Ecology: The Carbon Footprint of the New Means of Payment

published Feb 20, 2019
1 min read

Carbon Footprint of the New Means of Payment

When we think about ecology and reducing our carbon footprint, suppressing cash might seem like a good idea: no trees cut, no paper used, no transportation and so on. Yet, a closer look at cashless payment means shows that using cash actually produces less carbon emissions.

Over the past few years, the use of cashless payments has surged as new means were developed: not only can you pay with your debit or credit card, you can also use your phone, your watch or your e-wallet. For instance, in 2017, for the first time, the number of transactions made with debit card in the UK overtook that of transactions made with cash.

Mobile payments rose by 328% year-on-year with Brits spending almost £1 billion with their phones. Although using new types of payment might look like the way going forward, cash has not yet had its last word, especially when it comes to protecting the environment.

One argument used to promote cashless payments is that they do not require to cut trees, to produce paper or to use transportation means, and, consequently, pollute less. However, it is not because cashless payment means are digital and can be done electronically that they do not generate carbon emissions or have a lesser carbon footprint on the environment. In fact, it is quite the contrary.

Making a debit or credit card involves using raw materials – plastic, as well as water and transportation means. In addition, once the card is ready to be used, it needs to be sent to the customer using paper – an envelope – and, again, transportation means. A recent study compared the carbon footprint of making a card and that of producing cash and found the carbon emissions of one card were equal to that of 13 banknotes.

Similarly, mobile payments produce high level of carbon emissions and their environmental footprint will continue growing with their extensive use. First, while one needs a phone to use a mobile payment app, manufacturing smartphones has proven to be detrimental for our environment due to its energy, mining and transportation costs.

Between 2010 and 2020, carbon emissions of smartphones, mostly caused during their production process, will jump by 730% and reach 125 megatons – this is equivalent to the carbon emissions of 51 coal-fired power plants in a year. Moreover, the carbon footprint of mobile payments further increases with the use of data centres and communications networks. Experts calculated that the footprint of data centres and communications networks will reach 764 megatons in 2020. In other words, their footprint will equal that of over 163 million cars driven for a year.

Although mobile payment companies are trying to find a way to compensate for their carbon footprint – Google is buying renewable energy credits to make up for its carbon emissions – it is questionable whether such technique really mitigates their impacts on the environment. Having environmental-friendly data centres or finding ways to cut carbon emissions of electronic transactions and electronic storage would indeed be more efficient.

On the other hand, governments and central banks have developed and implemented measures to recycle discarded banknotes and coins and turn them into eco-friendly materials. For example, since 2015, the San Francisco Federal Reserve Bank has partnered with companies across the country to turn shredded banknotes into compost and biofuel. Similarly, the Bank of England is recycling old banknotes into compost.

While scientists worldwide warned against the detrimental effects of a 2°C global warming, thinking straight about our global footprint has become urgent. A deeper look into the carbon footprint of digital payment means reveals that cash might not be that bad after all.

Bio

Bridget Dayton is an independent environmental consultant specialised in accompanying companies and local authorities in their ecological transition