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Evaluating the environmental impact of debit card payments

  • Erik Roos Lindgreen
  • Milan van Schendel
  • Nicole Jonker
  • Jorieke Kloek
  • Lonneke de Graaff
  • Marc Davidson
REGIONAL TOPICS FROM EUROPE

Abstract

Purpose

Consumers in the Netherlands made more than 3.2 billion debit card transactions at points-of-sale in 2015, corresponding to over half of all point-of-sale payments in that year. This study provides insights into the environmental impact of debit card transactions based on a life cycle assessment (LCA). In addition, it identifies several areas within the debit card payment chain where the environmental impact can be reduced.

Methods

The debit card payment system can be divided into three subsystems: debit cards, payment terminals, and data centers used for transaction processing. Input data for all elements within each subsystem (manufacturing, transport, energy use, and disposal) were retrieved from interviews and literature study. Seven key companies and authorities within the debit card system such as the Dutch Payments Association, two banks, two data centers, one payment terminal producer and a recycling company contributed data. The analysis is conducted using SimaPro, the Ecoinvent 3.0 database and the ReCiPe endpoint (H) impact assessment method.

Results and discussion

One Dutch debit card transaction in 2015 is estimated to have an absolute environmental impact of 470 μPt. Within the process chain of a debit card transaction, the relative environmental impact of payment terminals is dominant, contributing 75% of the total impact. Terminal materials (37%) and terminal energy use (27%) are the largest contributors to this share, while the remaining impact comprises data center (11%) and debit card (15%) subsystems. For data centers, this impact mainly stems from their energy use. Finally, scenario analyses show that a significant decrease (44%) in the environmental impact of the entire debit card payment system could be achieved by stimulating the use of renewable energy in payment terminals and data centers, reducing the standby time of payment terminals and increasing the lifetimes of debit cards.

Conclusions

For the first time, the environmental consequences of electronic card payment systems are evaluated. The total environmental impact of debit card transactions in the Netherlands is relatively modest compared to the impact of cash payments, which are the closest substitute of debit card payments at the point-of-sale. Scenario analysis indicates that the environmental impact can be reduced by 44%.

Keywords

Data center Debit card payment system Debit card Environmental impact LCA Payment terminal 

Notes

Acknowledgements

We thank Hans Brits, Jan Dekker, Kenneth Rijsdijk, and two anonymous referees for their valuable comments and Gareth Budden for linguistic services. The views expressed in this paper are our own and do not necessarily reflect those of the CE Delft, De Nederlandsche Bank, or the European System of Central Banks.

Supplementary material

11367_2017_1408_MOESM1_ESM.docx (18 kb)
ESM 1 (DOCX 18 kb)

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Copyright information

© Springer-Verlag GmbH Germany 2017

Authors and Affiliations

  1. 1.CE DelftDelftThe Netherlands
  2. 2.Faculty of SciencesFree University of AmsterdamAmsterdamThe Netherlands
  3. 3.Market Infrastructures and Payments DivisionDe Nederlandsche Bank (DNB) n.v.AmsterdamThe Netherlands
  4. 4.Institute for Biodiversity and Ecosystem DynamicsUniversity of AmsterdamAmsterdamThe Netherlands

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