Sustainable Payment Solutions: New Challenges and Opportunities

Sustainability has become something of a buzzword these days — but for good reason. Last year, the Intergovernmental Panel on Climate Change (IPCC) published a synthesis report confirming that climate change is steadily worsening, with greenhouse gas emissions having reached record levels. However, it isn’t all doom and gloom; according to the IPCC, we can still turn things around — and with the future of our planet and our species at stake, it is vital that we take the necessary action to do so now.

One of the ways we can combat climate change is by refiguring the payment industry, developing and implementing more environment-conscious payment solutions for now and the future. This article will consider the importance of sustainability in the payment industry and will discuss how e-wallets, contactless payments, and other ‘green’ payment methods can pave the way to a brighter future.

The Importance of Sustainability

Thes effects of climate change are causing great harm not to our ecosystems and to people’s lives and livelihoods. According to a report from the Office of the United Nations High Commissioner for Human Rights, these changes can impact everything from cultural rights and the right to self-determination to the right to health and life itself.

The payments industry is one of many that should consider its role in the ongoing climate crisis, as a recent report from Osborne Clarke makes clear. Today’s credit and debit cards are mostly made from non-recyclable polyvinyl chloride, or PVC, withEMV chips made from glass and circuitry, materials that do not degrade and are bad for the environment.

Furthermore, the payments industry uses a significant amount of energy to process digital transactions. According to Osborne Clarke, three-quarters of the energy used by the industry goes towards processing digital operations, an effort that relies heavily on mobile and cloud infrastructures.

Some steps have already been made to address these concerns. In the next section of this article, we’ll consider how sustainability and environmental standards are beginning to shape payment technologies in Europe.

Sustainable Payment Solutions

Sustainability in the payments industry takes many different forms. From the use of recyclable materials in eco-friendly payment cards to the implementation of renewable energy in green data processing centres, there are many ways we can lessen our environmental impact.

In this article, however, our focus will be on payment systems and methods. Read on to find out more.

‘Green’ Payment Systems

When we talk about ‘green’ payment systems, we refer to systems that make it a priority to mitigate their ecological impact. Digital methods of payment are already a step in the right direction, as cashless technologies are more energy-efficient, eliminating the need for transportation and saving the overall cost to the environment.

With that being said, these methods still require a great deal of electricity to power them — electricity generated in large part by fossil fuels. To combat this, companies can:

• Use and promote renewable energy sources.
• Reduce paper usage, water consumption, and waste production.
• Recover and recycle waste — i.e., from shredded banknotes.
• Improve both material and energy efficiency.

Some of the world’s leading payment networks are already taking steps in the right direction. Mastercard and Visa are two such examples, with both companies having made the transition to using 100% renewable energy sources. Other examples of climate-positive action these influential brands have taken include Mastercard’s Carbon Tracking product and Priceless Planet Coalition initiative, and Visa’s dedication to carbon neutrality.

Eco-Friendly Payment Methods

There is still much progress to be made regarding sustainability in the payments industry, but eco-friendly payment methods are steadily being adopted by a greater and greater number of people. E-wallets and contactless payments are two such methods; according to a report from the European Central Bank, the number of cashless payments rose significantly from 21% in 2016 to 41% in 2022. With a growing interest in central bank digital currencies across the entirety of the continent, it seems likely that this shift towards digital methods of payment is only likely to increase in the coming years.

Additionally, many banks across Europe have launched or are currently in the process of launching ‘green’ cards; the Tred and Wise eco-friendly cards are both examples of this. Santander Bank has also accelerated the rollout of cards made from sustainable materials, promising that all bank cards in the Europe region will be eco-friendly by 2025.

More research is required to determine how we can continue to mitigate the environmental impact of the payments industry, but the methods and systems described above at least have us moving in the right direction. While the work is far from over, giants in the industry have proven their dedication to it, which is most encouraging.

Conclusion

The consequences of climate change are not a matter of debate; however, if we act today, we can still mitigate our impact on the planet and safeguard its future. For this to be actualised, we must enact real change, and we must do so now, across all industries. This article has explored the various ways in which the European payments industry in particular is being shaped by these growing climate concerns.

Eco-friendly payment systems and payment methods may not be enough to single-handedly save our planet, but they are a welcome step in the right direction. The more companies that choose to ‘go green’, the better — and it’s a sure thing that their future customers will agree with that, too. So, we can expect to see a growing emphasis on environmentally-friendly solutions in the payments industry going forward as Europe rises to meet the challenge of climate change.