Why Your Payment Processor's SOC 2 Report Doesn't Cover You (And What You Actually Need)

Compliance

Feb 16, 2026

x min read

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Your payment processor’s SOC 2 report might look reassuring, but it doesn’t cover your organization’s security responsibilities. Here’s why:

Relying solely on a vendor’s SOC 2 report can lead to failed audits, legal risks, and customer trust issues. To truly secure your environment, you need to build your own compliance program, assess your internal gaps, and actively manage third-party risks.

The article dives into these gaps, explains why SOC 2 reports fall short, and outlines steps to strengthen your security posture, including conducting gap analyses, implementing tailored controls, and setting up vendor oversight.

SOC 2 Report Coverage vs Your Compliance Responsibilities

What SOC 2 Reports Actually Cover

SOC 2 reports are designed to evaluate a vendor's internal controls. Created by the AICPA, these reports aim to provide assurance about how vendors manage user data, focusing specifically on the systems they use to process, store, and protect that information. A third-party CPA conducts the audit, reviewing both the design and effectiveness of the vendor's controls.

The Trust Services Criteria Explained

SOC 2 audits revolve around five categories, collectively called the Trust Services Criteria. Among these, Security is mandatory and includes over 30 criteria, such as access controls, firewalls, encryption, and incident response. The other four categories are optional, included only if the vendor chooses to have them audited:

SOC 2 takes a flexible, risk-based approach rather than following a rigid checklist. As Vanta explains:

SOC 2 is unique compared to other compliance standards. It's not a list of controls to implement; instead SOC 2 takes a risk-based approach and presents business problems and broad circumstances you'll need to solve for.

This approach means vendors define their own controls to meet the broader objectives, and auditors assess whether those controls are effective. While these criteria validate a vendor's processes, they don't address security measures your organization must implement.

What Falls Outside SOC 2 Scope

SOC 2 reports have clear boundaries, and several critical areas fall outside their scope:

Complementary User Entity Controls (CUECs) are your responsibility. For the vendor's security measures to function properly, you must handle tasks like authorizing transactions, managing user access, and monitoring activity logs. These obligations are mentioned in the report but aren't verified during the audit.

Sub-service organizations and industry-specific compliance requirements are often excluded. For instance, if a payment processor uses third-party infrastructure (like AWS or a fraud detection service), those providers might not be covered in the SOC 2 audit. Additionally, SOC 2 does not assess whether vendors meet standards like PCI DSS or HIPAA - even if they issue a SOC 2+ report. Similarly, the report does not confirm your compliance with those frameworks.

The audit's scope can also be narrower than expected. Vendors may restrict the evaluation to a specific product, data center, or business process. If the "Description of the System" in the report doesn't align with the services you use, the report offers no assurance for your specific use case.

These limitations highlight why relying solely on vendor SOC 2 reports can leave your organization exposed to risks.

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Where Payment Processor SOC 2 Reports Fall Short

Let’s take a closer look at the key gaps in SOC 2 reports when applied to your payment processor. Even a flawless SOC 2 report can leave critical blind spots. These reports focus solely on the vendor's infrastructure, leaving your own systems and practices unexamined. They don’t account for how you’ve integrated the processor’s services, how your team handles sensitive data, or whether your business meets specific regulatory standards.

Your Environment Isn't Covered

A SOC 2 audit evaluates your payment processor’s systems - like servers, access controls, and logging - but it doesn’t extend to your environment. It won’t confirm whether your network is segmented, employee access is tightly controlled, or physical data-handling points are secure. This highlights the shared responsibility model: while the processor secures data in transit, you’re responsible for protecting it once it enters your systems. For instance, if an employee saves cardholder data in an unsecured spreadsheet or your Wi-Fi lacks proper isolation, the SOC 2 report offers no assurances.

Another limitation is timing. SOC 2 Type II reports reflect a snapshot of the past, typically covering a 6–12 month period. This means any recent SaaS integrations, staff changes, or system updates made after the audit won’t be included. Issues like outdated software or misconfigured access controls could easily slip through unnoticed.

PCI DSS and Industry Requirements Aren't Addressed

SOC 2 and PCI DSS serve different purposes, and a processor’s SOC 2 report doesn’t equate to PCI compliance. Even if your processor is PCI compliant, that doesn’t automatically extend to your deployment. As Fayyaz Makhani, Global Security Architect at VikingCloud, explains:

"Your payment processor may be PCI compliant for certain systems or services - but that doesn't guarantee their compliance aligns with your deployment".

The responsibility for PCI DSS compliance ultimately rests with you. Noncompliance can lead to significant penalties, starting at $5,000–$10,000 per month and potentially escalating to $100,000 for ongoing violations. In 2024, the average cost of a data breach reached $4.88 million. While using a PCI-compliant processor can simplify your compliance obligations - like reducing a Self-Assessment Questionnaire from 329 to 35 questions - it doesn’t absolve you of responsibility. You’re still required to validate compliance annually, ensure script integrity on payment pages (PCI DSS v4.0 Requirement 6.4.3), and maintain proper network segmentation.

These gaps also make managing third-party risks more challenging, as discussed below.

Third-Party Risk Management Is Missing

Payment processors often rely on a network of third-party services, such as cloud hosting providers or fraud detection tools. Unfortunately, many of these subservice organizations fall outside the scope of a SOC 2 report, leaving you unaware of inherited vulnerabilities. If one of these fourth-party vendors experiences a breach, it could compromise both your data and your customers’ data.

PCI DSS Requirement 12.8 mandates that businesses maintain a list of all third-party service providers and assess their compliance annually. A SOC 2 report doesn’t meet this requirement. To address these risks, you need a clear responsibility matrix outlining which security controls are managed by your processor, which are your responsibility, and which are shared.

Mauricio Herrejon, Senior Information Security Consultant at RedLegg, emphasizes:

"Companies may waste a lot of resources implementing SOC controls that may not be very effective in their environment".

Without thorough oversight of vendors and detailed documentation, you risk basing your security strategy on incomplete information. Proactive third-party risk management is essential to close these gaps effectively.

The Real Risks of Depending Only on Third-Party SOC 2 Reports

Relying entirely on your payment processor's SOC 2 report can leave your organization exposed to serious risks. These gaps can lead to failed audits, damaged customer trust, and increased legal liabilities.

Failed Audits and Missing Evidence

Auditors don’t just want to see a clean SOC 2 report from your payment processor - they want proof that your own controls are in place and working. This means showing evidence of vendor risk assessments, strict access controls, and proper documentation of oversight activities. A third-party report simply doesn’t cover these bases.

If the services or integrations you depend on weren’t included in your processor’s audit scope, you’re left without verified evidence of security for those components. Many vendors exclude their subservice providers - like cloud platforms or fraud detection tools - from their SOC 2 audits, leaving critical gaps. These omissions make it harder to align vendor controls with your internal systems, creating vulnerabilities.

Audit quality can also vary widely. The cost of assessments can differ by over $100,000 for similar evaluations, and without a formal validation process to ensure alignment with AICPA standards, the depth and reliability of these audits can be inconsistent.

These gaps don’t just threaten audit success - they can also erode customer confidence.

Slower Sales and Lost Customer Trust

Enterprise customers expect more than just a link to your vendor’s SOC 2 report when evaluating your security practices. They demand detailed answers to questions about incident response, access controls, data retention, and network segmentation. Relying on third-party compliance documentation alone often results in incomplete or vague responses, which can raise red flags during procurement reviews. This can delay deals, hurt your credibility, and even cost you potential customers.

But the risks don’t stop there - legal and financial consequences can be even more severe.

Unmitigated Risks and Legal Exposure

A staggering three out of five data breaches originate from third-party vendors. If your processor’s vendor is compromised, that risk becomes your problem - a SOC 2 report won’t shield you from the fallout.

Real-world examples illustrate the stakes. In July 2025, Marks & Spencer suffered a ransomware attack due to a third-party help desk resetting an employee’s password. The result? A 7% drop in share price and an estimated $300 million in lost profits. That same month, Qantas faced a breach affecting 5.7 million customer records after a social engineering attack on a third-party customer service platform. Chanel also disclosed a breach where cybercriminals accessed a third-party database containing U.S. customer names, emails, and phone numbers.

These aren’t isolated incidents - they’re preventable failures caused by overreliance on vendor compliance reports without implementing strong internal controls. When breaches occur, neither regulators nor customers will accept "our vendor had a SOC 2 report" as a valid excuse. The legal and financial consequences will ultimately land on your organization.

How to Build Your Own Compliance Program

Relying solely on your payment processor's SOC 2 report leaves gaps in your security and compliance efforts. Building your own compliance program is essential to secure your environment, address risks, and meet regulatory requirements.

Start with a Gap Analysis

The first step is to review your payment processor's SOC 2 report. Pay special attention to the "System Description" section, which often reveals gaps, particularly related to subservice organizations. Then, map your internal controls to the Trust Services Criteria, focusing on areas like CC6 (Access Controls), CC7 (System Operations), CC8 (Change Management), and CC9 (Risk Mitigation). Keep in mind that your internal controls - such as access management, change processes, and risk strategies - are not included in third-party reports. Rank these gaps by severity and potential impact to prioritize your remediation efforts.

Check the auditor's opinion in the SOC 2 report. A "Qualified" opinion signals issues in the payment processor's security controls, meaning those risks fall on you to handle. Also, confirm the audit scope covers the products and services you are using - acquisitions and certain cloud platforms are often excluded.

Formal SOC 2 readiness assessments typically cost between $10,000 and $17,000, while first-year compliance costs for mid-sized organizations can range from $50,000 to $200,000 when you factor in technology and internal resources. You don’t need to tackle everything at once - prioritize gaps based on severity, urgency, and business impact.

"SOC 2 gap assessments should at the very least be performed on an annual basis. It's ideal for organizations to continuously monitor their compliance posture to ensure that their SOC 2 controls are operating effectively."

Using compliance automation platforms can save organizations 95% of the time and resources typically spent on managing compliance. Additionally, 81% of automation users complete their audits at least 25% faster compared to manual methods.

Once you’ve identified and ranked your gaps, start implementing controls to address them.

Implement Controls for Your Specific Risks

After completing your gap analysis, focus on creating controls that address your organization's most pressing risks. Avoid generic checklists - design controls that align with your specific challenges. Gradual implementation is key to preventing operational disruptions.

Assign clear accountability for each control area to ensure ownership and foster a security-driven culture. Faisal Khan, GRC Solutions Expert at Vanta, emphasizes:

"Security control ownership isn't just about assigning tasks... it's about embedding security into the culture of the organization. When people understand what they're accountable for... compliance stops being a checklist and turns into a shared mission."

Start with high-risk and urgent gaps, such as weak access controls, missing multi-factor authentication (MFA), lack of continuous vulnerability monitoring, inadequate network segmentation, and insufficient logging. Test your controls by simulating risk scenarios and documenting how they perform. Use this process to refine and improve your approach.

Organize everything in a Controls Matrix that maps each control to a Trust Services Criteria reference, describes the control, identifies the owner, and notes the associated risk level. Achieving SOC 2 Type 2 compliance typically takes 6 to 18 months, with Type 2 reports evaluating operational effectiveness over a period of 3 to 12 months.

Set Up Vendor Oversight and Documentation

Vendor oversight is a critical part of your compliance program. Create a full inventory of vendors, classify them by risk level, and enforce audit and breach clauses in contracts. With 30% of all data breaches involving third parties, and only one-third of enterprises continuously monitoring these relationships, this step is essential.

Maintain a detailed inventory of vendors that handle customer data, systems, or infrastructure, such as cloud providers and contractors. Classify vendors by risk based on data sensitivity, regulatory impact, and operational dependency:

Vendor Tier
Risk Level
Oversight Requirements
Review Cadence

Critical
SOC 2 Type II, Full Questionnaire, SLA for Uptime, Monthly Security Ratings
Quarterly

Significant
SOC 2 Type I or ISO 27001, Short Questionnaire, Uptime SLA
Annual

Low
Self-Attestation, Basic Security Questionnaire
Periodic/As-needed

Include clauses in vendor contracts for "Right to Audit", breach notification timelines, and data disposal requirements. Collect and verify artifacts like SOC 2 Type II reports, ISO 27001 certificates, and penetration test summaries instead of relying on questionnaires alone.

When reviewing a vendor's SOC 2 report, confirm the CPA firm's standing via the National Association of State Boards of Accountancy (NASBA) website. Be cautious of reports that lack detailed auditor language or testing specifics.

Store all vendor assessments, risk ratings, and remediation actions in a centralized portal to stay audit-ready. Reassess vendors immediately if they change hosting locations, add subprocessors, or experience security incidents.

In 2025, Konfirmity demonstrated that technology companies could achieve SOC 2 readiness in 4–5 months using pre-populated questionnaires and automated risk-tiering rules. This approach reduced internal compliance workloads from 600 hours to just 75 hours annually.

Finally, treat vendor offboarding as a critical security step. Require proof of access revocation and certified data destruction to eliminate residual risks. With U.S. data breach costs climbing to $10.22 million in 2025, effective vendor oversight is non-negotiable.

How Cycore Delivers Complete Compliance Coverage

Managing your own compliance program can help address the gaps left by your payment processor's SOC 2 report. But let’s face it - building and maintaining such a program can drain your internal resources. That’s where Cycore steps in as your fractional security team, taking on the heavy lifting of compliance so your engineers and operators can concentrate on what they do best: building and selling. Cycore bridges the gap between vendor reports and your organization's broader compliance needs, making the process smoother and more efficient.

Tailored Security Programs for Your Business

Cycore doesn’t believe in one-size-fits-all solutions. Instead, we create compliance programs tailored specifically to your business. By mapping your IT environment, we define an exact audit scope that ensures all customer data points - whether in cloud services or third-party vendors - are accounted for.

This approach goes beyond vendor reports by addressing your internal security needs. Whether you require SOC 2, PCI DSS, or both, Cycore’s expertise spans multiple frameworks. As Antonina K. McAvoy, Partner at PBMares, puts it:

"Finding a firm that combines both [SOC 2 and PCI DSS] skill sets is challenging".

We also customize your compliance program to include criteria like Availability, Confidentiality, Privacy, or Processing Integrity, depending on your customers’ needs . This tailored approach prevents costly errors, such as including unnecessary systems that increase audit fees or excluding critical ones that could result in audit failure.

AI-Driven Evidence Collection and Real-Time Gap Detection

Once your custom framework is in place, Cycore’s AI takes over to streamline evidence collection and close compliance gaps. Nearly 90% of compliance tasks are automated , eliminating manual processes like capturing screenshots, compiling spreadsheets, or digging through emails for evidence. The platform integrates with over 300 tools, including cloud services and identity providers, to continuously gather evidence .

Our AI performs hourly checks to ensure your security controls are functioning as intended, cutting compliance cycles from 30–45 days to under 10 days. This continuous monitoring spots vulnerabilities in real time and alerts your team immediately. All evidence is stored in one centralized hub, keeping you ready for audits at any moment.

Comprehensive Compliance Management

Cycore takes compliance a step further with a full-service approach that ensures ongoing alignment and addresses risks not covered by your payment processor’s SOC 2 report. Acting as your embedded fractional CISO and compliance team, we handle every aspect of the audit process - from identifying gaps to maintaining compliance. This includes everything from configuring access controls and setting up logging and backups to drafting policies, performing vendor due diligence, and resolving audit findings .

We even manage customer security questionnaires and join sales calls to address security concerns, helping you close deals faster. With third-party breaches doubling year-over-year according to the 2025 Verizon Data Breach Investigations Report, our vendor oversight ensures your entire supply chain stays compliant.

All of this is offered as a managed service for a fixed monthly fee, so you can remain compliant year-round without the stress of last-minute audit prep. This way, your team can stay focused on driving growth and revenue instead of getting bogged down in compliance tasks.

Conclusion

A SOC 2 report is just the beginning. While it provides insight into a vendor's infrastructure during a specific period, it doesn't address your internal systems, user practices, or unique configurations. As Dark Reading highlights:

SOC 2 reports are valuable but not sufficient … because of scope and time-bound limitations.

Ultimately, the responsibility - and the financial burden - of a breach, which averages $4.88 million globally in 2024, rests with you, even if the issue originates with a third party.

Understanding these gaps means taking proactive steps. Build your own compliance program by conducting regular gap analyses, implementing custom controls, and closely monitoring every vendor in your supply chain. However, managing all this manually can pull your team away from focusing on growth and innovation.

This is where expert support can make a difference. Cycore functions as your fractional security team, managing everything from policy creation and vendor evaluations to evidence collection and audit preparation. With AI-powered automation and continuous monitoring, you'll stay audit-ready without the burden of manual tasks. Your engineers can focus on building, your sales team can close deals, and Cycore ensures your compliance program builds trust and meets regulatory requirements - all for a predictable monthly fee. This approach helps you actively address vulnerabilities and strengthen your security posture.

Take control of your security strategy. Move beyond vendor reports, establish your own controls, and transform security into a competitive edge.

FAQs

What parts of payment security are still on me?

Even if your payment processor provides a SOC 2 report, your organization still holds responsibility for critical aspects of payment security. This means you need to handle access controls, keep an eye out for suspicious activity, and ensure your team follows proper data handling practices.

While SOC 2 reports cover general security standards, they don’t address your unique internal risks - like how well your employees are trained or how you respond to incidents. It's up to you to tackle these areas head-on to maintain both compliance and a secure environment.

Which CUECs should I implement right now?

Relying solely on a payment processor's SOC 2 report might leave gaps in your security and compliance efforts. To address risks unique to your organization, it's essential to implement Critical User and Entity Controls (CUECs). These include:

By taking these proactive steps, you can address risks that SOC 2 reports alone might overlook, strengthening your overall compliance strategy.

How do I prove compliance if my processor has SOC 2?

Relying only on your processor's SOC 2 report won’t cut it when it comes to proving compliance. You’ve got to take additional steps: conduct your own risk assessments, implement tailored security controls, and carry out internal audits or gap analyses. These actions help you tackle the specific risks your organization faces and ensure you're staying accountable to your compliance responsibilities. Building thorough oversight is key to meeting both your security and compliance requirements.