Which of the following statements about service providers is true?

The assertion that transaction payment gateways are not considered service providers is incorrect. In the context of PCI DSS (Payment Card Industry Data Security Standard), service providers are defined as entities that store, process, or transmit cardholder data on behalf of another entity. Transaction payment gateways do indeed fall within this definition because they facilitate and process payment transactions, thus they are subject to PCI DSS requirements.

The correct statement among the options is that service providers must validate their PCI compliance annually. This requirement ensures that service providers maintain a robust security posture to protect cardholder data. Annual validation helps in regularly assessing compliance with PCI DSS requirements, which are designed to ensure that payment card data is handled securely and reduces the risk of data breaches.

Service providers differ from merchants in the scope of their responsibilities regarding PCI compliance. Merchants also have compliance requirements, but service providers, especially those dealing directly with cardholder data, often face more rigorous standards due to the nature of their services. Therefore, the emphasis on annual validation for service providers underscores the importance of maintaining security measures and compliance due to the critical role they play in the payment ecosystem.