Assessing the climate impact of retail payment services

Payments are central to modern economies and societies yet concerns over the environmental impact of payment services are growing, especially from a climate perspective. This study examines the climate impact of retail payments in Sweden in 2021, including cash, cards, Giro payments, Swish, and payment apps. It builds upon established life cycle assessment (LCA) methodologies to measure the climate impact of retail payment services in the Swedish market, and evaluates their individual and aggregate climate impact. A full LCA is performed for cash, card, and app payments, while a screening LCA, considering only energy and GHG emissions, is applied to Giro and Swish. The study identifies areas to reduce overall impact and provides valuable information for sustainable decision-making related to payments. Total climate effect of card payments in Sweden is higher than those of cash, mainly due to a higher number of card transactions. However, the per-transaction climate impact of cash is higher than all other payment services. The research shows that the emissions from operational energy use for Swish and Giro are very low compared to cash and even card payments. Transitioning to digital payment systems therefore presents a clear opportunity to reduce the climate impact per transaction as well as per value transacted or per krona. Total system impact depends on transaction volume, infrastructure, and user behaviour, which can be shaped by supportive policies. The paper outlines key factors deciding the climate impact of retail payments which lay the foundation for future international comparative studies.