Encryption Requirements for PCI Compliance in 2025

For digital businesses accepting online payments, compliance with the Payment Card Industry Data Security Standard (PCI DSS) is mandatory. It’s a long standard with various requirements spanning the ways cardholder data is handled. Among these requirements are encryption standards, which safeguard data from unauthorized access.

Encryption requirements for PCI DSS compliance can become complicated, depending on how hands-on a business is with payment details (e.g., credit card data). This guide explores those requirements, detailing the challenges of implementing them alongside the practical strategies to maintain compliance.

Do Encryption Standards Apply to Every Business?

The PCI DSS requirements outline strict encryption controls to ensure sensitive cardholder data is protected at rest and in transit. Generally speaking, they emphasize the use of strong cryptography and secure encryption key management practices.

For some businesses, these controls aren’t relevant because they’re handled by a third-party product. For instance, businesses using Stripe and Stripe Elements experience little overhead as most concerns shift to Stripe. The same applies to customers using encryption services like Evervault; the encryption obligations (mostly) shift to the vendor’s engineering stack.

Encryption requirements remain mandatory, whether that’s to the end application or the third-party flow. To simplify things, we’ll first cover all the encryption controls detailed by PCI DSS, irrespective of who manages them. Then, we’ll touch on which of these could be outsourced to third parties, given the available tooling in 2025.

Encryption Algorithms That Meet PCI Standards

Let’s begin by discussing which encryption algorithms are recommended by PCI DSS to safeguard sensitive data:

• Advanced Encryption Standard (AES): AES-256 is the gold standard for large volume data encryption~~, compliance due to its effective key strength.~~
• RSA Encryption: Asymmetric encryption requires RSA with a minimum key length of 2048 bits for secure key exchange, and while this is still acceptable, the cryptography world keeps close tabs on the evolving quantum computing landscape.

By adopting these algorithms, businesses can ensure their encryption practices meet or exceed PCI DSS requirements.

Securing Data in Transit

Data in transit is highly vulnerable to interception, especially when transmitted across public networks. PCI DSS mandates strong cryptography to protect this data from unauthorized access.

Key Practices for Securing Transmitted Data

1. Use Modern Protocols: All cardholder data transmitted across networks must use Transport Layer Security (TLS) 1.2 or higher. Older protocols like SSL and early versions of TLS are no longer compliant.
2. Avoid Unencrypted Channels: Sensitive data, such as primary account numbers (PANs), should never touch unencrypted communication methods like email or instant messaging.
3. Authenticate Communication Channels: Companies should implement HTTPS with valid SSL/TLS certificates to secure data transmitted through websites and APIs.

These measures ensure that data remains secure during transmission, even when traveling across unsecured networks.

Protecting Data at Rest

Stored cardholder data must also be encrypted to comply with PCI DSS. Unauthorized access to data at rest can lead to significant data breaches, making its protection critical.

Best Practices for Data at Rest

• Robust Encryption: PCI DSS requires the use of AES-256 or equivalent encryption methods to secure stored data. With some trace exceptions, PANs must be masked when displayed, showing only the last four digits to minimize exposure.
• Secure Storage of Encryption Keys: Data encryption keys must be stored separately from the encrypted data. This could mean leveraging a third-party vault service to stores keys on behalf of the user; alternatively, companies could create their own key-storing service. A particularly niche option would be a dedicated hardware security module (HSM) can ensure secure key storage. Data Encryption Keys (DEK) must be encrypted by Key Encrypting Keys (KEKs) using at a minimum the same strength encryption as the DEK.
• Access Control: Access to decrypted data should be limited to authorized personnel only, governed by role-based access policies.

These steps ensure that sensitive cardholder data remains secure, even if storage systems are compromised.

Managing Encryption Keys

Encryption is only effective when encryption keys are properly managed. Poor key management practices can render even the strongest encryption useless. PCI DSS provides detailed requirements for cryptographic key management.

Key Management Essentials

1. Secure Key Storage: Keys must be stored in secure services or on tamper-resistant hardware.
2. Controlled Access: Only authorized personnel should have access to encryption keys. Dual control and split knowledge practices ensure no single individual has complete control over key management.
3. Regular Key Rotation: Encryption keys should be rotated at after a risk-defined crypto period or number of encryption operations. Or, of course, whenever a key is suspected to be compromised. Retire and securely destroy old keys to prevent misuse.
4. Detailed Documentation: Companies should maintain records of key creation, usage, storage, and retirement. Documentation is crucial during audits and ensures consistency across systems.

Proper key management not only enhances security; it also simplifies compliance efforts by demonstrating adherence to PCI DSS requirements.

The Challenges of Implementing PCI Encryption

Achieving PCI compliance often comes with technical and operational challenges. Recognizing and addressing these challenges is essential for smooth implementation.

Common Challenges

• Legacy Systems: Many older systems lack compatibility with modern encryption protocols, requiring costly upgrades or replacements.
• Performance Impact: Encryption can increase processing overhead, potentially slowing down operations. Organizations must optimize their systems to balance security and performance.
• Key Management Complexity: Managing thousands of encryption keys across a large organization can be tricky, requiring detailed processes, secure storage, and regular audits.
• High Costs: Implementing encryption tools, such as HSMs or end-to-end encryption (E2EE), can be expensive. Training staff and maintaining systems also add to the financial burden.

These challenges underscore the need for strategic planning and resource allocation when implementing PCI DSS encryption requirements.

Simplifying PCI Compliance With Alternative Solutions

For organizations struggling to meet encryption requirements, alternative solutions can streamline compliance while maintaining robust security.

Tokenization

Tokenization replaces sensitive cardholder data with non-sensitive tokens, which have no exploitable value. Since tokens do not qualify as sensitive data, their use can reduce the burden of PCI compliance while providing strong security.

Point-To-Point Encryption (P2PE)

For companies accepting physical payments, P2PE encrypts payment card data at the point of entry (e.g., at a POI terminal) and keeps it encrypted until it reaches a secure endpoint, such as a payment processor, who maintains the private key used for decryption.

Ongoing Compliance and Security

PCI DSS compliance is not a one-time achievement—it’s an ongoing process that requires continuous monitoring, updates, and testing.

Businesses should regularly update encryption protocols to address evolving threats. They should also conduct security audits, vulnerability scans, and penetration tests to identify and mitigate risks. Finally, they should monitor changes to PCI DSS standards and adapt encryption practices as needed.

Compliance isn’t just about avoiding penalties; it’s about maintaining customer trust and protecting against financial and reputational harm.

Conclusion

Encryption is fundamental to PCI DSS compliance, protecting cardholder data from unauthorized access and ensuring secure payment systems. By implementing robust encryption practices, managing keys securely, and addressing operational challenges, businesses can meet compliance requirements while safeguarding sensitive information.

Solutions like P2PE and tokenization offer practical ways to simplify compliance and enhance security. However, compliance is a continuous journey, requiring regular updates, testing, and monitoring.

Investing in strong encryption isn’t just about meeting regulatory standards—it’s about building customer trust, protecting the brand, and thriving in the digital payment ecosystem. By prioritizing security, an organization can confidently navigate the complexities of PCI DSS and foster a safer environment for payment transactions.