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%.
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Change history
08 September 2023
A Correction to this paper has been published: https://doi.org/10.1007/s11367-023-02227-0
Notes
In SimaPro, the following databases were used: Ecoinvent 3.0, CE Generic data, USA Input Output Database, and Industry data 2.0.
According to Endres and Siebert-Raths (2009), both the electronic and gas incineration of PVC amount 19 MJ/kg. According to the CE Delft, the efficiency of electronic incineration amounts 17% and of gas incineration 19%. As each debit card contains 0.0044 kg on PVC, the energy generated through electronic incineration amounts 0.014 MJ and through gas incineration 0.016 MJ.
According to Endres and Siebert-Raths (2009), both the electronic and gas incineration of the polycarbonate casing of a terminal amounts 30 MJ/kg. According to the CE Delft, the efficiency of electronic incineration amounts 17% and of gas incineration 19%. As a terminal contains 0.152 kg on polycarbonate, the energy generated through electronic incineration amounts 0.775 MJ and through gas incineration 0.866 MJ, leading to a total energy recovery of 1.641 MJ.
As the total environmental impact of the Dutch economy is unknown, but its GWP is known, the GWP of the debit card system is compared with the GWP of the Dutch economy.
The economic importance of the of debit card payments in 2015 was proxied by their resource costs to society. Resource costs for debit card payments refer to the costs to society (i.e. banks, retailers, data centers, and clearing houses) reflecting the use of resources in the production of debit card payments. Cost figures for the year 2009 (Jonker 2013) have been extrapolated taking into account the share of the costs which vary with debit card usage, the growth in debit card usage between 2009 and 2015, and the development of the prices in the services sector.
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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.
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Lindgreen, E.R., van Schendel, M., Jonker, N. et al. Evaluating the environmental impact of debit card payments. Int J Life Cycle Assess 23, 1847–1861 (2018). https://doi.org/10.1007/s11367-017-1408-6
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DOI: https://doi.org/10.1007/s11367-017-1408-6