Digitalisation is happening at a rapid pace and it is helping companies to be more environmentally friendly, as sustainability moves to the centre of the digital payments ecosystem.
By Jose Luis Martin-Oar — Global Head of Experience Design at PagoNxt Merchant Solutions
Digitisation is enabling companies to reduce their carbon footprint in parallel with increasing efficiency and enhancing financial management.
As the world’s rapid digitalisation continues at pace, fintech and payments will have an increasingly important role to play in the route towards net zero. Driven by demand from ethically minded, tech-savvy consumers, sustainability is beginning to move to the heart of the digital payments ecosystem.
We are constantly looking for ways to be as energy efficient as possible as we aim to reflect the values of society and our customers.
Here we outline how digital payments are key to achieving sustainability goals and outline why merchants must integrate them into their payments mix.
Are digital payments more sustainable?
While all methods of payment have some environmental cost associated with them, payment cards are made from synthetic plastic PVC, which doesn’t biodegrade and produces a lot of greenhouse gas. With fewer data stops, middlemen and the speed of digital payments, it’s estimated that an instant payment can produce up to 80% less CO2.
Take cash for example. Manufacturing bank notes or minting new coins requires an abundance of natural resources, as well as electricity and fuel. Moreover, transporting physical cash between towns and cities requires vehicles on the roads, many of which may be running on diesel. Both manufacturing and distribution will result in the emission of thousands of tonnes of CO2 each year, with a 2021 study suggesting that, based on resources used and CO2 released, for every $1USD produced, the cost to the environment is $0.26 annually per note.
Paying with a virtual card or mobile wallet largely sidesteps these environmental costs. Virtual cards, for instance, avoid producing new plastic cards, as well as couriering them through the mail to customers. Mobile wallets, on the other hand, use pre-existing and ubiquitous infrastructure such as smartphones and mobile networks, reducing the footprint of payments even further.
Both virtual cards and mobile wallets have the added benefits of eliminating paper receipts. According to Climate Action in 2019, every year in the US, paper receipts consume more than 3 million trees, 9 billion gallons of water, and generate the equivalent CO2 emissions of 450,000 cars on the road.
There are a myriad of new, eco-friendly initiatives and plug-ins further driving increased sustainability across eCommerce, too. For instance, there are companies which help customers to mitigate the greenhouse gas emissions associated with the products and services they’ve purchased. Meanwhile, digital POS terminals can enable merchants to support charitable causes they’re passionate about by allowing customers to round up their purchases with donations.
Data as an efficiency enabler
A by-product from the meteoric rise of digital payments is data. Harnessed correctly, this can in turn act as an invaluable resource for merchants, payment service providers and card issuers by offering rich operational insights. The data can be used to optimise processes and facilitate improved decision making that helps brands reduce their carbon footprint. Equally, any revenue saved can be reinvested in ESG initiatives and carbon offsetting.
For consumers, enriched financial data collected over time can help to reveal potential areas to increase the efficiencies that reduce carbon footprints and environmental impact. Equally, merchants can harness the data to deliver added value by helping their eco-minded customer base to make personalised, eco-conscious decisions. This is particularly important during economic volatility.
Financial inclusion, sustainability and sustainable development
Financial inclusions has been identified by the UN as an effective accelerator towards sustainable development goals. In addition to helping combat poverty, financial inclusion can help the global effort towards more sustainable development by facilitating the access to affordable and clean energy solutions or building resilience and driving sustainable investments.
Digital payments are one of the many services which can drive financial inclusivity across the world. As alternative payment methods grow in popularity, millions of formerly excluded and underserved poor customers can use their mobile phone to access previously unreachable services such as payments, transfers, savings and loans. This can help to foster economic empowerment in emerging markets, all while keeping carbon footprints low. The onus is now on supporting merchants in emerging markets to accept new ways to pay.
Digital payments hold the potential to not only push new boundaries when it comes to reducing environmental impact but unlock new revenue streams for merchants. Any merchant that integrates digital payments — and their reduced environmental impact — will hold a wider appeal to both new customers and investors.
Let’s not forget about the physical world
Point of Sale (POS) terminals are becoming increasingly environmentally conscious too. As part of its commitments to making its operations more sustainable, Getnet in Brazil recently launched the first card machine made from recycled parts from waste electrical equipment. Getnet expects to deliver some 150,000 terminals of this type to approximately 20,000 customers across Brazil before the end of the year as part of its commitment to having a positive impact on society and the environment.
We are constantly looking at ways to improve our environmental efficiencies across our entire supply chain. An example is a project we have developed, to distribute our terminals with electric motorcycles, create our terminals packaging with 100% recycled materials or enable transactions with zero paper usage.
Through initiatives like this, we can be as environmentally friendly as possible, from start to finish. We know is a long journey, but we also believe it’s a necessary one and at Getnet we are happy to keep working to enhance our processes to make sure we contribute not only to our client’s sustainability needs but also to be sure we participate as a company to create a better world.
