Payment Convenience & Sustainability: Can Businesses Ensure Both?

Nowadays, running a business entails way more than simply attracting clients and ensuring continuous sales. Modern company owners face a variety of considerations that sometimes can be difficult to balance simultaneously. For instance, how do you ensure a convenient payment flow for your clients while keeping it as sustainable as possible?

The truth is that the conventional approach to handling payments often involves cash, paper receipts, and physical gift cards. Fortunately, innovative tech and AI-based solutions enable the streamlining of trade transactions while reducing their environmental impact and boosting customer satisfaction.

Environmental Impact of the Traditional Payment Flow

Firstly, conventional payment methods contribute to environmental issues by creating waste, causing air pollution, and using up valuable natural resources.

For instance, in 2019, the typical ecological impact of using banknotes in the euro area amounted to 101 µPt per citizen. This is comparable to driving a car for 8 km and accounts for approximately 0.01% of the overall environmental influence of an average European citizen’s yearly consumption activities.

While this may not seem like a significant environmental trace, it’s crucial to remember that banknotes are only one part of the big picture. In fact, there are currently around 3 billion Visa credit cards in circulation worldwide. With a single card’s annual carbon footprint of 150 CO2eq, this sums up to approximately 450 million tons of pollutants produced each year.

Secondly, paper receipts, which are still a widespread practice, also come hand-in-hand with such major issues as:

• Deforestation
• Large volumes of water and energy used during manufacturing
• Chemical coating using BPA or BPS
• Short lifespan
• Recycling challenges

What’s more, the use of conventional receipts generates over 310 million kilograms of waste in the US alone!

Finally, it is also worth mentioning that the environmental cost of manufacturing payment hardware is often unjustly high compared to their relatively short lifetime. Surprisingly, in the process chain of a bank card transaction, 75% of the total negative natural impact share is linked to the POS terminal. At the same time, such devices typically only serve 5-7 years before needing to be disposed of.

Reducing the Carbon Footprint with the Help of Tech

As you can see, there is plenty of space for improvement when it comes to traditional payment flows. Besides, according to a recent study conducted by Mastercard, 62% of consumers agree that it’s more important than ever for businesses to adopt sustainable practices. Notably, 54% of them believe that reducing the companies’ carbon footprint has become critical since COVID-19.

Moreover, many companies are also eliminating the use of paper receipts and are opting for their digital counterparts. Therefore, instead of printing receipts by default, they give their clients an option to receive them via email, which has proven to impressively reduce carbon emissions.

Besides, innovative solutions like Apple’s Tap-to-Pay spare business owners the need to purchase POS terminals. Instead, they can accept payments directly via their mobile devices. This is yet another simple yet effective way of reducing a company’s carbon emissions.

Future Prospects for Greener Payments

It is safe to say that the world is on its way to greener payments. This becomes evident through multiple environmental sustainability initiatives launched by renowned industry giants.

For example, this year, Mastercard announced its decision to shift to more sustainable materials when producing its payment cards starting in 2028. The company claimed that it intends to use only recycled or bio-sourced plastics, such as rPVC, rPET, and PLA1.

Visa has also made significant sustainability efforts over the past years. For instance, in 2020, the company launched Earthwise, a payment card consisting of up to 98% upcycled materials.

What’s more, the rapid evolution of AI is also said to have a positive impact on the environment in the payment context, even though it may not be obvious at first glance. Some of the ways in which Artificial Intelligence is supporting sustainability efforts include:

• Streamlining transactions. AI algorithms optimize transaction processes in a variety of ways, which in turn reduces the computational power required for payment operations.
• Preventing fraud. By minimizing fraud, AI-based solutions help to reduce the environmental impact of reissuing cards and save the resources associated with investigating the incidents.
• Optimizing data center operations. AI can assist in enhancing the efficiency of resource utilization in data centers. This includes managing server loads, cooling systems, and overall energy consumption.

Moreover, all of these developments are also in line with the global population’s increasing interest in a cashless economy. Many nations, including Sweden, Finland, China, South Korea, and the UK, are already on the verge of switching to digital-only transactions. Combined with the advancing efforts in zero-carbon energy sources, these trends are sure to be revolutionary for the payments landscape.

With this in mind, experts also predict that we are likely to see more regulatory measures arise to direct payment evolution toward a greener future, making sustainability a legal requirement rather than a value-added feature.