Measuring the Impact of Payment Innovations in Sustainable Finance: A Refined Framework for Evaluating ESG, Social Equity, Financial Inclusion, and Efficiency

Abstract

The increasing focus on sustainable finance has led to a growing demand for tools to assess the environmental, social, and governance (ESG) impact of financial products and services. This article proposes a refined framework, the Payment Sustainability Index (PSI), to measure the sustainability performance of payment innovations. PSI integrates traditional ESG metrics with considerations of social equity, financial inclusion, and efficiency, weighted by their financial significance. This holistic approach allows for a comprehensive evaluation of payment innovations that balances sustainability with economic viability. The article discusses the theoretical foundations of the PSI, drawing on stakeholder theory, the triple bottom line, and impact investing principles. It also details the methodology for calculating the PSI, including the selection of metrics, weighting, and normalisation. The applicability of PSI is demonstrated through case studies of mobile money and blockchain-based supply chain finance. The article concludes by discussing the implications of PSI for fininstitutions, policymakers, and consumers, highlighting its potential to drive innovation, inform regulation, and empower consumers to make more sustainable payment choices.