《牛津經濟研究院：2024歐洲數字支付對現金支付的環境影響研究報告（英文版）（351頁）.pdf》由會員分享，可在線閱讀，更多相關《牛津經濟研究院：2024歐洲數字支付對現金支付的環境影響研究報告（英文版）（351頁）.pdf（351頁珍藏版）》請在三個皮匠報告上搜索。

1、The Environmental Impact of Digital Over Cash Payments 1 THE ENVIRONMENTAL IMPACT OF DIGITAL OVER CASH PAYMENTS IN EUROPE WHITE PAPER REPORT FOR THE EUROPEAN DIGITAL PAYMENTS INDUSTRY ALLIANCE APRIL 2024 The Environmental Impact of Digital Over Cash Payments i ABOUT OXFORD ECONOMICS Oxford Economics

2、 was founded in 1981 as a commercial venture with Oxford Universitys business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad.Since then,we have become one of the worlds foremost independent global advisory firms,providing reports,for

3、ecasts,and analytical tools on more than 200 countries,100 industry sectors,and 8,000 cities and regions.Our best-in-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic,social,and business impact.

4、Headquartered in Oxford,England,with regional centres in New York,London,Frankfurt,and Singapore,Oxford Economics has offices across the globe in Belfast,Boston,Cape Town,Chicago,Dubai,Dublin,Hong Kong,Los Angeles,Mexico City,Milan,Paris,Philadelphia,Stockholm,Sydney,Tokyo,and Toronto.We employ 600

5、staff,including more than 350 professional economists,industry experts,and business editorsone of the largest teams of macroeconomists and thought leadership specialists.Our global team is highly skilled in a full range of research techniques and thought leadership capabilities from econometric mode

6、lling,scenario framing,and economic impact analysis to market surveys,case studies,expert panels,and web analytics.Oxford Economics is a key adviser to corporate,financial and government decision-makers and thought leaders.Our worldwide client base now comprises over 2,500 international organisation

7、s,including leading multinational companies and financial institutions;key government bodies and trade associations;and top universities,consultancies,and think tanks.APRIL 2024 All data shown in tables and charts are Oxford Economics data,except where otherwise stated and cited in footnotes,and are

8、 copyright Oxford Economics Ltd.The modelling and results presented here are based on information provided by third parties,upon which Oxford Economics has relied in producing its report and forecasts in good faith.Any subsequent revision or update of those data will affect the assessments and proje

9、ctions shown.To discuss the report further please contact:Yann Girard: Johanna Neuhoff: Oxford Economics 4 Millbank,London SW1P 3JA,UK Tel:+44 203 910 8061The Environmental Impact of Digital Over Cash Payments i TABLE OF CONTENTS TABLE OF CONTENTS.I LIST OF FIGURES.V LIST OF TABLES.IX ABBREVIATIONS.

10、XIII EXECUTIVE SUMMARY.1 1.INTRODUCTION.7 1.1 Motivation and goal.7 1.2 Digital versus Cash Payments in Europe.8 1.3 Structure of the report.10 2.LIFE-CYCLE ASSESSMENTGOAL.11 2.1 Project goal and questions to be answered.11 2.2 Audience and publication.11 2.3 Standards applied.12 3.LIFE-CYCLE ASSESS

11、MENTSCOPE.15 3.1 Functional unit.15 3.2 Description of product systems and system boundaries.16 3.2.1 Digital Payments:General description of the product system and reference flow.16 3.2.2 Digital Payments:Subsystems.18 3.2.3 Cash Payments:General description and reference flow.25 3.2.4 Cash Payment

12、s:Subsystems.28 3.2.5 System boundaries and cut-off criteria:Summary.37 3.3 Allocation procedure.38 3.4 Data quality requirements.39 The Environmental Impact of Digital Over Cash Payments ii 3.5 Life-cycle impact assessment.40 3.6 Interpretation.41 3.7 Uncertainty analysis using Monte Carlo Simulati

13、ons.42 3.8 Critical review.42 4.LIFE-CYCLE ASSESSMENTINVENTORY ANALYSIS.43 4.1 Digital payments.44 4.1.1 Subsystem 1:Cards digital system.45 4.1.2 Subsystem 2:Terminals.53 4.1.3 Subsystem 3:Data centres digital system.63 4.1.4 Subsystem 4:Smartphones.74 4.2 Cash payments.80 4.2.1 Subsystem 5:Banknot

14、es.80 4.2.2 Subsystem 6:Coins.93 4.2.3 Subsystem 7:Cash-in-Transit.99 4.2.4 Subsystem 8:Cash counting machines.103 4.2.5 Subsystem 9:Cards cash system.111 4.2.6 Subsystem 10:ATMs/CRMs.116 4.2.7 Subsystem 11:Data centres cash system.123 5.LIFE-CYCLE ASSESSMENTIMPACT ASSESSMENT.127 5.1 Contribution an

15、alysis.127 5.1.1 Digital POS Payment.127 5.1.2 Cash POS Payment.133 5.1.3 Detailed analysis for selected impact categories.138 5.2 Comparison of the digital and cash payment systems.157 5.2.1 All impact categories.157 5.2.2 Detailed analysis for selected impact categories.161 6.LIFE-CYCLE ASSESSMENT

16、INTERPRETATION.172 6.1 Comparison.172 6.2 Sensitivity analysis.173 6.2.1 No Way to ATM/CRM(impact on cash payment system).180 6.2.2 Newer POS terminal model(impact on digital payment system).183 6.2.3 No refurbishment of terminals(impact on digital payment system).186 6.2.4 Worst EoL for refurbished

17、 terminals(impact on digital payment system).187 The Environmental Impact of Digital Over Cash Payments iii 6.2.5 Printing of two paper receipts(impact on digital payment system).188 6.2.6 Higher energy use of digital data centres(impact on digital payment system).190 6.2.7 Higher energy use for cas

18、h data centres(impact on cash payment system).192 6.2.8 Lower energy use of digital data centres(impact on digital payment system).192 6.2.9 Data centres local grid(digital only)(impact on digital payment system).193 6.2.10 Data centres local grid(cash and digital)(impact on cash and digital payment

19、 systems).196 6.2.11 More small CCMs(impact on cash payment system).198 6.2.12 No small CCMs(impact on cash payment system).198 6.2.13 Recycled cards(impact on cash and digital payment system).198 6.2.14 Longer lifetime of banknotes(impact on cash payment system).199 6.2.15 No overhead during coin p

20、roduction(impact on cash payment system).201 6.2.16 Worst case for digital POS payments vs.best case for cash POS payments.203 6.2.17 Conclusion on sensitivity checks.207 6.3 Uncertainty analysis with Monte-Carlo simulation.207 6.3.1 All impact categories.208 6.3.2 Global Warming.211 6.3.3 Mineral r

21、esource scarcity.213 6.3.4 Ionizing radiation.216 6.4 Data quality,limitations,and uncertainties.218 6.5 Completeness Check.225 6.6 Consistency Check.225 7.CONCLUSIONS AND RECOMMENDATIONS.227 8.BIBLIOGRAPHY.230 APPENDIX 1:OVERVIEW OF RECIPE 2016 IMPACT CATEGORIES.239 APPENDIX 2:DETAILED IMPACT ASSES

22、SMENT RESULTS.242 APPENDIX 3:MAIN EMITTING PROCESSES FOR IMPACT CATEGORIES.260 APPENDIX 4:DETAILED CHARACTERISATION RESULTS FOR EACH SENSITIVITY ANALYSIS.266 APPENDIX 5:PEDIGREE MATRICES.282 The Environmental Impact of Digital Over Cash Payments iv APPENDIX 6:DETAILED RESULTS OF UNCERTAINTY ANALYSIS

23、.313 APPENDIX 7:CRITICAL REVIEW.320 The Environmental Impact of Digital Over Cash Payments v LIST OF FIGURES FIGURE 1:USAGE OF DIFFERENT POS PAYMENT INSTRUMENTS IN THE EURO AREA.8 FIGURE 2:SHARE OF CASH AND DIGITAL PAYMENTS USED AT POS IN TERMS OF THE NUMBER OF TRANSACTIONS BY COUNTRY(2022).9 FIGURE

24、 3:PRODUCT SYSTEM FOR DIGITAL PAYMENTS AT POS.17 FIGURE 4:OVERVIEW OF SUBSYSTEMS IN THE DIGITAL PAYMENTS ECOSYSTEM.19 FIGURE 5:FLOWCHART OF THE CARD SUBSYSTEM.20 FIGURE 6:FLOWCHART OF THE PAYMENT TERMINAL SUBSYSTEM.21 FIGURE 7:FLOWCHART OF THE DATA CENTRE SUBSYSTEM.22 FIGURE 8:SHARE OF PAYMENT INSTR

25、UMENT AT POS.23 FIGURE 9:FLOWCHART OF THE SMARTPHONE SUBSYSTEM.24 FIGURE 10:CENTRAL ELEMENTS OF THE CASH SYSTEM.25 FIGURE 11:PRODUCT SYSTEM FOR A CASH PAYMENT AT POS.26 FIGURE 12:OVERVIEW OF SUBSYSTEMS IN THE CASH PAYMENTS ECOSYSTEM.28 FIGURE 13:FLOWCHART OF THE BANKNOTES SUBSYSTEM.29 FIGURE 14:FLOW

26、CHART OF THE COIN SUBSYSTEM.31 FIGURE 15:CIT COMPANIES AS PART OF THE CASH LIFECYCLE.33 FIGURE 16:FLOWCHART OF THE CASH-IN-TRANSIT SUBSYSTEM.34 FIGURE 17:FLOWCHART OF THE CCM SUBSYSTEM.35 FIGURE 18:FLOWCHART OF THE ATM/CRM SUBSYSTEM.36 FIGURE 19:IMPACT CATEGORIES IN COUNTRY COMPARISON FOR ONE DIGITA

27、L POS PAYMENT.129 FIGURE 20:LIFE-CYCLE STAGE CONTRIBUTION OF ONE DIGITAL POS PAYMENT IN GERMANY.130 FIGURE 21:LIFE-CYCLE STAGE CONTRIBUTION OF ONE DIGITAL POS PAYMENT IN ITALY 131 FIGURE 22:LIFE-CYCLE STAGE CONTRIBUTION OF ONE DIGITAL POS PAYMENT IN FINLAND.132 FIGURE 23:IMPACT CATEGORIES IN COUNTRY

28、 COMPARISON FOR ONE CASH POS PAYMENT.134 FIGURE 24:LIFE-CYCLE STAGE CONTRIBUTION OF ONE CASH POS PAYMENT IN GERMANY.135 FIGURE 25:LIFE-CYCLE STAGE CONTRIBUTION OF ONE CASH POS PAYMENT IN ITALY.136 FIGURE 26:LIFE-CYCLE STAGE CONTRIBUTION OF ONE CASH POS PAYMENT IN FINLAND.137 FIGURE 27:GLOBAL WARMING

29、 POTENTIAL OF AN AVERAGE DIGITAL POS PAYMENT BY PHASE.139 FIGURE 28:SHARE OF GLOBAL WARMING POTENTIAL BY DIGITAL SUBSYSTEMS.140 FIGURE 29:GLOBAL WARMING POTENTIAL OF AN AVERAGE DIGITAL POS PAYMENT BY PHASE AND SUBSYSTEM.141 FIGURE 30:MAIN EMISSIONS FOR GWP IN THE DIGITAL SYSTEM.141 FIGURE 31:GLOBAL

30、WARMING POTENTIAL OF CASH POS PAYMENT BY PHASE.142 FIGURE 32:SHARE OF GLOBAL WARMING POTENTIAL BY CASH SUBSYSTEMS.143 FIGURE 33:GLOBAL WARMING POTENTIAL OF CASH POS PAYMENT BY PHASE AND SUBSYSTEM.144 The Environmental Impact of Digital Over Cash Payments vi FIGURE 34:MAIN EMISSIONS FOR GWP IN THE CA

31、SH SYSTEM.145 FIGURE 35:GLOBAL WARMING POTENTIAL OF THE ATM/CRM SUBSYSTEM.146 FIGURE 36:GLOBAL WARMING POTENTIAL OF THE OPERATION PHASE OF THE ATM/CRM SUBSYSTEM.147 FIGURE 37:MINERAL RESOURCE SCARCITY OF DIGITAL POS PAYMENT BY PHASE.148 FIGURE 38:SHARE OF MINERAL RESOURCE SCARCITY BY DIGITAL SUBSYST

32、EMS.148 FIGURE 39:MINERAL RESOURCE SCARCITY OF DIGITAL POS PAYMENT BY PHASE AND SUBSYSTEM.149 FIGURE 40:MAIN EMISSIONS FOR MINERAL RESOURCE SCARCITY IN THE DIGITAL SYSTEM.149 FIGURE 41:MINERAL RESOURCE SCARCITY OF CASH POS PAYMENT BY PHASE.150 FIGURE 42:SHARE OF MINERAL RESOURCE SCARCITY BY CASH SUB

33、SYSTEMS.151 FIGURE 43:MINERAL RESOURCE SCARCITY OF CASH POS PAYMENT BY PHASE AND SUBSYSTEM.151 FIGURE 44:MAIN EMISSIONS FOR MINERAL RESOURCE SCARCITY IN THE CASH SYSTEM152 FIGURE 45:IONIZING RADIATION OF DIGITAL POS PAYMENT BY PHASE.153 FIGURE 46:SHARE OF IONIZING RADIATION BY DIGITAL SUBSYSTEMS.153

34、 FIGURE 47:IONIZING RADIATION OF DIGITAL POS PAYMENT BY PHASE AND SUBSYSTEM 154 FIGURE 48:MAIN EMISSIONS FOR IONIZING RADIATION IN THE DIGITAL SYSTEM.154 FIGURE 49:IONIZING RADIATION OF CASH POS PAYMENT BY PHASE.155 FIGURE 50:SHARE OF IONIZING RADIATION BY CASH SUBSYSTEMS.155 FIGURE 51:IONIZING RADI

35、ATION OF CASH POS PAYMENT BY PHASE AND SUBSYSTEM.156 FIGURE 52:MAIN EMISSIONS FOR IONIZING RADIATION IN THE CASH SYSTEM.157 FIGURE 53:IMPACT COMPARISON OF A DIGITAL VS.A CASH POS TRANSACTION IN GERMANY.158 FIGURE 54:IMPACT COMPARISON OF A DIGITAL VS.A CASH POS TRANSACTION IN ITALY159 FIGURE 55:IMPAC

36、T COMPARISON OF A DIGITAL VS.A CASH POS TRANSACTION IN FINLAND.160 FIGURE 56:GLOBAL WARMING POTENTIAL OF ONE DIGITAL VS.CASH POS TRANSACTION.161 FIGURE 57:MINERAL RESOURCE SCARCITY OF ONE DIGITAL VS.CASH POS TRANSACTION.162 FIGURE 58:IONIZING RADIATION OF ONE DIGITAL VS.CASH POS TRANSACTION.162 FIGU

37、RE 59:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN GERMANY USING THE ENVIRONMENTAL FOOTPRINT 3.1 METHOD.163 FIGURE 60:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN ITALY USING THE ENVIRONMENTAL FOOTPRINT 3.1 METHOD.164 FIGURE 61:CHARACTERISATION RESULTS OF

38、ONE CASH OR DIGITAL POS TRANSACTION IN FINLAND USING THE ENVIRONMENTAL FOOTPRINT 3.1 METHOD.164 FIGURE 62:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN GERMANY USING THE INDIVIDUALIST PERSPECTIVE OF THE RECIPE METHOD.166 FIGURE 63:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL

39、POS TRANSACTION IN ITALY USING THE INDIVIDUALIST PERSPECTIVE OF THE RECIPE METHOD.167 The Environmental Impact of Digital Over Cash Payments vii FIGURE 64:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN FINLAND USING THE INDIVIDUALIST PERSPECTIVE OF THE RECIPE METHOD.167 FIGURE 65

40、:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN GERMANY USING THE EGALITARIAN PERSPECTIVE OF THE RECIPE METHOD.169 FIGURE 66:CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN ITALY USING THE EGALITARIAN PERSPECTIVE OF THE RECIPE METHOD.170 FIGURE 67:CHARACTERISAT

41、ION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION IN FINLAND USING THE EGALITARIAN PERSPECTIVE OF THE RECIPE METHOD.170 FIGURE 68:IMPACT OF NO WAY TO ATM/CRM ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.182 FIGURE 69:IMPACT OF NEWER POS TERMINAL MODELS ON THE CASH SYSTEM AND THE

42、 RELATIVE IMPACT OF THE DIGITAL SYSTEM.185 FIGURE 70:IMPACT OF PRINTING TWO PAPER RECEIPTS ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.189 FIGURE 71:IMPACT OF HIGHER DIGITAL DATA CENTRE ENERGY USE ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.191 FIGURE 72:IMP

43、ACT OF DIGITAL DATA CENTRE LOCAL GRID USE ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.195 FIGURE 73:IMPACT OF CASH&DIGITAL DATA CENTRE LOCAL GRID USE ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.197 FIGURE 74:IMPACT OF A LONGER LIFETIME OF BANKNOTES ON THE CA

44、SH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.200 FIGURE 75:IMPACT NO OVERHEAD DURING COIN PRODUCTION ON THE CASH SYSTEM AND THE RELATIVE IMPACT OF THE DIGITAL SYSTEM.202 FIGURE 76:IMPACT OF THE WORST-CASE DIGITAL SCENARIO VS.BEST-CASE CASH SCENARIO ON THE CASH SYSTEM AND THE RELATIVE IMPA

45、CT OF THE DIGITAL SYSTEM.206 FIGURE 77:MONTE CARLO SIMULATION RESULTS FOR AN AVERAGE CASH AND DIGITAL POS PAYMENT ACROSS ALL IMPACT CATEGORIES.209 FIGURE 78:DIFFERENCE IN MEAN GWP IMPACT BETWEEN CASH AND DIGITAL POS TRANSACTIONS.212 FIGURE 79:MEAN IMPACT OF A DIGITAL POS TRANSACTION ON GWP BY PHASE.

46、213 FIGURE 80:MEAN IMPACT OF A CASH POS TRANSACTION ON GWP BY PHASE.213 FIGURE 81:DIFFERENCE IN MEAN IMPACT ON MINERAL RESOURCE SCARCITY BETWEEN CASH AND DIGITAL POS TRANSACTIONS.214 FIGURE 82:MEAN IMPACT OF A DIGITAL POS TRANSACTION ON MINERAL RESOURCE SCARCITY BY PHASE.215 FIGURE 83:MEAN IMPACT OF

47、 A CASH POS TRANSACTION ON MINERAL RESOURCE SCARCITY BY PHASE.215 FIGURE 84:DIFFERENCE IN MEAN IMPACT ON IONIZING RADIATION BETWEEN CASH AND DIGITAL POS TRANSACTIONS.216 FIGURE 85:MEAN IMPACT OF A DIGITAL POS TRANSACTION ON IONIZING RADIATION BY PHASE.217 The Environmental Impact of Digital Over Cas

48、h Payments viii FIGURE 86:MEAN IMPACT OF A CASH POS TRANSACTION ON IONIZING RADIATION BY PHASE.217 The Environmental Impact of Digital Over Cash Payments ix LIST OF TABLES TABLE 1:OVERVIEW OF THE KEY DATA SOURCES.13 TABLE 2:OVERVIEW OF PRIMARY DATA SOURCES DIGITAL PAYMENTS.18 TABLE 3:OVERVIEW OF PRI

49、MARY DATA SOURCES CASH PAYMENTS.28 TABLE 4:ELECTRICITY MIXES USED IN THIS STUDY AND THEIR EMISSION FACTORS.44 TABLE 5:INVENTORY TABLE FOR CARDS DIGITAL SYSTEM.49 TABLE 6:ELECTRICITY USE AND TIMES FOR A TERMINAL PER PROCESS.55 TABLE 7:INVENTORY TABLE FOR TERMINALS.57 TABLE 8:BULK MATERIAL INPUT FOR D

50、ATA CENTRE EQUIPMENT.64 TABLE 9:APPROXIMATED DATA CENTRE GRID SHARE BASED ON INSTALLED CAPACITY.69 TABLE 10:INVENTORY TABLE FOR DATA CENTRES DIGITAL SYSTEM.71 TABLE 11:INVENTORY TABLE FOR SMARTPHONES.78 TABLE 12:INVENTORY TABLE FOR BANKNOTES.86 TABLE 13:COMPOSITION OF DIFFERENT EURO COIN DENOMINATIO

51、NS.93 TABLE 14:INVENTORY TABLE FOR COINS.97 TABLE 15:INVENTORY TABLE FOR CASH-IN-TRANSIT.101 TABLE 16:INVENTORY TABLE FOR SMALL CCMS.106 TABLE 17:INVENTORY TABLE FOR LARGE CCMS.108 TABLE 18:INVENTORY TABLE FOR CARDS CASH SYSTEM.112 TABLE 19:TRANSPORT MODE TO GET TO THE NEXT ATM/CRM.118 TABLE 20:INVE

52、NTORY TABLE FOR ATMS/CRMS.120 TABLE 21:INVENTORY TABLE FOR DATA CENTRES CASH SYSTEM.124 TABLE 22:OVERALL CHARACTERISATION RESULTS OF ONE DIGITAL POS PAYMENT FOR EACH COUNTRY.127 TABLE 23:OVERALL CHARACTERISATION RESULTS OF ONE CASH POS PAYMENT FOR EACH COUNTRY.133 TABLE 24:ABSOLUTE RESULTS OF THE CH

53、ARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION USING THE ENVIRONMENTAL FOOTPRINT METHOD 3.1.165 TABLE 25:ABSOLUTE RESULTS OF THE CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION USING THE INDIVIDUALIST PERSPECTIVE OF THE RECIPE METHOD.168 TABLE 26:ABSOLUTE RESULTS OF TH

54、E CHARACTERISATION RESULTS OF ONE CASH OR DIGITAL POS TRANSACTION USING THE EGALITARIAN PERSPECTIVE OF THE RECIPE METHOD.171 TABLE 27:OVERVIEW OF THE RESULTS FROM THE SENSITIVITY ANALYSIS.175 TABLE 28:INVENTORY TABLE ADJUSTMENTS FOR NO WAY TO ATM/CRM.180 TABLE 29:INVENTORY TABLE ADJUSTMENTS FOR NEWE

55、R POS TERMINAL MODEL.184 TABLE 30:INVENTORY TABLE NO REFURBISHMENT OF TERMINALS.186 TABLE 31:INVENTORY TABLE ADJUSTMENTS FOR WORST EOL FOR REFURBISHED TERMINALS.187 TABLE 32:INVENTORY TABLE ADJUSTMENTS FOR PRINTING OF TWO PAPER RECEIPTS.188 TABLE 33:INVENTORY TABLE ADJUSTMENTS FOR HIGHER ENERGY USE

56、OF DIGITAL DATA CENTRES.190 The Environmental Impact of Digital Over Cash Payments x TABLE 34:INVENTORY TABLE ADJUSTMENTS FOR HIGHER ENERGY USE OF CASH DATA CENTRES IN ITALY.192 TABLE 35:INVENTORY TABLE ADJUSTMENTS FOR LOWER ENERGY USE OF DIGITAL DATA CENTRES.193 TABLE 36:INVENTORY TABLE ADJUSTMENTS

57、 FOR DATA CENTRES LOCAL GRID(DIGITAL ONLY).194 TABLE 37:INVENTORY TABLE ADJUSTMENTS FOR DATA CENTRES LOCAL GRID(DIGITAL AND CASH).196 TABLE 38:INVENTORY TABLE ADJUSTMENTS FOR MORE SMALL CCMS.198 TABLE 39:INVENTORY TABLE ADJUSTMENTS FOR NO SMALL CCMS.198 TABLE 40:INVENTORY TABLE ADJUSTMENTS FOR RECYC

58、LED CARDS.199 TABLE 41:INVENTORY TABLE ADJUSTMENTS FOR LONGER LIFETIME OF BANKNOTES.199 TABLE 42:INVENTORY TABLE ADJUSTMENTS FOR NO OVERHEAD DURING COIN PRODUCTION.201 TABLE 43:INVENTORY TABLE ADJUSTMENTS FOR WORST CASE DIGITAL POS PAYMENTS VS.BEST CASE CASH POS PAYMENTS.203 TABLE 44:MONTE-CARLO SIM

59、ULATION RESULTS FOR HUMAN NON-CARCINOGENIC TOXICITY.211 TABLE 45:DESCRIPTION OF THE MIDPOINT IMPACT CATEGORIES.239 TABLE 46:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE CASH SYSTEM IN GERMANY.242 TABLE 47:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE CASH SYSTEM IN GERMANY.243

60、TABLE 48:CHARACTERISATION RESULTS FOR THE END-OF-LIFE PHASE OF THE CASH SYSTEM IN GERMANY.244 TABLE 49:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE DIGITAL SYSTEM IN GERMANY.245 TABLE 50:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE DIGITAL SYSTEM IN GERMANY.246 TABLE 51:CHARAC

61、TERISATION RESULTS FOR THE END-OF-LIFE PHASE OF THE DIGITAL SYSTEM IN GERMANY.247 TABLE 52:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE CASH SYSTEM IN ITALY.248 TABLE 53:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE CASH SYSTEM IN ITALY.249 TABLE 54:CHARACTERISATION RESULTS FOR

62、 THE END-OF-LIFE PHASE OF THE CASH SYSTEM IN ITALY.250 TABLE 55:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE DIGITAL SYSTEM IN ITALY.251 TABLE 56:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE DIGITAL SYSTEM IN ITALY.252 TABLE 57:CHARACTERISATION RESULTS FOR THE END-OF-LIFE PHAS

63、E OF THE DIGITAL SYSTEM IN ITALY.253 TABLE 58:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE CASH SYSTEM IN FINLAND.254 TABLE 59:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE CASH SYSTEM IN FINLAND.255 The Environmental Impact of Digital Over Cash Payments xi TABLE 60:CHARACTERIS

64、ATION RESULTS FOR THE END-OF-LIFE PHASE OF THE CASH SYSTEM IN FINLAND.256 TABLE 61:CHARACTERISATION RESULTS FOR THE PRODUCTION PHASE OF THE DIGITAL SYSTEM IN FINLAND.257 TABLE 62:CHARACTERISATION RESULTS FOR THE OPERATION PHASE OF THE DIGITAL SYSTEM IN FINLAND.258 TABLE 63:CHARACTERISATION RESULTS F

65、OR THE END-OF-LIFE PHASE OF THE DIGITAL SYSTEM IN FINLAND.259 TABLE 64:MAIN EMITTING PROCESSES FOR GWP IN THE DIGITAL SYSTEM ACROSS COUNTRIES.260 TABLE 65:MAIN EMITTING PROCESSES FOR GWP IN THE CASH SYSTEM ACROSS COUNTRIES.261 TABLE 66:MAIN EMITTING PROCESSES FOR MINERAL RESOURCE SCARCITY IN THE DIG

66、ITAL SYSTEM ACROSS COUNTRIES.262 TABLE 67:MAIN EMITTING PROCESSES FOR MINERAL RESOURCE SCARCITY IN THE CASH SYSTEM ACROSS COUNTRIES.263 TABLE 68:MAIN EMITTING PROCESSES FOR IONIZING RADIATION IN THE DIGITAL SYSTEM ACROSS COUNTRIES.264 TABLE 69:MAIN EMITTING PROCESSES FOR IONIZING RADIATION IN THE CA

67、SH SYSTEM ACROSS COUNTRIES.265 TABLE 70:NO WAY TO ATM/CRM(IMPACT ON CASH PAYMENT SYSTEM).266 TABLE 71:NEWER POS TERMINAL MODEL(IMPACT ON DIGITAL PAYMENT SYSTEM).267 TABLE 72:NO REFURBISHMENT OF TERMINALS(IMPACT ON DIGITAL PAYMENT SYSTEM)268 TABLE 73:WORST EOL FOR REFURBISHED TERMINALS(IMPACT ON DIGI

68、TAL PAYMENT SYSTEM).269 TABLE 74:PRINTING OF TWO PAPER RECEIPTS(IMPACT ON DIGITAL PAYMENT SYSTEM)270 TABLE 75:HIGHER ENERGY USE OF DIGITAL DATA CENTRES(IMPACT ON DIGITAL PAYMENT SYSTEM).271 TABLE 76:HIGHER ENERGY USE FOR CASH DATA CENTRES(IMPACT ON CASH PAYMENT SYSTEM).272 TABLE 77:LOWER ENERGY USE

69、OF DIGITAL DATA CENTRES(IMPACT ON DIGITAL PAYMENT SYSTEM).273 TABLE 78:DATA CENTRES LOCAL GRID(DIGITAL ONLY)(IMPACT ON DIGITAL PAYMENT SYSTEM).274 TABLE 79:DATA CENTRES LOCAL GRID(CASH AND DIGITAL)(IMPACT ON CASH AND DIGITAL PAYMENT SYSTEMS).275 TABLE 80:MORE SMALL CCMS(IMPACT ON CASH PAYMENT SYSTEM

70、).276 TABLE 81:NO SMALL CCMS(IMPACT ON CASH PAYMENT SYSTEM).277 TABLE 82:RECYCLED CARDS(IMPACT ON CASH AND DIGITAL PAYMENT SYSTEM).278 TABLE 83:LONGER LIFETIME OF BANKNOTES(IMPACT ON CASH PAYMENT SYSTEM).279 TABLE 84:NO OVERHEAD DURING COIN PRODUCTION(IMPACT ON CASH PAYMENT SYSTEM).280 TABLE 85:WORS

71、T CASE FOR DIGITAL POS PAYMENTS VS.BEST CASE FOR CASH POS PAYMENTS.281 TABLE 86:PEDIGREE MATRIX OF THE CARDS SUBSYSTEM(DIGITAL AND CASH).284 TABLE 87:PEDIGREE MATRIX OF THE TERMINALS SUBSYSTEM.289 TABLE 88:PEDIGREE MATRIX OF THE SMARTPHONE SUBSYSTEM.295 The Environmental Impact of Digital Over Cash

72、Payments xii TABLE 89:PEDIGREE MATRIX OF THE BANKNOTES SUBSYSTEM.297 TABLE 90:PEDIGREE MATRIX OF THE COINS SUBSYSTEM.302 TABLE 91:PEDIGREE MATRIX OF THE CASH-IN-TRANSIT SUBSYSTEM.304 TABLE 92:PEDIGREE MATRIX OF THE CASH COUNTING MACHINES(SMALL)SUBSYSTEM 305 TABLE 93:PEDIGREE MATRIX OF THE CASH COUNT

73、ING MACHINES(LARGE)SUBSYSTEM 308 TABLE 94:PEDIGREE MATRIX OF THE ATM/CRM SUBSYSTEM.310 TABLE 95:RESULTS OF OVERALL MONTE CARLO SIMULATIONDIFFERENCE BETWEEN CASH AND DIGITAL.313 TABLE 96:RESULTS OF SEPARATE MONTE CARLO SIMULATIONS OF ALL IMPACT CATEGORIES.316 The Environmental Impact of Digital Over

74、Cash Payments xiii ABBREVIATIONS a annum ATM Automated Teller Machine CCM Cash Counting Machine CFC11 trichlorofluoromethane CiT Cash in Transit cm centimetres CO2 Carbon Dioxide CRM Cash Recycling Machine DCB dichlorobenzene DNB Dutch National Bank ECB European Central Bank EDPIA European Digital P

75、ayment Industry Alliance e.g.for example eq.equivalents EoL end-of-life ESG Environmental,Social and Governance EU European Union g grams GHG Greenhouse Gas GWP Global Warming Potential HIPS Polymer High-Impact Polystyrene i.e.that is ICT Information and Communication Technology ISO International Or

76、ganization for Standardization IT Information Technology kBq kilobecquerel kg kilogram km kilometres kWh kilowatt-hours LCA Life-Cycle Assessment LCIA Life Cycle Impact Assessment m2 square meter m cubic meter Mbit/s megabits per second Mio.Million mm millimetres MW megawatt MWh megawatt hour N Nitr

77、ogen NFC Near Field Communication NOx Nitric Oxide The Environmental Impact of Digital Over Cash Payments xiv P Phosphorus PEF Product Environmental Footprint PET Polyethylenterephthalat PIN Personal Identification Number PM Particulate Matter POS point of sale PSP Payment Service Provider PUE Power

78、 Usage Effectiveness PVC polyvinylchloride SO2 Sulfur Dioxide SPACE study on the payment attitudes of consumers in the euro area t ton tkm ton kilometres TWh terawatt-hour UK United Kingdom W watt WEEE Waste from Electronical and Electronic Equipment Wh watt-hour yr year The Environmental Impact of

79、Digital Over Cash Payments 1 EXECUTIVE SUMMARY Digital payments have become increasingly important in the past years.According to a recent study by the European Central Bank(ECB),the share of non-cash payments at point of sale(POS)1 almost doubled from 21%in 2016 to 41%in 2022 in the euro area.2 As

80、a result,the total number of non-cash paymentscovering all types of payment servicesin the euro area increased by 12.5%to 114.2 billion between 2020 and 2021 processing a total value of 197.0 trillion.3 At the same time,cash remains an important payment alternative in many European countriesin 14 ou

81、t of 19 euro-area countries,cash is still the most common payment method at POS.Moreover,the share of the digitalisation of the payment system differs substantially across countries.Only 19%of POS transactions were paid in cash in Finland in 2022,while in Malta 77%of POS payments were paid in cash.4

82、 Recent studies have indicated that digital payments may have a smaller environmental impact than cash payments.A study by the Dutch National Bank(DNB)analysed that one Dutch debit card transaction in 2015 was estimated to have a global warming potential(GWP)of 0.85 grams(g)of carbon dioxide(CO2)equ

83、ivalents,for instance.5 Furthermore,the DNB showed in a separate paper that the climate impact of an average cash transaction was 4.6 g CO2 equivalents.6 Although these estimates were not intended for comparison,the results suggest that cash POS transactions might be more harmful to the environment

84、than digital ones.To explore this further and to ultimately understand how the payments sector can decrease its environmental impact,the European Digital Payment Industry Alliance(EDPIA)commissioned Oxford Economics to carry out this study.We investigated the environmental impact of both digital and

85、 cash payments at a POS in three European countries.The goal of this study was to gain insights into the diverse environmental impacts of an average digital and cash payment at POS in selected European countries in the baseline year 2022.For the analysis,Oxford Economics together with EDPIA chose th

86、ree different countries all using the euro but with varying digital payment adoption rates:Finland,Italy,and Germany.Finland has the highest digital payment adoption rate,whereas Italy belongs to the countries with one of the lowest adoption rates.Germany was chosen as the third country with a low t

87、o medium adoption rate.These countries were also selected as they constitute countries with relevant market sizes and different cultures concerning digital and cash payments.7 The main research questions were as follows:1 In some countries the abbreviation POS also refers to the payment terminal.In

88、our study,we will use POS only as abbreviation for the point of sale.Terminals will be referred to as terminals or POS terminals.2 See European Central Bank(2022):“Study on the payment attitudes of consumers in the euro area(SPACE)2022”,Frankfurt am Main:European Central Bank.3 See European Central

89、Bank(2022):“Press Release:Payments statistics:2021”,retrieved October 25th,2023.4 See European Central Bank(2022):“Study on the payment attitudes of consumers in the euro area(SPACE)2022”,Frankfurt am Main:European Central Bank.5 See Lindgreen et al.(2023):“Author Correction to:Evaluating the enviro

90、nmental impact of debit card payments”,The International Journal of Life Cycle Assessment 28,pp.17991801.6 See Hanegraaf et al.(2018):“Life cycle assessment of cash payments”,Amsterdam:De Nederlandsche Bank NV.7 For example,the SPACE study that is based on a survey found that while in Germany 30%sta

91、te cash as their preferred method of payment compared to 41%preferring card or other cashless payments,18%preferred cash payments in Italy and 58%card The Environmental Impact of Digital Over Cash Payments 2 i)Which payment method for settling an average POS transaction in Germany,Italy,and Finland

92、in 2022cash or non-cashhas a smaller estimated environmental impact?ii)Which are the drivers that cause the highest environmental impact in the cash payment and the digital payment system?iii)Which measures could reduce the environmental impact of both cash and non-cash payments at POS in Europe?To

93、answer these questions,we performed a comparative life-cycle assessment(LCA)of the environmental impact of an average digital payment transaction8 at POS and an average cash transaction at POS in Germany,Italy,and Finland in 2022.We performed the LCA based on the ReCiPe 2016 method using the SimaPro

94、 software.An LCA should provide a holistic assessment of the environmental impacts of a product or service.The environmental impacts assessed in our study include impacts to air,soil,and water affecting the climate,the environment,resource availability,and human health.Following the International Or

95、ganization for Standardization(ISO)guidelines for a comparative LCA,we conducted a cradle-to-grave LCA,where we analysed the complete process from the material extraction(the cradle)to production,distribution,and operation until the disposal or recycling(the grave).In addition,our LCA was critically

96、 reviewed by a panel of independent experts.To conduct the LCA we used the SimaPro version 9.5.0.1 software(2023),provided by PR Sustainability.In our modelling,we used the ecoinvent 3.9.1 database(2016)with the system model“allocation,cut-off by classification”and unit processes.The ecoinvent datab

97、ase is a background database that provides data on emissions for a large number of processes,thus easing the data collection process.We studied two product systems:the digital and the cash payment system at POS.The functional unit of the analysis was making an average payment at POS in 2022.Both pro

98、duct systems that we seek to compare have the same function,i.e.,to pay for a good or service at a POS in the relevant countries in 2022.The functional unit that is considered focuses on the action of making a payment.It excludes other aspects such as security issues,social acceptance,or barriers to

99、 usage.The average payment was calculated by dividing the impact of the total systemsfor cash and digital paymentsper year by the number of cash and digital POS payments per year,respectively.The average payment has been chosen to ensure comparability across systems.For the digital payment system,we

100、 included cards,payment terminals,data centres,and smartphones as so-called subsystems in our analysis.We assumed that every digital transaction at POS is either made directly with a physical card or a smartphone.Nevertheless,we assumed that a physical card is behind all payments made by smartphone.

101、The seller provides the payment terminal to initiate the transaction.Data centres perform the actual transaction and settle the payment.For all subsystems,we included the production,operation,and end-of-life phase.We did not include any software and development inputs as well as data centre construc

102、tion activities.For the cash payment system,we included banknotes,coins,cash-in-transit,cash counting machines,cards,ATMs/CRMs,and data centres as subsystems.To pay with cash at a POS,banknotes and coins are used.These are typically transported by cash-in-transit companies and or other cashless opti

103、on and 7%preferred cash in Finland compared to 83%preferring card or cashless payments(see European Central Bank(2022):“Study on the payment attitudes of consumers in the euro area(SPACE)2022”,Frankfurt am Main:European Central Bank).8 It is important to note that we do not study the entire digital

104、and cash payment system.We only consider the relevant functions required to pay for a good or service at a POS.The Environmental Impact of Digital Over Cash Payments 3 regularly counted by Cash Counting Machines(CCMs).Cash is typically withdrawn and deposited at Automated Teller Machines(ATMs)or Cas

105、h Recycling Machines(CRMs)using a card.The withdrawal or deposition is again processed by data centres.For all subsystems,we included the production,operation,and end-of-life phase.We did not include any software and development inputs,storage of banknotes and coins,coin counting,any other input of

106、cash-in-transit companies than transport trucks,and data centre construction activities.Data quality was limited.The analysis concerns a complex market activity requiring many data inputs.For some of these,reliable data sources were available,such as the material inputs of banknotes and coins.For ot

107、hers,data availability was limited leading to several assumptions that can limit the reliability of the results.This includes aspects like the number of coins and banknotes used for transactions per country since they cannot be as easily tracked as digital payments,the overall energy usage of data c

108、entres since several actors with data centres are involved,and the average distance travelled to an ATM/CRM for the sole purpose of withdrawing money.In light of these limitations and considering the commissioner,we have opted to favour cash over digital payments in our assumptions whenever these we

109、re questionable throughout the report.Thus,for example,we assumed that every mobile payment at POS is based on a physical card which increases the environmental impact of digital payments.Moreover,we have performed several sensitivity checks and a Monte-Carlo uncertainty analysis.Nevertheless,it is

110、crucial to keep the limitations concerning data quality in mind when interpreting the results.Our estimates indicate that a cash POS payment has a larger impact on most analysed impact categories than a digital one in all three countries in 2022.For Germany and Finland,the estimated impact of a cash

111、 transaction at POS is larger than the estimated impact of a digital transaction at POS across all 18 impact categories.For Italy,this holds true for all impact categories except ionizing radiation.Here,the estimated impact is larger for the digital payment at POS.In general,the estimated impact of

112、a cash payment is largest in Finland and smallest in Italy.For digital payments the opposite holds true:Here,the largest impact was estimated in Italy and the smallest in Finland.Germany typically ranks in the middle.The differences in environmental impacts between countries are largely explained by

113、 variation in the utilisation of the infrastructure.In Finland,for example,few cash payments are made leading to a higher share of the installed infrastructure being assigned to one average cash transaction at POS.At the same time,the number of cash payments made in Italy is rather high,reducing the

114、 impact of the infrastructure assigned to an average cash payment here.In contrast,an average digital transaction has a larger impact in Italy than in the other two countries,because the number of payment terminals is relatively large in Italy compared to the number of digital POS transactions.While

115、 the average POS terminal in Italy is used for only 6,456 digital POS transactions,it is used for more than 28,870 in Germany and even 46,152 transactions in Finland.Moreover,in the case of Finland,the large distances travelled in this country increase the impact of a cash transaction significantly.

116、This holds true for the average distance travelled to ATM/CRM,for example,as well as the overall impact of cash transport.However,there is significant uncertainty concerning the way travelled to ATM/CRM due to the population distribution across urban and rural areas and potential behavioural differe

117、nces between these two groups.As a result,one should keep this uncertainty in mind when interpreting the results for Finland.The Environmental Impact of Digital Over Cash Payments 4 Three important impact categories,global warming potential(GWP),mineral resource scarcity,and ionizing radiation,were

118、examined more closelygiven their relevance for POS payments.The estimated impact on GWP was assessed to be significantly lower for a digital payment than for a cash payment made at POS.We estimated that an average digital payment at POS is associated with the emission of 3.06 g CO2 equivalents in Ge

119、rmany,5.39 g CO2 equivalents in Italy,and 2.20 g CO2 equivalents in Finland.Considering cash,the estimated emissions are 18.07 g CO2 equivalents in Germany,11.50 g of CO2 equivalents in Italy,and 51.80 g of CO2 equivalents in Finland.Thus,the impact of a digital payment at POS on GWP is estimated to

120、 correspond to 17%of the impact of a cash payment in Germany,47%in Italy,and 4%in Finland.Yet,the overall environmental impact of both payment systems is rather small.Putting emissions into perspective,in Germany and Italy,the GWP of an average cash POS transaction corresponds to the average carbon

121、emission emitted by one person within just one minute.9 For Finlands cash system,where the highest GWP was estimated at 51.8 g CO2 equivalents,this corresponds to streaming Netflix for 60 minutes in Europe,which is estimated to emit around 55 g CO2 equivalents by Netflix(Carbon Trust,2021).Our estim

122、ated results regarding mineral resource scarcity look similar to the results for GWP with a significantly lower impact for a digital payment than for a cash payment made at POS.Mineral resource scarcity is measured as the impact of mg copper(CU)equivalents.More specifically,our analysis suggests tha

123、t an average digital payment at POS is related to the impact of 49.3 mg CU equivalents in Germany,133.3 mg CU equivalents in Italy,and 44.5 mg CU equivalents in Finland.Moreover,the values for a cash POS payment are 841.8 mg CU equivalents for Germany,262.5 mg CU equivalents for Italy,and 541.6 mg C

124、U equivalents for Finland.Setting the digital and the cash payment at POS in relation to each other,the outcomes show that the impact of a digital payment at POS equals 14%of the impact of a cash payment at POS in Germany,51%in Italy,and 8%in Finland.The estimated impact of a digital POS payment on

125、ionizing radiation is larger than a cash POS payment in Italy,but smaller in Germany and Finland.Ionizing radiation is measured in millibecquerel(mBq)Cobalt-60(Co-60)equivalents.On the one hand,the estimated impact of an average digital POS transaction is around 38.5 mBq Co-60 equivalents in Germany

126、,55.0 mBq Co-60 equivalents in Italy,and 40.8 mBq Co-60 equivalents in Finland.On the other hand,the values are 113.4 mBq Co-60 equivalents in Germany,47.9 mBq Co-60 equivalents in Italy,and 365 mBq Co-60 equivalents in Finland.Whereas the estimated impact of a digital POS transaction amounts 34%of

127、a cash POS transaction in Germany and 11%in Finland,it amounts 115%for Italy.This indicates that when looking at ionizing radiation,a digital transaction appears to have a higher impact than a cash transaction in Italy.The highest potential to further reduce the environmental impact of the digital p

128、ayment system lies in the production phase,more specifically the production of terminals and cards.In Italy and Germany,the largest effect is caused in the production phase regarding all impact categories except for ionizing radiation,where the operation phase has the highest effect.The latter holds

129、 true 9 The average carbon emission emitted by one person within one minute can be approximately estimated at 15.22 and 10.84 g CO2 equivalents in Germany and Italy,respectively(own calculation based on Our World in Data(2023a).The Environmental Impact of Digital Over Cash Payments 5 for Finland as

130、well.However,a difference between Finland and Germany as well as Italy lies in the nearly equal effect of the production and operation phase in the impact categories land use,fossil resource scarcity,water consumption,and global warming potential.Whereas the production phase clearly dominates in the

131、se categories for Germany and Italy,the effect is balanced between production and operation for Finland.In Italy and Germany,the production of terminals and cards accounts for over 80%of the production phases GWP and contributes significantly to the other impact categories as well.The higher the uti

132、lisation rate of terminals and cards during their lifespan,the lower the global warming impact of an average digital payment POS transaction.This can be mainly achieved by using them for a longer time.Using less material-intensive terminals or recycled cards had a smaller beneficial effect on GWP,fo

133、r instance,compared to increasing their lifespans.Reducing the number of cards produced can also lower the environmental impact during the production phase.Additionally,further options such as reducing the need for physical cards and terminals at all should be considered.Moreover,any efforts to redu

134、ce the energy consumption of data centres can reduce the environmental impact of digital paymentsincluding their transition to more energy-efficient cloud-based data centres.Although the production phase currently dominates the environmental impact,the operation phase is almost solely driven by data

135、 centres.Lastly,paper receipts from payment terminals have a large negative impact on the environment,which could be reduced by accelerating the usage of digital receipts.The highest potential to further reduce the environmental impact of the cash payment system lies in the production and operation

136、phase.In Italy and Germany,the production and operation phase contribute most to the estimated environmental impact depending on the considered impact category.For GWP and ionizing radiation,for example,the production phase is the dominating factor.For others such as marine eutrophication,human non-

137、carcinogenic toxicity,and mineral resource scarcity,the operation phase is most important.While this broadly holds true for Finland as well,the operation phase is more dominating across all impact categories due to the longer distances travelled.In the production phase,the ATM/CRM production is most

138、 important.Improving the materials used and extending the life expectancy of ATMs and CRMs could therefore reduce the environmental impact of cash payments at POS.Coin production is another crucial factor.The number of produced coins and the materials used could again reduce the systems impact.Durin

139、g the operation phase,the way and mode travelled to an ATM/CRM is most important.Since this way is significantly larger in Finland,the operation phase is more dominant than in the other two countries.One option to improve the systems impact here would be to promote getting cash in shops that do not

140、require any additional physical infrastructure.When interpreting the results of our model,it is important to keep in mind the large uncertainties in our assumptions.As mentioned above,we faced limitations on the available data and had to make many assumptions when modelling the digital and cash paym

141、ent systems.To take this uncertainty into account,we calculated a series of sensitivity checks and a Monte-Carlo uncertainty analysis to check the robustness of our baseline results.One such sensitivity check excluded the way travelled to ATMs/CRMs to withdraw money from the model.Since several data

142、 sources had to be combined for modelling the way to an ATM/CRM,the results of these sensitivity are crucial when interpreting the baseline results.Our findings suggest that the baseline results hold in such a sensitivity check for all countries and all impact categories.However,the environmental im

143、pact of a cash POS payment decreases significantly in this sensitivity check suggesting that the way The Environmental Impact of Digital Over Cash Payments 6 travelled to ATMs/CRMs to withdraw money accounts for a significant share of the total impact of a cash POS payment.For example,the estimated

144、impact on GWP drops to 11.6 g CO2 equivalents in Germany,6.6 g of CO2 equivalents in Italy,and 11.6 g of CO2 equivalents in Finland compared to 18.1 g CO2 equivalents in Germany,11.5 g of CO2 equivalents in Italy,and 51.8 g of CO2 equivalents in Finland in the baseline.We also modelled a combination

145、 of sensitivity checks that merges several checks which reduce the impact of the cash system and increase the impact of the digital system(a“worst case for digital versus best case for cash”scenario).Our estimation suggest that our baseline results hold in Germany and Italy in such a check.However,i

146、n Italy,digital POS payments become more damaging than cash in the impact categories global warming,freshwater eutrophication,freshwater ecotoxicity,marine ecotoxicity,land use,and fossil resource scarcity.10 Finally,our sensitivity checks and Monte-Carlo analysis can only partially take the uncerta

147、inty in our assumptions into account.Digital POS payments could help to reduce the environmental impact of POS payments,but the transformation needs to be shaped and supported.Our study indicates that an average cash payment at POS likely burdened the climate,environment,and human health more than a

148、 digital POS payment made at POS in 2022 in Germany,Italy,and Finland.Yet,it should be noted that the overall impact of payments at POS are minor compared to other economic activities.Furthermore,the uncertainty and limitations concerning the presented results should be kept in mind.Additionally,the

149、 presented analysis only estimates the environmental impact of both payment options given the current conditions.Other relevant aspects such as social desirability,security,and ease of handling need to be considered as well to compare both payment options holistically.Despite uncertainty and data li

150、mitations,we have identified options to improve the environmental impact of both systems.While the major levers concern the industry as discussed above,others can be influenced by policymakers and public institutions.As a result,industry and policymakers should work together to improve the environme

151、ntal impacts of these systems.10 Digital payments also have a larger impact than cash in the category ionizing radiation but this is already the case in the baseline model.The Environmental Impact of Digital Over Cash Payments 7 1.INTRODUCTION 1.1 MOTIVATION AND GOAL Digital payments can have variou

152、s positive effects on an economy.Although digital payments serve the benefits of reducing fraud,costs,and waste,increasing transaction speed,scalability,and accuracy,and providing real-time cash flow visibility(Forbes,2023),some customers still prefer cash over paying digitally.For instance,some arg

153、ue that privacy and anonymity are better ensured when paying in cash and thus,data security does not serve as a problem in cash payments.Furthermore,cash might be easier to handle due to immediate settling or a better overview of their spending(ECB,2022a).Additionally,no technological literacy is ne

154、cessary for the usage of cash and cash payments are not dependent on the functioning of software,which is the case for digital payments and thus,serves as another drawback of paying digitally(NTT Data,2024).However,first estimates show that the Greenhouse Gas(GHG)impact of cash payments may be highe

155、r than those of digital payments as digital payments seem to generate less carbon dioxide(CO2)as shown,for example,by Hanegraad et al.(2018)and Lindgreen et al.(2023).With consumers,businesses,and governments becoming increasingly aware of their behaviours impact on the natural environment,including

156、 CO2 footprint,habitat impacts,and loss of biodiversity,advancing the adaptation of digital payments can be one step to helping economic actors to reduce their environmental footprint.However,the underlying assumption is that all other factors remain constant,for example,the overall number of point

157、of sale(POS)transactions.Thus,this conclusion only holds ceteris paribus and would not be true if,for instance,the usage of digital payments went hand in hand with an increase in the number of POS payments.The goal of this study is to gain quantitative insight into the environmental impact of digita

158、l compared to cash payments at POS in 2022 using Life-Cycle Assessments(LCAs).This includes one comparative LCA,where the digital payment and the cash payment systems are analysed and compared.The year 2022 was chosen as the reference year as it is the latest year for which reasonable data is availa

159、ble.To understand the impact of digital payments in a variety of settings,the study will focus on three European countries with varying levels of digital payment adoption.The countries selected are Italy with 31%digital payments adoption at POS,Germany with 37%,and Finland with 81%(ECB,2022a).Beside

160、s their varying levels of digital payment adoption,these countries were also selected as they constitute countries with relevant market sizes and different cultures concerning digital and cash payments.For example,the SPACE study(ECB,2022a)that is based on a survey found that while in Germany 30%sta

161、te cash as their preferred method of payment compared to 41%preferring card or other cashless payments,18%preferred cash payments in Italy and 58%card or other cashless option and 7%preferred cash in Finland compared to 83%preferring card or cashless payments(ECB,2022a).Moreover,all countries use th

162、e euro as their currency.The LCA aims to provide a holistic assessment of the environmental impacts associated with the production,distribution,use and disposal of cash and digital payment systems from cradle to grave.These emissions include environmental impacts on air,soil,and water.Besides identi

163、fying the main drivers for environmental impacts,the study also aims to compare the environmental footprints between both the cash and the digital payment system regarding its function to pay for a good or service at POS.The Environmental Impact of Digital Over Cash Payments 8 The study was commissi

164、oned by the European Digital Payment Industry Alliance(EDPIA),and the results are intended for publication.This can be a source for dialogue with stakeholders such as European policymakers to explore potential options on how to decarbonize the payment system.As the study constitutes an independent a

165、nalysis commissioned by EDPIAan association with an interest in promoting digital paymentswe have assumed the most conservative assumption whenever no detailed information was available.In other words,assumptions made lean towards favouring cash payments over digital payments.Thus,estimations of the

166、 impact of digital over cash payments constitute conservative estimates and are more likely to be biased downward.1.2 DIGITAL VERSUS CASH PAYMENTS IN EUROPE In a recent survey,the European Central Bank(ECB)studied the payment attitudes of consumers in the euro area(ECB,2022a).This so-called Study on

167、 the Payment Attitudes of Consumers in the Euro area(SPACE)report shows that cash payments are still the most frequently used payment method at POS in the euro area.Payments made at POS encompass a wide variety of purchases.For instance,consumers have the option to buy everyday items at supermarkets

168、,invest in consumer durables or home services,make transactions at hotels,restaurants,cultural and sports venues,or petrol stations,as well as acquire tickets or other products from vending machines.According to the SPACE study,54%of all POS transactions in the euro area in 2022 have been initiated

169、to buy day-to-day itemsan increase of 3 percentage points from 2019(ECB,2022a).Durable goods are also becoming increasingly important considering POS transactions,accounting for 8%of POS transactions in the euro area in 2022 compared to 6%in 2019(ECB,2022a).Although cash remains the most important p

170、ayment instrument for POS transactions,the relative importance of cash payments has declined over the years from 79%of all POS transactions paid by cash in 2016 to 59%of transactions in 2022(ECB,2022a).As an alternative to cash payments,consumers tend to use card payments for POS transactions more o

171、ften(ECB,2022a).Additionally,the importance of mobile apps expanded from less than 1%in 2019 to 3%in 2022(see Figure 1).FIGURE 1:USAGE OF DIFFERENT POS PAYMENT INSTRUMENTS IN THE EURO AREA Source:Oxford Economics based on ECB(2022a),chart 2 Cash in POS transactions is mostly used for smaller cash am

172、ounts.81%of POS transactions with a euro amount of 5 or less have been paid in cash(ECB,2022a).In contrast to that,only 31%of POS 79%72%59%19%25%34%1%3%201 201920220%10%20%30%40%50%0%70%80%90%100%CashCards obile appOtherShare of number of transactions at POSThe Environmental Impact of Digital Over C

173、ash Payments 9 transactions with a value of 100 or more have been paid in cash(ECB,2022a).Yet,the small value transactions at POS are the most common.59%of all POS transactions had a value of 20 or less(ECB,2022a).Comparing digital and cash payments at POS makes the most sense in locations where cas

174、h and digital payments are both accepted.According to the SPACE study,on average,95%of POS transactions in the euro area could be carried out using cash according to respondents in 2022,while in 81%of transactions,it was possible to pay with non-cash payment instruments(ECB,2022a).There are signific

175、ant differences in the payment instruments used in European countries for POS payments.Figure 2 illustrates how the share of cash and digital payments differs between the European countries.Digital payments include card payments,mobile payments,and other payment methods such as mobile apps.The three

176、 countries considered in this study are highlighted.Finland has a high adoption of digital payments.Only 19%of POS transactions are settled in cash.Germany shows a lower adoption rate of digital payments since 63%of POS transactions in 2022 are still paid in cash.In Italy,this share is even higher:6

177、9%of POS transactions are paid in cash.FIGURE 2:SHARE OF CASH AND DIGITAL PAYMENTS USED AT POS IN TERMS OF THE NUMBER OF TRANSACTIONS BY COUNTRY(2022)Source:Oxford Economics based on ECB(2022a),chart 5 77%73%70%9%4%3%2%2%0%59%59%54%50%49%4%45%39%21%19%23%27%30%31%34%3%37%38%38%40%41%41%4%50%51%54%55

178、%1%79%81%TS T TESPTDEG LTS C E 19 EF L EEBELU LF 0%10%20%30%40%50%0%70%80%90%100%CashDigital The Environmental Impact of Digital Over Cash Payments 10 1.3 STRUCTURE OF THE REPORT The remaining part of the report is structured as follows.In Chapter 2,we specify the goal of our study and the research

179、questions we seek to answer,introduce the publication strategy for the report and explain the standards applied in our analysis.In the following Chapter 3,we elaborate on the scope of the study in detail.This includes specifying the functional unit,the studys product systems,each systems boundaries,

180、our implementation of a sensitivity analysis,data quality requirements,assignment procedures,the calculation,and the critical review of our analysis.The data inventory for our study can be found in Chapter 4.Chapter 5 presents the results of our impact assessment.Chapter 6 contains the interpretatio

181、n of our results as well as a sensitivity analysis,an uncertainty analysis,and a discussion of the data quality.Finally,Chapter 7 concludes by providing a concise summary of the analysis,and from this,pertinent policy recommendations are deduced.The appendix to this report contains the following con

182、tent:Appendix 1 gives an overview of the ReCiPe 2016 impact categories.Next,Appendix 2 provides detailed results of the impact assessment.Appendix 3 contains tables with the main emitting processes for the two payment systems.Detailed characterisation results for all sensitivity checks are displayed

183、 in Appendix 4.The pedigree matrices used for the uncertainty analysis are displayed in Appendix 5.The detailed results for the uncertainty analysis are displayed in Source:Oxford Economics Appendix 6.Finally,Appendix 7 shows the results of this studys critical review.The Environmental Impact of Dig

184、ital Over Cash Payments 11 2.LIFE-CYCLE ASSESSMENTGOAL 2.1 PROJECT GOAL AND QUESTIONS TO BE ANSWERED Two studies by the Dutch National Bank(DNB)shed the first light on the difference that specific payment systems can have on the environmental footprint at a POS.One assessed the environmental impacts

185、 of cash payments in the Netherlands(Hanegraaf,Jonker,Mandley,&Miedema,Life cycle assessment of cash payments,2018),while the other study focussed on the environmental impact of debit card payments in the Netherlands(Lindgreen,et al.,2017)with an erratum published a few years later(Lindgreen,et al.,

186、2023).Although some external stakeholders compared the study results with each other,the purpose of the studies was to understand the environmental footprint in each system independently rather than comparing different payment methods.Consequently,our study seeks to build on the two studies publishe

187、d by the DNB but specifically intends to compare cash and non-cash payments.Moreover,the location of analysis differswhile the DNB estimated the impacts for the Netherlands,the countries studied in this report are Germany,Italy,and Finland.The goal of the study is to identify which payment method at

188、 POScash or non-cashis more beneficial from an environmental perspective by comparing the estimated environmental impact of an average cash transaction at POS in Germany,Italy,and Finland in 2022 to an average digital payment at POS in the same countries.11 Thus,the two product systems studied are t

189、he cash payment system and the digital payment system in these three countries for a POS transaction in the baseline year 2022.This is done by estimating the environmental impacts of these two systems throughout their life cycle.We seek to answer the following research questions:Which payment method

190、 for settling an average POS transaction in Germany,Italy,and Finland in 2022cash or non-cashhas a smaller estimated environmental impact?Which subsystem12 within the cash and digital POS payment systems causes the highest environmental impact in the cash payment and the digital payment system?Does

191、this vary between countries and why?Considering the results in the three countries,which measures could reduce the environmental impact of both cash and non-cash payments at POS in Europe?2.2 AUDIENCE AND PUBLICATION The outcomes will be made public to promote the study results,ensure transparency,a

192、nd contribute to the literature on LCAs in the payment systems sphere.To substantiate a public comparative statement,the standard mandates a compulsory assessment by impartial specialists(refer to Chapter 3.8).11 Although the monetary value of an average POS transaction paid with cash differs from t

193、he average POS transaction using cards,comparing an average transaction at POS in both systems with each other is still valid as the environmental impact of a POS transaction paid by card is independent of the transaction value.12 Subsystems refer to the different systems part of the larger cash and

194、 digital POS payment systems.For example,the cash POS payment system contains the banknotes and coins subsystems among others.The Environmental Impact of Digital Over Cash Payments 12 The planned uses of the findings encompass:Strengthening knowledge-driven understanding of the environmental footpri

195、nt of different payment systems.Recognising possibilities for improving the environmental impact through the identification of significant areas within the evaluated subsystems lifecycle(hotspot analysis).Sharing the results for educational intentions,to increase transparency and to support governme

196、ntal decision-making.Assisting consumers in deciding which payment option is more environmentally friendly.The intended audience of the study is first and foremost the members of EDPIA.External audience groups include other stakeholders in the payment ecosystems,supply chain partners,consumers,polic

197、ymakers,and the public.2.3 STANDARDS APPLIED The study is developed following the International Organization for Standardization(ISO)14040 standards,which are a set of international standards that provide guidelines and principles for conducting an LCA.ISO 14040(ISO 14040,2006)and ISO 14044(ISO 1404

198、4,2006)provide a standardised framework for conducting LCAs,ensuring that assessments are consistent,transparent,and comparable.13 These standards are widely used by organisations and governments to evaluate and reduce the environmental impacts of products and processes,make informed decisions,and c

199、ommunicate environmental performance to stakeholders.ISO 14040 and its related standards provide a structured approach to assessing the environmental aspects of products.These include the following steps(Whitehead,Andrews,&Shah,2015):Goal and Scope Definition:The first step in an LCA is to clearly d

200、efine the goals and scope of the assessment.This includes identifying the specific objectives,the system boundaries(what is included and excluded),and the functional unit(the unit of measurement for the product or service being assessed).Inventory Analysis:This phase involves collecting data on all

201、inputs and outputs associated with the product,process,or service throughout its life cycle.This data includes raw materials,energy consumption,emissions,and waste generation.Life Cycle Impact Assessment:In this step,the collected inventory data is used to assess the potential environmental impacts.

202、This involves evaluating the environmental consequences of resource use and emissions,such as greenhouse gas emissions,water pollution,and habitat 13 Although the LCA is performed in line with ISO standards,it should be noted that the underlying methodological approach differs from the Product Envir

203、onmental Footprint(PEF)method that is recommended by the European Commission(2021).While both approaches aim to analyse the environmental impact of a products lifecycle holistically,PEFs are based on a more detailed framework with more specific guidelines on how to perform an LCA to increase compara

204、bility across studies(Makersite,2023).Thus,our analysis may not be comparable to a similar PEF study.In our view,using the PEF method in the comparison of payment system can be challenging.According to Weidema(2023),the 2021 PEF method recommends excluding capital goods.Considering the high and vary

205、ing infrastructure needs in the digital and cash payment POS systems,this could lead to a significant bias in the comparison of these products.There is still an ongoing debate on this topic.In any case,research“suggest that the inclusion of both services and capital,either individually or in combina

206、tion,leads to overall notable differences in footprint results”(Font Vivanco,2020).The Environmental Impact of Digital Over Cash Payments 13 destruction.Various impact categories,such as climate change,acidification,and eutrophication,are considered.Interpretation:The interpretation phase involves a

207、nalysing and interpreting the results of the inventory analysis and impact assessment.It aims to draw conclusions and make recommendations based on the assessments findings.This phase also includes sensitivity analyses and uncertainty analyses to account for data limitations and assumptions.To condu

208、ct the LCA we used the SimaPro version 9.5.0.1 software(2023),provided by PR Sustainability.In our modelling,we used the ecoinvent 3.9.1 database(2016)with the system model“allocation,cut-off by classification”and unit processes.The ecoinvent database is a background database that provides data on e

209、missions for a large number of processes,thus easing the data collection process.Since the same database has been used in the study performed by Lindgreen et al.(2017)and(2023),the exact unit processes could be used in our study whenever the information provided was suitable for the presented analys

210、is.14 The main data sources used are displayed in Table 1.A summary of the data quality is presented in the last column.Although it was not always feasible to have the highest quality data due to a lack of data availability,the data sources used present the most reliable database that wasto the best

211、 of our knowledgeavailable and suitable for this study.To account for uncertainties regarding data quality and robustness,several sensitivity checks have been performed.The results can be found in Chapter 6.2.Moreover,we have also performed an uncertainty analysis using a Monte Carlo simulation.The

212、results can be found in Chapter 6.3.Lastly,the pedigree matrix,serving as an input for the Monte Carlo simulation details the assessment of data quality and is displayed in the Appendix.TABLE 1:OVERVIEW OF THE KEY DATA SOURCES Data Source Primary use Examples of indicators used Impact on subsystems

213、Data quality Payment Statistic(ECB,2022b)Assignment factors Numbers of digital payments,terminals,cards,Automated Teller Machines(ATM)/Cash Recycling Machines(CRM)in use All High:Based on data provided by national central banks SPACE report(ECB,2022a)Assignment factors Share of cash,non-cash,and mob

214、ile payments All Medium to high:Based on a survey commissioned by the ECB Freight transport statistics(Eurostat,2021a)Transport distances for freight National or international transport distance of product to customer Most High:Based on a survey answered by a representative sample and carried out by

215、 14 Please note that different versions of the ecoinvent database have been used in the studies.While Lindgreen et al.(2017)used the ecoinvent 3.0 database,Lindgreen et al.(2023)used ecoinvent 3.8 and ecoinvent 3.9.1 has been applied in the present study.The Environmental Impact of Digital Over Cash

216、 Payments 14 Data Source Primary use Examples of indicators used Impact on subsystems Data quality national public authorities Passenger mobility statistics(Eurostat,2021b)Distance to waste treatment facility Average commuting distance Included if waste market datasets exclude transport High:Based o

217、n a survey answered by a representative sample and carried out by national public authorities ECB statistics on cash circulation(ECB,2023a;ECB,2023b;ECB,2023e)Assignment factors Banknotes and coins in circulation,share of cash used for transactional purposes All cash subsystems High:Based on data pr

218、ovided by national central banks DNB paper on the impact of cash(Hanegraaf,Jonker,Mandley,&Miedema,Life cycle assessment of cash payments,2018)Input to all phases of cash subsystems Material input,production processes,energy consumed,assumed lifetimes of cash subsystems Subsystems 5(banknote),6(coin

219、s),7(Cash in Transit(CiT),8(Cash Counting Machine(CCM),10(ATM/CRM)Medium:Published study by the Dutch national central bank based on varying degrees of data quality DNB paper on the impact of debit card payments(Lindgreen,et al.,2017)Input to all phases of digital subsystems Material input,productio

220、n processes,energy consumed,assumed lifetimes of digital subsystems Subsystems 1(cards),3(payment terminals)Medium:Published study by the Dutch national central bank based on varying degrees of data quality Source:Oxford Economics Lastly,given the commissioner and background of the study,we have ass

221、umed the most conservative assumption whenever no detailed information was available leaning towards favouring cash payments over digital payments.Thus,estimations of the impact of digital over cash payments constitute conservative estimates and are more likely to be biased downward.The Environmenta

222、l Impact of Digital Over Cash Payments 15 3.LIFE-CYCLE ASSESSMENTSCOPE 3.1 FUNCTIONAL UNIT The functional unit defines what is being studied in an LCA according to ISO norm 14040.More precisely,it is defined as the“quantified performance of a product system for use as a reference unit”(ISO 14040,200

223、6,p.4).In the present study,the product studied is a market activity,i.e.,the payment at POS.To conduct the payment,different options are available,such as cash payment,card payments,and smartphone payments,for instance.This study analyses and compares two common payment methods at POS:cash POS paym

224、ents and digital POS payments.While the cash payment is performed by transferring coins and/or banknotes from customer to supplier in exchange for a good or a service,digital payments studied here are performed by a credit or debit card that is typically tapped on to,swiped through,or inserted into

225、a payment terminal in exchange for a good or service.Smartphone payments that are based on a card are included in the digital payment system.Both product systems that we seek to compare have the same function,i.e.,to pay for a good or service at a POS in the relevant countries in 2022.Therefore,the

226、functional unit is one average payment at POS.This average payment is calculated by dividing the impact of the total systemsfor cash and digital paymentsper year by the number of cash and digital POS payments per year,respectively.This could include,for instance,estimating the total energy usage of

227、payment terminals in a given year and dividing it by the total number of digital payments at POS to get the energy used for the payment terminal per average digital POS transaction for that year.Note that our definition of the functional unit excludes other aspects relevant to payments such as secur

228、ity issues,social acceptance,or barriers to usage.The average payment has been chosen to increase comparability across systems.Comparing both systems in total may be misleading as their utilisation rate might differ.By comparing the average POS payment,it is possible to estimate the environmental im

229、pact of both options for the customer given current conditions taking into account aspects like ATM or terminal utilisation,for example.Yet,the average value of cash and non-cash transactions usually differs.Non-cash payments are more commonly used for higher transaction values,whereas smaller trans

230、action values are more likely paid in cash.Regarding the environmental impact,the value of the transaction is mostly relevant for cash transactions as the value influences the number of banknotes and/or coins used in a transaction;however,the value of a digital transaction has mostly no impact on th

231、e environmental effect of the payment according to expertsespecially regarding the mostly smaller-value POS transactions.15 Therefore,we decided to calculate the overall systems impact on both subsystems and then assign it to one average POS transactionwhether it is a cash or a non-cash transaction.

232、Concerning the analysis for the different countries,the functional unit remains the same,i.e.,an average transaction at POS.The effective amount of an average payment at POS might differ between countries.Since this also leads to varying results,it is important to note that the analysis presented 15

233、 Larger-value digital transactions may include extra verification and data processing steps.The Environmental Impact of Digital Over Cash Payments 16 here hold for Germany,Italy,and Finland respectively in 2022.Still,as both payment systems provide the same service at a POS,the functional unit picke

234、d ensures a reasonable comparison of the estimated environmental impact of one cash payment at a POS with the impact of a digital payment at a POS by country and year given the assumptions stated in the analysis.In detail,the market segment studied is payments made at POS in Germany,Italy,and Finlan

235、d in 2022.With 37%,31%,and 81%,these three countries of interest have varying adoption rates of digital payments at POS(ECB,2022a).These countries have been chosen due to their varying degrees of digital and cash payments at POS as well as their economic significance for the euro area.3.2 DESCRIPTIO

236、N OF PRODUCT SYSTEMS AND SYSTEM BOUNDARIES 3.2.1 Digital Payments:General description of the product system and reference flow If consumers want to pay for a service at a POS via non-cash means,they initiate a digital transaction at a POS.The customer selects their items for purchase and proceeds to

237、 the payment terminal at the checkout counter.They either use their physical payment card,their contactless card,or their smartphone16 to initiate the payment.The payment terminal collects the transaction data and securely sends it to the data centre for processing.Once the payment is authorised,the

238、 data centre sends a confirmation back to the payment terminal.The transaction is completed when the merchant receives the payment in his or her bank account.The digital transaction process at POS can be complex,but it is streamlined and divided into four key subsystems for clarity and efficiency(se

239、e Figure 4).These subsystems work together seamlessly to facilitate secure and convenient payments as displayed in Figure 3.Payment Cards:Payment cards are a crucial component of the transaction process.These cards can be physical(like credit or debit cards)or virtual(stored in a mobile wallet app,s

240、ee subsystem Smartphones).When a customer initiates a payment at the POS,they use their payment card by inserting it into the terminal or tapping it,to make a digital payment.The card contains the necessary information for the transaction,such as the cardholders account details.We include debit and

241、credit cards in our analysis.Smartphones:In addition to traditional payment cards,consumers can also use smartphones or wearable devices like smartwatches to initiate payments.These devices often support contactless payment methods,such as Near Field Communication(NFC)technology.To pay via smartphon

242、e,the customers hold their device near the payment terminal,and the transaction is processed securely.In this study,only smartphone payments at POS are considered whereas other mobile payment methods including for example smartwatches are not covered.Additionally,only those smartphone payments that

243、are based on a debit or credit card(physical or virtual)are studied.Thus,many use cases of smartphone payments are not part of the study,i.e.,online purchases,P2P transactions,and other payment services that are not based on a credit or a debit card such as payment via loyalty programs or online pay

244、ment systems not based on credit or debit cards.Payment Terminals:Payment terminals are the starting point of the transaction process.These are devices used by consumers to initiate a payment at a physical store.Payment terminals come 16 People can also pay using wearables.The Environmental Impact o

245、f Digital Over Cash Payments 17 in various forms as combined chip card readers and contactless reader payment terminals.When a customer is ready to make a purchase,they interact with the payment terminal by inserting or tapping their payment card,or tapping their smartphone.We include in our analysi

246、s dedicated devices only.POS apps on smartphones are not in the scope of this study.Data Centres:Data centres are the backbone of the digital payment system.They are responsible for processing the transaction data generated by the payment terminal.This data includes information about the purchase,th

247、e payment method used,and the authorisation request.Data centres are equipped with robust security measures to ensure that sensitive financial information is protected during transmission and processing.For all subsystems,the production,operation,and end-of-life(EoL)are considered and assigned to on

248、e digital POS transaction in Germany,Italy,and Finland.Moreover,transport and energy consumption are always covered as part of the inputs.FIGURE 3:PRODUCT SYSTEM FOR DIGITAL PAYMENTS AT POS Source:Oxford Economics,partially adapted from Lindgreen,et al.(2017)Table 2 gives an overview of the primary

249、data sources used for the description of the digital payment system.Depending on the preferences of the interview partner,information was either provided through an expert interview or by filling out a questionnaire.All interviews and questionnaires were conducted or collected between August and Oct

250、ober 2023.The interviewees were selected based on an assessment of the market leaders in the respective subsystem.To achieve the greatest representativeness possible,we aimed at gathering information for all three countries from the most important players in each field respectively.Considering the r

251、ather low number of interviews,we aimed to gain insights representing the overall market as well as possible.Uncertainties concerning data quality and representativeness were estimated using Monte Carlo simulations.The results are displayed in Chapter 6.3 and their inputs,i.e.,the pedigree matrix,ar

252、e displayed in Appendix 4.The Environmental Impact of Digital Over Cash Payments 18 TABLE 2:OVERVIEW OF PRIMARY DATA SOURCES DIGITAL PAYMENTS Primary data source Primary use Examples of indicators used Geographic Focus Data request Card personalisation company(one of the market leaders)Production of

253、 cards Location of card and chip production;location of card personalisation;energy used for card personalisation Italy Written data request(questionnaire)POS terminal manufacturer(one of the market leaders)Terminal production Material input and energy consumed by terminal per POS transaction,produc

254、tion location,transport modes Europe Written data request(questionnaire)European paper roll manufacturer(one of the market leaders)Terminal operation Material inputs for paper receipts Europe Confidential report containing interviews Payment service provider(PSP)Terminal operation and end-of-life En

255、ergy use for transaction processing;energy use for card personalisation;life expectancy;recycling and refurbishing rates;packaging;transport;servicing of POS terminals Germany Expert interview followed by a written data request PSP Terminal operation and end-of-life Energy use for transaction proces

256、sing;energy use for card personalisation;life expectancy;recycling and refurbishing rates;packaging;transport;servicing of POS terminals Italy Expert interview followed by a written data request PSP Terminal operation and end-of-life Energy use for transaction processing;energy use for card personal

257、isation;life expectancy;recycling and refurbishing rates;packaging;transport;servicing of POS terminals Finland Expert interview followed by a written data request PSP Data centre operation Data centre location and energy usage Europe Expert interviews Source:Oxford Economics 3.2.2 Digital Payments:

258、Subsystems As described,the digital payment system is divided into four subsystems(see Figure 4).They are described in the following paragraphs.Differences between the countries under investigation are highlighted.These descriptions are meant to clarify the scope of the study.Detailed steps and inpu

259、ts included are presented in Chapter 4.The Environmental Impact of Digital Over Cash Payments 19 FIGURE 4:OVERVIEW OF SUBSYSTEMS IN THE DIGITAL PAYMENTS ECOSYSTEM Source:Oxford Economics SUBSYSTEM 1:CARDS DIGITAL SYSTEM Cards are essential for both systemsthe digital and the cash system.17 In the di

260、gital system,customers need cards to make transactions at payment terminals,whereas in the cash system cards enable the withdrawal and deposit of cash.In this paragraph,we consider cards as part of the digital payment system.Usually,customers receive a physical payment card that is connected to thei

261、r bank account enabling them to make digital transactions at POS.Having a virtual card only is still very rare(expert interview with a PSP).This is why we decided to leave this case out of our scope and assume that a digital POS transaction is done by using a physical card only or by using a smartph

262、one in addition equipped with the virtual image of a physical card(see Subsystem smartphones).As we assume that payments made without physical cards are reducing the overall impact of digital payments on the environment,our assumption is more conservative and thus more likely to lead to an overestim

263、ation of digital payments environmental impact than an underestimation.The lifecycle of cards can be displayed as in Figure 5.It is divided into production,operation,and end-of-life phases,whereas the dotted line marks the system boundary of this subsystem.Starting from above,a card body and a chip

264、are produced separately by different companies and assembled afterwards.After the physical assembly data and applications need to be loaded through an operation system(Rankl&Effing,2010).Thisas well as any other software used during the card production phaseis not included in our analysis.After the

265、card production is finalised,the cards are transported to the respective countries to get personalised.Then,after being sent to a warehouse,the cards and a separate letter with the Personal Identification Number(PIN)code are sent to the final owner of the bank account and are,afterwards,ready to use

266、.17 Moreover,cards are also used for online purchases but these purchases are not considered in this study.CardsCardsSubsystem 1CardsTerminalsTerminalsSubsystem 2TerminalsData centresData centresSubsystem 3Data centresSmartphonesSmartphonesSubsystem 4SmartphonesThe Environmental Impact of Digital Ov

267、er Cash Payments 20 FIGURE 5:FLOWCHART OF THE CARD SUBSYSTEM Note:This figure gives a broad overview of the subsystems lifecycle and indicates what aspects were considered and what was outside the system boundary.Thus,especially transport steps are simplified and do not represent the complexity of t

268、he system as modelled in this study.In general,all transport steps were considered either through market processes or through explicit modelling.For detailed information on the transports considered and further aspects of the lifecycle,see Chapter 4.Source:Oxford Economics based on Rankl&Effing(2010

269、)During the operation phase,other elements such as terminals and data centres become crucial but the card usage itself does not cause any relevant inputs or outputs.Since terminals and data centres constitute subsystems themselves,no additional inputs or processes are needed for the operation phase

270、of cards in this subsystem.When a card reaches its end-of-life,customers usually destroy the chip to ensure that any personal information will not be misused by cutting the card and disposing of everything in the domestic waste.Note that we only focus on digital payments at POS.Digital payments done

271、 online,for example for e-commerce,are not included in our analysis.SUBSYSTEM 2:PAYMENT TERMINALS Payment terminals are a central part of the digital payment system.They are used to conduct the transaction between customers and retailers.As alternative uses of POS terminals(e.g.,customer loyalty or

272、club programs that award the customer with points per purchase or offers)are negligible,their environmental footprint can be attributed to the system of digital payments.By assigning the whole terminals impact to the digital payment system,the analysis over-rather than underestimates the impact of P

273、OS terminals,as terminals may be used for other purposes as well.Thus,this once again constitutes a conservative assumption in favour of the cash payment system.Besides their importance for the system,a study by Lindgreen et al.(2023)showed that payment terminals are a crucial factor in the environm

274、ental impact of digital paymentespecially terminal materials and energy use.The Environmental Impact of Digital Over Cash Payments 21 FIGURE 6:FLOWCHART OF THE PAYMENT TERMINAL SUBSYSTEM Note:This figure gives a broad overview of the subsystems lifecycle and indicates what aspects were considered an

275、d what was outside the system boundary.Thus,especially transport steps are simplified and do not represent the complexity of the system as modelled in this study.In general,all transport steps were considered either through market datasets or through explicit modelling.For detailed information on th

276、e transports considered and further aspects of the lifecycle,see Chapter 4.Source:Oxford Economics partly based on Lindgreen,et al.(2017)As outlined in Figure 6,upstream processes considered involve the terminal production including the material inputs,production processes and their associated energ

277、y consumption.Out of scope is again the development and installation of the software for the operating system.Moreover,transportation from the country of production to the warehouse and the customer is covered.The terminals are mostly produced in Asia and transported by ship or aeroplane to Europe.A

278、fter that,they are transported with trucks to the customers warehouses,repackaged and sent to the final customerthe merchant using the terminal as a method for payment at their POS.In the usage phase,the terminals consume energy.In addition to energy usage,we also consider the input for printing pap

279、er receipts as most countries still use paper over electronic receipts.In Germany,for example,the printing of the merchant receipt is mandatory.Furthermore,we consider the maintenance of the terminals,which is mostly done by postal swap according to interviews with a PSP.At the end-of-life,terminals

280、 are either recycled,refurbished,or disposed of.For recycled terminals,only the transport to the recycling facility is considered.Refurbished terminals are mostly shipped to Asia and disposed of abroad.As terminals fall under the Waste from Electrical and Electronic Equipment(WEEE)directive set out

281、by the European Union(EU),most of the materials used for terminals disposed of in Germany,Italy,and Finland are sorted before the disposal(in t Groen,Stengs,&Zanneveld,2017),and therefore treated separately.Paper receipts and packaging are disposed of as well.SUBSYSTEM 3:DATA CENTRES DIGITAL SYSTEM

282、Data centres,like cards,are relevant for both payment systems.Concerning digital payments,data centres process the transaction.They serve as the backbone of the digital payment ecosystem,The Environmental Impact of Digital Over Cash Payments 22 enabling seamless,secure,and efficient transaction proc

283、essing while ensuring data integrity and compliance with industry standards.Additionally,they potentially also play a crucial role in the environmental impact of digital payments.Visa and MasterCard,for example,both report in their most recent Environmental,Social and Governance(ESG)reports that dat

284、a centres accounted for 66%of isas total electricity consumption in the financial year 2022(VISA,2023)and 10%of asterCards total GHG emissions of Scope 1 and 2(MasterCard,2023).Although data centres can vary significantly,their contribution to the impact of digital payments can be summarised in a sc

285、hematic overview(see Figure 7).First,a data centre needs to be manufactured.The main inputs,according to Lindgreen et al.(2017),are raw materials,as well as other material inputs.In our specification,the material inputs for the power infrastructure,the IT equipment,the cooling system,the racks,and c

286、ontainments as well as the building for the data centre are included.FIGURE 7:FLOWCHART OF THE DATA CENTRE SUBSYSTEM Note:This figure gives a broad overview of the subsystems lifecycle and indicates what aspects were considered and what was outside the system boundary.Thus,especially transport steps

287、 are simplified and do not represent the complexity of the system as modelled in this study.In general,all transport steps were considered either through market datasets or through explicit modelling.For detailed information on the transports considered and further aspects of the lifecycle,see Chapt

288、er 4.Source:Oxford Economics based on Lindgreen,et al.(2017)and Whitehead,Andrews,and Shah(2015).Second,estimates of transporting the input materials for the manufacturing to the site must be included.Following Whitehead,Andrews,and Shah(2015),the omission of on-site facility construction impacts is

289、 attributed to the absence of sufficient data and the relatively minor influence it exerts on the outcome.We excluded the packaging of the separate IT components due to a lack of data.Third,the usage or operation of a data centre for the transaction needs to be considered.As the energy supply of dat

290、a centres is almost exclusively based on electricity,the emissions produced by the energy usage of data centres heavily depend on the grid emissions factor that varies substantially between European countries(Hintemann,Hinterholzer,&Clausen,2020).As some data centres may not use the electricity grid

291、 but renewable energy sources,assuming the national grids emission factor corresponds to a very conservative assumption.Furthermore,we consider the water usage for the The Environmental Impact of Digital Over Cash Payments 23 cooling of the data centres in the operation phase.In the operation phase,

292、maintenance and associated transport are omitted.18 Finally,the end-of-life of data centres needs to be considered.This includes the transport of materials and components to the relevant waste treatment sites.SUBSYSTEM 4:SMARTPHONES Smartphones are becoming increasingly important for the digital pay

293、ment system.The SPACE report published by the ECB(2022a)shows that while mobile app payments at POS were not relevant in 2016,they accounted for 1%of the number of POS payments in the euro area in 2019 and 3%in 2022.19 Considering the countries of interest,the report shows that in 2022,2%of POS paym

294、ents in Germany and Italy were conducted by mobile app(see Figure 8).In Finland,mobile app payments are much more popular with a share of 6%out of all POS payments in 2022.The report also shows that mobile app payments are most popular among younger people.FIGURE 8:SHARE OF PAYMENT INSTRUMENT AT POS

295、 EA 19 refers to euro area 19,i.e.,the 19 EU Member States which adopted the euro as their common currency at the time of the analysis.These include Belgium,Germany,Estonia,Ireland,Greece,Spain,France,Italy,Cyprus,Latvia,Lithuania,Luxembourg,Malta,Netherlands,Austria,Portugal,Slovenia,Slovakia,and F

296、inland.Source:Oxford Economics based on ECB(2022a)18 The production and usage of the internet network is not considered as separate subsystem since the usage share of POS transactions is very high.Therefore,comparable to modelling road infrastructure,the network infrastructure is considered in the o

297、peration phase.19 The SPACE report(ECB,2022a)differentiates between payments made with cash,card,mobile app and other.Mobile app payments may include banks mobile applications,pple Pay,Google Pay,other,and country-specific mobile applications.3%9%19%59%Germany talyFinlandE 190,0%10,0%20,0%30,0%40,0%

298、50,0%0,0%70,0%80,0%The Environmental Impact of Digital Over Cash Payments 24 The subsystem smartphone20 includes the production of a smartphone covering the material input,energy used,the production of the power adapter,transport from the production location to the relevant country and the customer

299、as well as the packaging of the new smartphone.The operation phase covers the energy used by the smartphone to conduct an average payment as POS.Other aspects concerning energy usage,such as terminal processing and data centres,are covered in the respective subsystems.We do not consider the energy u

300、sage to load the banking card into the e-wallet as we consider it to be negligibleespecially after assigning it to one POS transaction.Lastly,the need for internet access varies between providers of mobile payment solutions.For example,Apple Pay does not require internet access,while Google Pay and

301、Samsung Pay require regular access to the internet from time to time to load new tokens(Lowry,2022).Due to a lack of more specific data,we have omitted impacts caused by internet access through the smartphone.Nevertheless,the internet used by the data centre processing the transaction is still inclu

302、ded in the corresponding subsystem 4.The end-of-life includes the waste treatment process of the smartphone,power adapter and the initial packaging.Transport to the waste facility and energy used during the treatment process are also part of the system.FIGURE 9:FLOWCHART OF THE SMARTPHONE SUBSYSTEM

303、Note:This figure gives a broad overview of the subsystems lifecycle and indicates what aspects were considered and what was outside the system boundary.Thus,especially transport steps are simplified and do not represent the complexity of the system as modelled in this study.In general,all transport

304、steps were considered either through market datasets or through explicit modelling.For detailed information on the transports considered and further aspects of the lifecycle,see Chapter 4.Source:Oxford Economics Of course,there are different ways to use smartphones for POS payments.A study performed

305、 by Eschelbach et al.(2022)shows that Apple Pay,payment apps provided by banks,and Google Pay are the most common methods used for mobile payments in Germany.Other alternative payment 20 As the subsystem for smartphones is very simple,a visualisation by a flow chart is omitted.The Environmental Impa

306、ct of Digital Over Cash Payments 25 solutions include PayPal or Payback Pay,for example.Yet,as the data used typically do not allow for a differentiation between those smartphone payment methods,we assume every mobile app payment to be a smartphone payment connected to a physical card.Since these me

307、thods are mostly used as described above,we consider this a valid assumption.Moreover,as various methods of mobile payments may not be connected to a physical card,reducing their environmental impact,we consider this approach to be conservative.We do not consider the production of wearables as their

308、 usage share is still little according to expert interviews.In Germany,for example,a study by Deutsche Bundesbank found that while 89%of customers owned a smartphone in 2021,only 7%owned a smartwatch and 4%a fitness bracelet with a payment function,respectively(Eschelbach,Lorek,Novotny,Pietrowiak,&S

309、eiler,2022,p.20).Of these wearable owners,only 27%have used them to pay in a shop at least once(Eschelbach,Lorek,Novotny,Pietrowiak,&Seiler,2022,p.21).In the usage phase,all non-cash payments are considered digital paymentswhether done by physical card,E-Wallet,or retail payment apps.Furthermore,the

310、 usage share of smartphones includes all mobile payments reported in the SPACE report,which includes all payments using the customers banks mobile application,pple Pay,Google Pay or other methods to carry out the payment(ECB,2022a).3.2.3 Cash Payments:General description and reference flow The cash

311、system can be understood as consisting of a corethe actual cashand supporting elements that are necessary for the functioning of the cash system.All subsystems are displayed in Figure 10.FIGURE 10:CENTRAL ELEMENTS OF THE CASH SYSTEM Source:Oxford Economics For a consumer to be able to pay with cash

312、at a POS,banknotes and coins need to be produced.Furthermore,the cash must reach the consumer,which is typically done via ATM withdrawals using a payment card and the back-end processing of data centres that authorise the withdrawal and settle it with the consumers bank.21 Thus,ATMs,data centres for

313、 the back-end processing and cards also need to be produced.In the usage phase,the cash needs to be distributed between ATMs,retailers,and consumers.Mostly,special CiT companies provide that service for ATMs,CRMs22 and retailers.They use armoured cash trucks for that service and need to count and so

314、rt the cash before recirculating it,which is typically 21 We do not consider withdrawal at the bank counter or cash back at merchants.22 CRMs can be used for both withdrawing and depositing money.The Environmental Impact of Digital Over Cash Payments 26 done by CCMs.The withdrawal of cash at an ATM

315、as well as the deposit of money at CRMs is typically done by a consumer using their card.When coins and banknotes become excessively damaged and reach the end of their life,they need to be withdrawn from circulation.These unfit currency units are typically shredded or melted down for recycling.Simil

316、arly,when ATMs,data centres and cards become damaged or non-functional,they are disposed of.FIGURE 11:PRODUCT SYSTEM FOR A CASH PAYMENT AT POS Source:Oxford Economics,partially adapted from Hanegraaf,et al.(2018)Using this description of the cash payment system,we identified seven primary subsystems

317、(see Figure 12):Banknotes and Coins:Banknotes and coins are two separate subsystems and constitute the centre of the cash transaction system.Banknotes enter circulation after being commissioned and dispensed by the national central banks.Similarly,coins enter circulation after being commissioned and

318、 produced.Physical currency is used in daily transactions and exchanged among individuals.They may change hands multiple times during their lifespan and can be used for multiple transactions.ATMs/CRMs:ATMs and CRMs are deployed at various locations,such as banks,convenience stores,and public areas.T

319、he consumer needs to reach the ATM to be able to pay with cash at a POS in a different location.These machines provide consumers with access to cash withdrawals and deposits.ATMs and CRMs are regularly restocked with banknotes and coins by CiT companies.This process involves securely transporting ca

320、sh to replenish the machines.To withdraw and deposit money,consumers can use their cards at ATMs and CRMs.Cards:To withdraw cash from ATMs or CRMs,consumers can use their debit or credit cards,which are typically provided by banks after opening a bank account.Data centre:A withdrawal at an ATM as we

321、ll as a deposit at a CRM involves back-end processing.For example,when a person wants to withdraw funds from their account,the ATM needs to establish a connection with the relevant systems to verify the persons authorisation and the availability of funds necessary to complete the transaction.The Env

322、ironmental Impact of Digital Over Cash Payments 27 CiT companies:CiT companies are crucial to the cash system as they are responsible for the transportation of valid coins and banknotes during the lifecycle.This may include transporting new banknotes from printing works to the national central banks

323、 headquarters,distributing cash across retailers,ATMs,and CRMs,and transporting damaged banknotes to the central banks analysis centres,for example.The transport is performed by special armoured and safe vehicles.These cash trucks are built for the sole use of transporting valid coins and banknotes

324、making them fully attributable to the cash system.CCM:t various steps during a banknotes lifecycle,it needs to be counted.To do this efficiently,CCMs are used,for example by national central banks or by commercial cash handlers.The latter are also CiT companies,but the operation of cash centres is a

325、 different business vertical than cash transport.As these machines are produced for the counting of banknotes only,they are a central element of the cash system that should be considered to analyse the environmental impact of cash transactions.To account for the different types of CCMs,we have model

326、led a typical large CCM as well as a small one.For all subsystems,the production,operation,and end-of-life are considered and assigned to a cash POS transaction in 2022 in Germany,Italy,and Finland.Again,besides the inputs,transport and energy consumption are always covered.Table 3 gives an overview

327、 of the primary data sources used for the description of the cash payment system.As mentioned in Chapter 3.2.1 on the digital payment system,the interviews and questionnaires were conducted or collected between August and October 2023.To maximize the representativeness and quality of the information

328、 collected,we aimed to receive data from a market leader whenever possible.The Monte-Carlo simulations account for data uncertainty and their varying degrees of representativeness.The results are displayed in Chapter 6.3 and the pedigree matrices for the Monte-Carlo simulations can be retrieved from

329、 Appendix 4.The Environmental Impact of Digital Over Cash Payments 28 TABLE 3:OVERVIEW OF PRIMARY DATA SOURCES CASH PAYMENTS Primary data source Primary use Examples of indicators used Geographic Focus Data request ATM/CRM manufacturer(one of the market leaders)Production and operation of ATM/CRM Ma

330、terial input,production processes,energy consumed,assumed lifetimes,waste treatment of ATM/CRM Germany,Italy,and Finland Written data request ATM/CRM maintenance provider(one of the market leaders)Servicing ATM/CRM Distance travelled for servicing ATM/CRM Italy Written data request Trade association

331、 Cash transport(CiT)Mileage and lifetime of trucks for cash transport Germany Expert interview CiT company and trade association(one of the market leaders)Cash transport and counting(CCM,CiT)Number of CCM in use;milage and lifetime of trucks for cash transport Italy Written data request Source:Oxfor

332、d Economics 3.2.4 Cash Payments:Subsystems As described,the cash payment system is divided into seven subsystems(see Figure 12).They are described in detail in the following paragraphs.Differences between the countries under investigation are highlighted.FIGURE 12:OVERVIEW OF SUBSYSTEMS IN THE CASH

333、PAYMENTS ECOSYSTEM Source:Oxford Economics The Environmental Impact of Digital Over Cash Payments 29 SUBSYSTEM 5:BANKNOTES Euro banknotes are a key element of the cash payments system and thus constitute a key subsystem.They are used for payment in the Eurozone covering all three countries of interest.In general,euro banknotes exist in seven denominations,namely 5-euro,10-euro,20-euro,50-euro,100-