Encryption is a way of protecting cardholder data by transforming it into an unreadable format that can only be decrypted with a secret key1. Backups are a way of ensuring that cardholder data is not lost or corrupted in case of a disaster or system failure2. Both encryption and backups are part of the PCI DSS requirements that apply to any entity that stores, processes, or transmits cardholder data1. The other options are not directly related to credit card data security or compliance.