to collect?This is a good question. This is a very good question. In a security summit my company hosted last year, we put together a round table discussion with Visa, MasterCard, AMEX and the attendees, a similar question was posed. The answer was a little vague and it goes like:
VISA/MasterCard – The initial response was that Visa's and MasterCard's legal agreements are between them and the member banks, not the merchant so Visa and MasterCard does not have the ability to fine merchants, they can only fine the member banks. But, after some follow-up questions and prodding, they stated that their agreements with the member banks does not prohibit the member bank from passing the fine down the chain until it gets to the merchant. Most all agreements in this chain have some sort of "hold harmless" clause and it's this wording that end up placing the fines in the merchants lap. So while Visa and MasterCard do not fine the merchant directly, indirectly they are the one imposing them.
AMEX – American Express' agreements are much more straightforward, most AMEX agreements are between AMEX and the merchant. In this case, AMEX would be imposing any fines directly and hold harmless clauses are not in the mix.
Part two of the question above, what makes them think they will actually be able to collect? Well, merchant agreements are legal and binding contracts so not only can your merchant bank freeze your accounts to cover any fines, they can make your life legally miserable. In addition, many merchant agreements require personal guarantees, which can add to the miserable factor.
Bottom line: read your merchant agreements carefully and do your best to comply with all the requirements. Just like with the law (maybe more so), ignorance is no excuse.