Ethical Banking Europe Insights

Digital Payments More Environmentally Efficient Than Cash, Report Finds

Digital payments produce significantly lower CO2-equivalent (CO2e) emissions than cash transactions, according to a new report conducted in Belgium by Worldline, a payment processing company.

Its life cycle analysis (LCA) study reveals that in-store digital payments emit 14 per cent less CO2e than in-store cash payments, generating 2.45g of CO2e compared to 2.8g for cash.

The study, led by Patrice Geoffron, professor of economics at Paris Dauphine-PSL University, extends its analysis to include the environmental impact of the supply chain and sourcing for cash withdrawals. When considering these factors, emissions from a cash transaction can be 15 times higher than those of a digital payment, reaching 36.8g of CO2e per transaction.

The report examines the entire payment ecosystem in Belgium, including banks, network providers and terminal manufacturers, aiming to identify industry-wide measures to further reduce the carbon footprint of payment transactions.

Recommended actions include eliminating paper receipts, virtualising payment cards, and adopting phone-to-phone payments, which could cut digital payment emissions by 70 per cent to just 0.74g per transaction.

Online transactions were also analysed, with current emissions estimated at 3g of CO2e per transaction. The report suggests that utilising smartphones for payments and authentication could reduce these emissions by up to 93 per cent.

Report suggestions

The report recommends the following carbon optimisation measures to be adopted by different
players across the European payment ecosystem:

  1. Regulators to end the requirement for the mandatory printing of payment receipts for a transaction
  2. Banks to provide digital tokens to virtualise payment cards, rather than relying on plastic cards
  3. Merchants to adopt smartphone-based solutions which support digital payment transactions.

“The payments industry has a number of levers at its disposal to help it adapt to the decarbonisation imperative,” said Geoffron. “These include eco-design, energy efficiency, decarbonised energy sourcing and circular economy mechanisms.”

Sébastien Mandron, CSR Officer at Worldline, also added: “The continuous adoption of digital payments is already bringing a positive contribution to the CO2 reduction ambitions of Europe as they are more efficient than cash from an environmental standpoint. But, beyond this intrinsic benefit of moving towards digital payments, the good news of this study based on Belgium nation-wide data is that there are many more levers ahead to further optimise the digital payment CO2 footprint.

“To fully activate these levers, we’ll need to go beyond what a single company can do by itself and also work collectively as an ecosystem. Associating industry players, banks regulators, policy makers and, of course, citizens around this common goal will allow to promote in the years to come, constantly more CO2 efficient solutions while keeping security and convenience at the highest levels.”


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