Evaluating the environmental impact of debit card payments

Erik Roos Lindgreen, Milan van Schendel, Nicole Jonker, Jorieke Kloek, Lonneke de Graaff, M.D. Davidson

Research output: Contribution to journalArticleAcademicpeer-review

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%.
Original languageEnglish
Pages (from-to)1847-1861
Number of pages15
JournalInternational Journal of Life Cycle Assessment
Volume23
Issue number9
DOIs
Publication statusPublished - Sep 2018

Keywords

  • Data center
  • Debit card
  • Debit card payment system
  • Environmental impact
  • LCA
  • LIFE-CYCLE ASSESSMENT
  • Payment terminal

Cite this

Roos Lindgreen, Erik ; van Schendel, Milan ; Jonker, Nicole ; Kloek, Jorieke ; de Graaff, Lonneke ; Davidson, M.D. / Evaluating the environmental impact of debit card payments. In: International Journal of Life Cycle Assessment. 2018 ; Vol. 23, No. 9. pp. 1847-1861.
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title = "Evaluating the environmental impact of debit card payments",
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, Debit card payment system, Environmental impact, LCA, LIFE-CYCLE ASSESSMENT, Payment terminal",
author = "{Roos Lindgreen}, Erik and {van Schendel}, Milan and Nicole Jonker and Jorieke Kloek and {de Graaff}, Lonneke and M.D. Davidson",
year = "2018",
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doi = "10.1007/s11367-017-1408-6",
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Roos Lindgreen, E, van Schendel, M, Jonker, N, Kloek, J, de Graaff, L & Davidson, MD 2018, 'Evaluating the environmental impact of debit card payments', International Journal of Life Cycle Assessment, vol. 23, no. 9, pp. 1847-1861. https://doi.org/10.1007/s11367-017-1408-6

Evaluating the environmental impact of debit card payments. / Roos Lindgreen, Erik; van Schendel, Milan; Jonker, Nicole; Kloek, Jorieke; de Graaff, Lonneke; Davidson, M.D.

In: International Journal of Life Cycle Assessment, Vol. 23, No. 9, 09.2018, p. 1847-1861.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

T1 - Evaluating the environmental impact of debit card payments

AU - Roos Lindgreen, Erik

AU - van Schendel, Milan

AU - Jonker, Nicole

AU - Kloek, Jorieke

AU - de Graaff, Lonneke

AU - Davidson, M.D.

PY - 2018/9

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N2 - 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%.

AB - 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%.

KW - Data center

KW - Debit card

KW - Debit card payment system

KW - Environmental impact

KW - LCA

KW - LIFE-CYCLE ASSESSMENT

KW - Payment terminal

U2 - 10.1007/s11367-017-1408-6

DO - 10.1007/s11367-017-1408-6

M3 - Article

VL - 23

SP - 1847

EP - 1861

JO - International Journal of Life Cycle Assessment

JF - International Journal of Life Cycle Assessment

SN - 0948-3349

IS - 9

ER -