What Is Cardholder Data Environment: A Complete Guide

30 May, 2024
10 mins
Vipul Taneja, VP, Finance Transformation

Table of Content

Key Takeaways
What Is a Cardholder Data Environment?
The Role of CDE in the Payment Card Industry
9 Components of Cardholder Data Environment
PCI DSS Requirements for a Cardholder Data Environment
What Can and Cannot Be Stored in a CDE?
How to Create a Secure Card Holder Environment

Key Takeaways

  • The Cardholder Data Environment encompasses processes, technology, and structures that handle cardholder data securely, protecting it from unauthorized access.
  • Protecting cardholder data is not just a compliance requirement but also crucial for maintaining customer trust and the integrity of the digital payment system.
  • While PANs, cardholder names, expiration dates, and service codes can be stored, sensitive authentication data like full magnetic stripe data, CVV or CVC codes, and PINs should not be stored within the CDE.


In a world where digital payments are king, the safety of cardholder data affects us all businesses, and the economy at large. At the heart of these payments is the Cardholder Data Environment (CDE)—a system designed to secure cardholder information from the ever-increasing threat of data breaches and cyberattacks.

This blog post delves into the essence of CDE within the Payment Card Industry (PCI), unwrapping layer by layer the components, requirements, and best practices that ensure the cardholder data you handle daily is shielded with the highest security standards.

Whether you are setting up a new business, looking to upgrade your existing security measures, or simply curious about how cardholder data is protected, this guide is your go-to resource for understanding and mastering the Cardholder Data Environment.

What Is a Cardholder Data Environment?

The Cardholder Data Environment (CDE) refers to the processes, technology, and physical structures that store, process, or transmit cardholder data. It’s a secure pathway governed by strict security measures to protect sensitive data from unauthorized access, starting from card swipe to data protection.

The Role of CDE in the Payment Card Industry

In the vast expanse of the Payment Card Industry, the CDE plays a critical role by ensuring cardholder data security throughout its lifecycle.

  1. Data Protection: The CDE is responsible for safeguarding cardholder data from unauthorized access, ensuring compliance with industry standards such as the Payment Card Industry Data Security Standard (PCI DSS).
  2. Transaction Processing: It facilitates the secure processing of payment transactions from when a card is swiped or entered into a system until the transaction is completed.
  3. Risk Management: By implementing stringent security measures, the CDE helps mitigate the risk of data breaches and fraud, protecting both consumers and businesses.
  4. Compliance: It ensures that organizations adhere to regulatory requirements and industry standards related to the handling of cardholder data, reducing the risk of penalties and reputational damage.

9 Components of Cardholder Data Environment

9 Components of Cardholder Data Environment

A typical CDE consists of several key components, each serving a specific function in the protection of cardholder data.

  1. Computing hardware: This includes servers and workstations responsible for running payment-processing software. Additionally, network components such as routers, switches, and firewalls play a crucial role in directing and protecting data as it moves across networks.
  2. Payment terminals: These physical devices, situated at points of sale, facilitate the processing of payment cards. Whether cards are swiped, inserted, or tapped, payment terminals ensure smooth transactions for customers.
  3. Storage systems: The CDE encompasses areas where payment card data is stored, including digital files, databases, and backups. Removable media such as USB drives or backup tapes may also be utilized for data storage within this category.
  4. Applications: Various software applications are integral to processing payments within the CDE. This includes point-of-sale systems and online payment gateways, which handle the transactional aspects of payment processing.
  5. Access controls: Systems designed to authenticate user identity play a crucial role in securing the Cardholder data environment. This encompasses both physical access to secure areas and digital access to data systems, ensuring only authorized personnel can interact with sensitive information.
  6. Servers: Within the CDE, servers play a vital role in collecting and storing cardholder data. Web servers gather this data, while database servers manage authentication information for CDE access. Both physical and virtualized servers fall within the scope of the CDE.
  7. Point of Sale (POS) systems: Specifically designed to read cardholder data from payment cards, POS systems are a fundamental part of the CDE. These systems, which include payment terminals and cash registers, are responsible for processing transactions securely.
  8. Network infrastructure: The secure transmission of cardholder data is facilitated by network infrastructure components like firewalls, routers, and wireless access points. These devices ensure that data travels safely across networks, protecting it from unauthorized access.
  9. Third-Party PCI service providers: In some cases, organizations may rely on third-party CDEs to handle aspects of payment processing. These providers collect, store, or process cardholder data, reducing the burden of PCI DSS compliance for the organization. Through processes like tokenization, the third-party CDE effectively becomes part of the organization’s own CDE, ensuring the secure handling of sensitive data.

PCI DSS Requirements for a Cardholder Data Environment

The Payment Card Industry Data Security Standard sets forth comprehensive requirements for securing a Cardholder Data Environment (CDE). Now, let’s explore the main requirements of the PCI DSS standard:

1. Install and retain a firewall to protect cardholder data

To ensure network security, organizations must install and properly configure a firewall to protect the CDE. Firewalls regulate network traffic through restrictive rules and act as the first line of defense against attackers. PCI DSS or PCI certification requires organizations to review firewall rules twice a year to ensure they are appropriate for securing the environment.

2. Strong passwords and secure configuration

Organizations must avoid leaving devices and software with default passwords. All devices affecting the CDE should have secure passwords and appropriate security settings. This includes routers, point-of-sale (POS) equipment, and other vulnerable devices.


3. Protect stored cardholder data

Cardholder data must be protected using methods like encryption, hashing, truncation, or tokenization. Organizations must maintain a comprehensive list of cardholder information, where it is stored, and its retention period. Encryption keys should be managed rigorously, and data discovery tools can be used to identify where credit card details are stored.

4. Encrypt cardholder data transmission across public networks

Cardholder data must be encrypted whenever it is transmitted over open or public networks, including the Internet, mobile phone networks, and Bluetooth. Secure protocols like Transport Layer Security (TLS) or Secure Shell (SSH) should be used for encryption.

5. Use and regularly update anti-virus software

Anti-virus software must be deployed on all computing systems in the CDE and updated regularly. POS equipment should also be equipped with anti-virus software, and regular scans should be conducted to detect and prevent malware.

6. Create and retain secure systems and applications

Software patches and updates must be applied to all systems promptly. Vulnerabilities in software systems should be actively sought out and addressed. New or modified code must be scanned for known vulnerabilities, and insecure coding practices should be avoided.

7. Limit access to cardholder data based on “Need to Know”:

Access to cardholder data should be limited within the organization, following the “need-to-know” principle. Employees should only have access to data necessary for performing their tasks, and requests for cardholder data should be denied if not authorized.

8. Assign unique IDs for every person with computer access:

Every person with access to computing systems in the CDE must be assigned a unique identifier. Two-factor authentication is recommended, requiring users to provide something they know (password) and something they own (security token).

9. Restrict physical access to cardholder data

Unauthorized physical access to equipment in the CDE should be prevented. Access controls should restrict access to computing systems, devices, storage media, and paper copies storing or enabling access to cardholder data.

10. Track and monitor access to network and cardholder data

Networks in the CDE should have appropriate audit policies to log all activity, which should be reviewed at least once per day. Security information and event monitoring (SIEM) tools can automate this process, centrally storing, analyzing, and alerting on log data.

11. Periodically test security systems and processes

Regular testing of security controls and procedures is essential to ensure systems remain secure. Testing should include scanning for vulnerabilities, penetration testing, setting up intrusion detection and prevention systems (IDS/IPS), and file integrity monitoring (FIM).

12. Sustain an information security policy affecting all personnel

Organizations should have a formal, well-documented security policy detailing the security responsibilities of all personnel related to the CDE. This policy should undergo an annual review based on a formal risk assessment, and employees must undergo security awareness training. Background checks for employees and a documented incident response process are also required.

What Can and Cannot Be Stored in a CDE?

The Cardholder Data Environment (CDE) is vast, encompassing not just the systems, but also the people and processes that store, process, or transmit cardholder data. Understanding what types of data can and cannot be stored in the CDE is crucial for complying with Payment Card Industry Data Security Standard (PCI DSS) requirements.

What can be stored in CDE?

In a Cardholder Data Environment (CDE), the following types of data can be stored securely:

  • Primary Account Numbers (PANs): The unique card numbers that identify cardholders.
  • Cardholder Names: The names associated with the payment cards.
  • Expiration Dates: The expiry dates of the payment cards.
  • Service Codes: Additional codes on the payment cards.

What cannot be stored in a CDE?

Certain types of data should not be stored in a Cardholder Data Environment (CDE) to minimize security risks and maintain compliance with PCI DSS:

  • Sensitive Authentication Data: Full magnetic stripe data, CVV or CVC codes, and PINs should not be stored after authorization. It must be immediately deleted after the purchase.
  • Personal Identification Numbers (PINs): PINs used for cardholder authentication should not be stored within the CDE.
  • Other Personally Identifiable Information: While not directly related to payment cards, storing other forms of PII, such as social security numbers or driver’s license numbers, should be avoided within the CDE to reduce the risk of data breaches.

How to Create a Secure Card Holder Environment

Creating a secure Cardholder Data Environment (CDE) requires a multi-layered approach to security:

  • Access Controls: Limit access to cardholder data to authorized personnel only and implement strong authentication mechanisms.
  • Data Encryption: Encrypt cardholder data both in transit and at rest using robust encryption algorithms.
  • Network Segmentation: Segment the CDE from other networks to reduce the risk of unauthorized access.
  • Regular Auditing and Monitoring: Monitor access to the CDE, conduct regular security audits, and promptly address any vulnerabilities or anomalies.
  • Security Policies and Procedures: Develop and enforce comprehensive security policies and procedures, including regular employee training and awareness programs.
  • Incident Response Plan: Have a well-defined incident response plan in place to detect, respond to, and recover from security breaches effectively.


Mastering the Cardholder Data Environment is essential for any organization processing, storing, or transmitting cardholder data. By understanding the components, complying with PCI DSS requirements, and implementing robust security measures, you can protect your customers’ sensitive information and maintain their trust.

In the ever-evolving landscape of digital payments, staying informed and vigilant is the best strategy to safeguard against potential threats. Remember, protecting cardholder data is not just a technical requirement—it’s a cornerstone of maintaining customer trust and ensuring the integrity of the digital payment system.

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1). What cardholder data can be stored?

Cardholder data that can be stored includes primary account numbers (PANs), cardholder names, expiration dates, and service codes. However, other authentication data or full magnetic stripe data cannot be stored within the Cardholder Data Environment, even in any encrypted format.

2). What is an example of cardholder data?

An example of cardholder data includes the primary account number (PAN), which is the unique number associated with a payment card. This number, along with other information such as cardholder names, expiration dates, and service codes, is essential for processing payment transactions securely.

3). What is the difference between cardholder data and sensitive authentication data?

Cardholder data includes primary account number (PAN), cardholder names, and expiration dates that are necessary for processing payment transactions. Sensitive authentication data includes data that is used to authenticate the cardholder, like full magnetic stripe data, CVV or CVC codes, and PINs.

4). What type of cardholder data must be protected when stored?

All cardholder data, including primary account numbers (PANs), cardholder names, expiration dates, and service codes, must be protected when stored within the Cardholder Data Environment. This data should be encrypted or protected using methods to prevent fraud or misuse.

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