PCI Compliance Without Cardholder Data: A Strategic Guide

You've been asked to become PCI compliant, but there's a problem: your organization doesn't store, process, or transmit cardholder data. This scenario is more common than you might think, and it presents a unique challenge. Whether driven by contractual requirements, business relationship expectations, or future-proofing considerations, organizations often find themselves navigating PCI DSS compliance requirements without actually handling the data that PCI DSS was designed to protect.

This situation requires careful strategic thinking. Simply ignoring PCI requirements isn't an option if you have contractual obligations or business relationships that expect compliance. However, implementing every PCI requirement when you don't handle cardholder data can be unnecessarily costly and complex. The solution lies in understanding your options and choosing the approach that best aligns with your business needs, risk tolerance, and future plans.

In this guide, we'll explore two primary approaches for organizations in this position: the Risk-Based Approach and the Defined CDE Scope approach. We'll also discuss when alternative frameworks like the NIST Cybersecurity Framework might be more appropriate. Each approach has distinct advantages, implementation requirements, and implications for your compliance posture.

Approach 1: Risk-Based Approach

The Risk-Based Approach assumes that you have no contractual or legal obligations to maintain full PCI DSS compliance. This method can also be used in cases where you are contractually required to meet PCI compliance requirements on behalf of a client or partner but do not require full compliance with the PCI DSS standard.

Understanding the Risk-Based Approach

In this approach, you use the PCI DSS as a framework for security and compliance guidance rather than a strict compliance requirement. You define the scope to which the requirements will apply and make informed decisions about which requirements to implement based on a risk assessment and cost-benefit analysis. Any requirements you choose not to meet would be explicitly excluded from any type of self- or third-party assessment.

Companies that do not require PCI compliance may still choose the PCI DSS as a security framework because it is very prescriptive. In many cases, it is specific enough that organizations do not need to invest great effort in devising and drafting additional controls to meet higher-level objectives. The PCI DSS provides clear, actionable requirements that can be directly applied to secure systems and data, making it an attractive framework even when full compliance isn't required.

Important clarification: Choosing to not meet specific PCI requirements means that you are NOT fully compliant with the PCI DSS. However, should you ever be required to be fully PCI compliant in the future, you would only need to implement any missing controls, making this approach a flexible foundation for future compliance.

When to Use the Risk-Based Approach

This approach works best when:

• You have no contractual or legal obligations requiring full PCI compliance
• You want to use PCI DSS as a security framework without the full compliance burden
• Cost optimization is important, and you can justify excluding certain requirements
• You need flexibility to adapt your security posture over time
• You want to maintain PCI-aligned security practices without formal assessment requirements

Implementation Steps

1. Conduct a Comprehensive Risk Assessment

Begin by evaluating your actual risk exposure. Since you don't handle cardholder data, identify what sensitive data you do handle and assess the risks associated with your systems, networks, and processes. This assessment should consider:

• Data types you actually process (PII, financial data, etc.)
• System criticality and exposure
• Threat landscape relevant to your industry
• Regulatory requirements beyond PCI DSS

2. Map PCI Requirements to Your Environment

Review all PCI DSS requirements and map them to your specific environment. For each requirement, determine:

• Whether it applies to your risk profile
• The cost of implementation
• The security benefit it would provide
• Whether alternative controls might achieve similar security outcomes

3. Perform Cost-Benefit Analysis

For each PCI requirement, evaluate the cost of implementation against the security benefit. Consider:

• Direct implementation costs (technology, personnel, time)
• Ongoing maintenance and operational costs
• Security value provided
• Risk reduction achieved
• Opportunity costs of not implementing

4. Document Exclusions and Rationale

Create comprehensive documentation that clearly states:

• Which PCI requirements you are implementing
• Which requirements you are excluding
• The rationale for each exclusion based on risk assessment
• Alternative controls or mitigations in place
• How excluded requirements would be addressed if full compliance becomes necessary

Real-World Example

We worked with a client that had previously been PCI compliant because they were contractually required by one of their clients (they were a service provider) to be PCI compliant. However, their contract ended, and they had never actually possessed cardholder data to begin with. Once the contract ended, they chose to switch to a risk-based approach and cut out some of the requirements with a lower benefit-to-cost ratio.

However, they still valued using PCI compliance as a guide because it is more prescriptive than other standards and provided a structured way to secure their other sensitive data and systems. In this situation, if they were ever asked to become PCI compliant again, it would not require much work—they had maintained the foundational controls and documented their approach, making future compliance achievable with minimal additional effort.

Pros and Cons

Advantages:

• Cost-effective: Only implement controls that provide value for your specific risk profile
• Flexible: Adapt your security posture based on changing business needs
• Practical: Focus resources on controls that matter for your actual risk exposure
• Future-ready: Maintains foundation for future PCI compliance if needed
• Documented approach: Clear rationale for decisions supports future assessments

Disadvantages:

• Not fully compliant: Cannot claim full PCI DSS compliance
• Assessment limitations: Cannot undergo formal PCI assessment without using 'Not Assessed' or 'Not Compliant' outcomes
• Contractual restrictions: May not satisfy contracts requiring full PCI compliance
• Potential gaps: Risk of overlooking important controls if risk assessment is incomplete

Key Considerations

• Document your approach: Maintain records of your risk assessment, cost-benefit analysis, and exclusion rationale to support future decisions
• Regular review: Periodically reassess your approach as business needs and risk landscape evolve
• Stakeholder alignment: Ensure key stakeholders understand that this is not full PCI compliance
• Alternative controls: Consider whether alternative security controls achieve similar outcomes at lower cost
• Future planning: Maintain awareness of potential future PCI compliance requirements

Approach 2: Defined CDE Scope

The Defined CDE Scope approach involves intentionally designating specific subnets and systems as the Cardholder Data Environment (CDE) even though you do not currently store, process, or transmit cardholder data. The defined CDE scope will be protected in accordance with PCI requirements, and even though there is no cardholder data present, cardholder data could be added to the environment without any change in procedures or controls.

Understanding the Defined CDE Scope Approach

This approach represents full PCI DSS compliance with an intentionally empty CDE. You are implementing all PCI requirements applicable to your defined scope, maintaining full compliance posture, and can undergo formal PCI assessments. This approach provides maximum flexibility for future business needs while maintaining strict compliance standards.

Some organizations fully expect to handle cardholder data in the future but must be PCI compliant first. In these cases, the Defined CDE Scope approach allows them to achieve compliance certification before they begin processing cardholder data, ensuring they meet business requirements or contractual obligations from day one.

When to Use the Defined CDE Scope Approach

This approach applies best in the following situations:

1. Business relationship requirements: The organization handles data from clients that could contain cardholder data, but in practice does not. Business partners or clients require PCI compliance certification as a prerequisite for doing business.

2. Contractual obligations: The organization must be fully PCI compliant for contractual or legal reasons, even though they do not currently have cardholder data. This might include payment processor agreements, merchant agreements, or industry-specific requirements.

3. Future-proofing: The organization anticipates future payment functionality or integrations and wants a PCI-ready environment already in place. This eliminates the need for major infrastructure changes when payment processing is added. Some organizations fully expect to handle cardholder data but must achieve PCI compliance certification before they can begin processing payments.

4. Competitive advantage: PCI compliance certification provides a competitive advantage in your market, demonstrating security maturity to potential clients or partners.

Implementation Steps

1. Define Your CDE Scope

Work with qualified security assessors (QSAs) or internal security teams to define your CDE scope. This involves:

• Identifying systems and networks that would handle cardholder data if it were present
• Documenting network segmentation and boundaries
• Defining system components within scope
• Creating network diagrams showing CDE boundaries
• Establishing clear criteria for what is in-scope vs. out-of-scope

2. Implement Network Segmentation

Establish clear network segmentation to isolate your defined CDE:

• Create separate network segments for the CDE
• Implement firewall rules and access controls
• Document network architecture and segmentation strategy
• Test segmentation effectiveness
• Maintain network diagrams and documentation

3. Implement PCI Requirements

Implement all applicable PCI DSS requirements for your defined scope:

• Build and maintain secure networks and systems
• Protect cardholder data (even though none exists currently)
• Maintain vulnerability management program
• Implement strong access control measures
• Monitor and test networks regularly
• Maintain information security policy

4. Conduct Formal Assessment

Undergo formal PCI assessment:

• Complete Self-Assessment Questionnaire (SAQ) if applicable
• Or engage a Qualified Security Assessor (QSA) for on-site assessment
• Address any identified gaps or deficiencies
• Obtain Attestation of Compliance (AOC)
• Maintain ongoing compliance through annual assessments

5. Maintain Ongoing Compliance

Establish processes to maintain compliance:

• Regular security monitoring and testing
• Quarterly vulnerability scans
• Annual penetration testing
• Ongoing policy review and updates
• Staff training and awareness programs
• Change management processes

Real-World Example

In one case, we worked with a client in the payments industry that did not handle cardholder data themselves. However, PCI compliance was the language that other organizations in their ecosystem spoke when it came to security. These partners and potential clients expected PCI compliance certification as a prerequisite for business relationships.

In this case, the client actually had a need to be PCI certified to maintain and grow their business relationships. Their only viable option was to use the Defined CDE Scope approach. They designated specific systems and networks as their CDE, implemented all PCI requirements, and underwent formal assessment. This allowed them to obtain PCI compliance certification, which became a key differentiator in their market and enabled them to work with major payment processors and financial institutions.

Pros and Cons

Advantages:

• Full compliance: Achieve and maintain full PCI DSS compliance status
• Formal certification: Can obtain Attestation of Compliance (AOC)
• Business enablement: Meets contractual and business relationship requirements
• Future-ready: Environment is ready for cardholder data without major changes
• Competitive advantage: Demonstrates security maturity to clients and partners
• Structured approach: Clear framework and requirements to follow

Disadvantages:

• Higher cost: Full implementation of all PCI requirements is expensive
• Ongoing maintenance: Requires continuous compliance efforts and annual assessments
• Resource intensive: Demands significant time and expertise from security teams
• Rigidity: Less flexibility to adapt controls based on actual risk
• Assessment requirements: Must undergo formal assessments (SAQ or QSA)

Key Considerations

• Scope definition is critical: Work with experienced professionals to properly define your CDE scope
• Network segmentation: Proper segmentation is essential for managing scope and costs
• Ongoing commitment: This approach requires long-term commitment to maintaining compliance
• Assessment costs: Budget for annual assessment costs (SAQ or QSA fees)
• Documentation: Maintain comprehensive documentation of all controls and processes
• Staff expertise: Ensure you have or can access PCI DSS expertise for implementation and maintenance

Comparing the Approaches

Understanding the differences between these two approaches is essential for making the right decision for your organization. The following comparison highlights key distinctions:

Decision Framework

To determine which approach is right for your organization, consider the following questions:

1. Do you have contractual obligations requiring full PCI compliance?

• If yes → Defined CDE Scope is likely required
• If no → Risk-Based Approach may be viable

2. Do you anticipate handling cardholder data in the future?

• If yes, and soon → Defined CDE Scope provides readiness
• If yes, but uncertain timeline → Risk-Based Approach with future planning
• If no → Risk-Based Approach may be sufficient

3. What is your risk tolerance and security maturity?

• High maturity, structured approach needed → Defined CDE Scope
• Need flexibility and cost optimization → Risk-Based Approach

4. What is your budget for compliance efforts?

• Limited budget → Risk-Based Approach
• Budget available for full compliance → Defined CDE Scope

5. Do business relationships require PCI certification?

• Certification required → Defined CDE Scope
• Security framework sufficient → Risk-Based Approach

6. What is your timeline for implementation?

• Immediate need → Risk-Based Approach (faster)
• Can invest time in full implementation → Defined CDE Scope

Common Pitfalls to Avoid

Organizations navigating PCI compliance without cardholder data often encounter several common mistakes. Understanding these pitfalls can help you avoid costly errors and ensure you choose the right approach for your situation.

Pitfall 1: Assuming No Cardholder Data Means No PCI Requirements

The Mistake: Some organizations assume that if they don't handle cardholder data, PCI DSS doesn't apply to them at all. This oversimplification can lead to missed contractual obligations or business relationship requirements.

How to Avoid: Carefully review all contracts, agreements, and business relationship requirements. Even if you don't handle cardholder data, you may still have obligations to demonstrate PCI compliance or security maturity.

Pitfall 2: Not Documenting Scope Decisions Properly

The Mistake: Making decisions about which requirements to implement or exclude without thorough documentation. This creates problems when stakeholders question decisions, when contracts change, or when future compliance becomes necessary.

How to Avoid: Document your risk assessments, cost-benefit analyses, exclusion rationales, and decision-making processes. While comprehensive documentation isn't strictly required, maintaining clear records of your approach will help when stakeholders have questions or when future compliance becomes necessary.

Pitfall 3: Choosing the Wrong Approach for Business Needs

The Mistake: Selecting an approach based on cost alone without considering business requirements, or choosing full compliance when a risk-based approach would suffice.

How to Avoid: Conduct a thorough analysis of your business needs, contractual obligations, and future plans before selecting an approach. Consider both short-term costs and long-term implications.

Pitfall 4: Underestimating Future Requirements

The Mistake: Choosing the Risk-Based Approach without considering that business needs might change, requiring full PCI compliance in the future. This can lead to costly retrofitting of systems and processes.

How to Avoid: Regularly reassess your business strategy and potential future needs. If there's a reasonable possibility of needing full PCI compliance, consider whether the Defined CDE Scope approach might be more cost-effective long-term.

Pitfall 5: Not Maintaining Controls After Implementation

The Mistake: Implementing controls initially but then allowing them to degrade over time, especially with the Risk-Based Approach where there's no formal assessment requirement.

How to Avoid: Establish ongoing maintenance processes, regular reviews, and accountability mechanisms. Treat security controls as living systems that require continuous attention, not one-time implementations.

When to Consider Alternative Frameworks

If the Risk-Based Approach is more appropriate because there are controls that the organization cannot or does not want to comply with, it might be better to use another standard that is more risk-based from the start. This can provide a more natural fit for organizations that want structured security guidance without the PCI-specific requirements.

NIST Cybersecurity Framework (CSF)

The NIST Cybersecurity Framework is often the best option in this case. Developed by the National Institute of Standards and Technology, the CSF provides a flexible, risk-based approach to cybersecurity that is widely recognized across industries.

Key Advantages:

• Risk-based from the start: Built on risk management principles rather than prescriptive requirements
• Flexible and adaptable: Can be tailored to your organization's specific needs and risk profile
• Industry-recognized: Widely accepted standard that demonstrates security maturity
• Comprehensive: Covers identify, protect, detect, respond, and recover functions
• Scalable: Works for organizations of all sizes and industries
• Less prescriptive: Focuses on outcomes rather than specific controls

The NIST CSF is particularly well-suited for organizations that want a structured security framework but don't need the specific PCI DSS requirements. It provides similar security value while offering greater flexibility in implementation.

CMMC 2.0 Framework

Another framework to consider is the CMMC 2.0 Framework (Cybersecurity Maturity Model Certification). While less risk-based than the NIST CSF, CMMC 2.0 is more modern and less specific to cardholder data than PCI DSS.

Key Characteristics:

• Maturity-based: Focuses on cybersecurity maturity levels rather than binary compliance
• Modern approach: Incorporates current cybersecurity best practices
• Less cardholder-data specific: More broadly applicable to various data types and systems
• Structured levels: Provides clear progression path for security improvement

CMMC 2.0 may be appropriate if you work with Department of Defense contractors or want a maturity-based approach to cybersecurity that goes beyond simple compliance.

Transition Considerations

If you're considering transitioning from a PCI-based approach to an alternative framework:

• Assess overlap: Many controls overlap between frameworks, so existing implementations may translate
• Document mapping: Create a control mapping between PCI requirements and your chosen framework
• Stakeholder communication: Ensure stakeholders understand the change and its implications
• Gradual transition: Consider a phased approach rather than abrupt change
• Maintain security: Ensure security posture doesn't degrade during transition

Conclusion

Navigating PCI compliance requirements when you don't handle cardholder data requires careful strategic thinking and a clear understanding of your options. The Risk-Based Approach offers flexibility and cost-effectiveness for organizations that want to use PCI DSS as a security framework without full compliance obligations. The Defined CDE Scope approach provides full PCI compliance certification for organizations that need it for business relationships or contractual requirements.

The key to success lies in choosing the approach that aligns with your business needs, risk profile, and future plans. Both approaches have their place, and the right choice depends on your specific circumstances. For organizations that find PCI requirements don't fit their needs, alternative frameworks like the NIST Cybersecurity Framework offer risk-based security guidance without PCI-specific requirements.

Regardless of which path you choose, thorough documentation, regular reassessment, and ongoing maintenance of security controls are essential. The decisions you make today will impact your security posture and compliance capabilities for years to come.

Get Expert Guidance on Your Compliance Strategy

Choosing the right compliance approach requires deep expertise in security frameworks, risk assessment, and business requirements. Our team specializes in helping organizations navigate these complex decisions and implement the security frameworks that best fit their needs.

NIST Cybersecurity Framework Assessments are our primary focus, providing comprehensive evaluations that help organizations understand their security posture, identify gaps, and develop actionable roadmaps for improvement. The NIST CSF's risk-based approach makes it an ideal framework for organizations seeking structured security guidance without prescriptive requirements.

We also offer PCI readiness assessments and gap assessments to help organizations understand their current state and what would be required for full PCI compliance. For organizations pursuing PCI compliance, we provide SAQ assistance and third-party on-site assessments to guide you through the compliance process.

Our assessments help you make informed decisions about which framework is right for your organization, whether that's PCI DSS, NIST CSF, CMMC 2.0, or another standard. We work with you to understand your business requirements, risk profile, and future plans, then recommend the approach that provides the best security value for your investment.

We also provide a web portal that makes documenting current controls and determining overlap with related standards easy and efficient. This tool streamlines the process of mapping your existing security controls across multiple frameworks, identifying gaps, and understanding how controls translate between standards.

For companies looking to switch between frameworks or assess against multiple compliance standards, we provide consulting services that reduce effort and improve efficiency. Our expertise in framework mapping and control overlap analysis helps you maximize the value of your existing security investments while meeting multiple compliance requirements.

Contact us today to discuss your compliance needs and learn how we can help you choose and implement the right security framework for your organization.