Are digital payments a more sustainable and environmentally friendly way?
Much of the focus on conscious consumption is on what we buy, not necessarily how we buy it. However, the way you spend your money, literally, can have an impact on the environment. Therefore, in this post, we will focus on the advantages of digital payments for the environment
Payments aren’t something we tend to think about a lot in terms of sustainability. However, the ways in which we traditionally pay for things can have detrimental effects on the environment. Metal and paper consumption can be wasteful as used in currencies, and unfortunately the new alternatives don’t look much better. According to Forbes’ look at the UK’s new currency, plastic polymer banknotes currently in circulation are more harmful (in terms of carbon dioxide emissions) than banknotes - despite the fact that they are more recyclable.
This raises the question of whether the continued transition to digital payments may eventually bring some environmental benefits. In short, will electronic transactions really bring about significant and sustainable change?
The most obvious benefit comes from the fact that digital transactions have the potential to eliminate physical cash in one form or another, and eventually even credit cards. At the moment, cash is slowly but surely receding into the background, many consumers are already using cards to make quick and easy payments that are in person facilitated by modern POS machines.
However, as people become more accustomed to purely electronic services - which primarily function as mobile credit cards - the need to carry even physical cards decreases. We are clearly moving towards a new reality in which there may not even be a need to issue physical cards in the first place.
This transition will be supported in part by the obvious benefits to companies, as it is widely recognized that electronic transactions can be faster and easier. For example, companies that typically adopt digital payment methods can reduce costs, increase transaction rates, gain payment data and insights, and even expand international transaction activity.
At the same time, there are clear benefits to consumers as well. This is partly due to convenience and efficiency; Digital payments are simply often faster, and they save consumers having to carry cards and cash. Additionally, digital transactions can provide contactless payment methods that are becoming an increasingly preferred option with consumers, particularly in the post-pandemic market. In fact, when The Financial Brand specifically examined consumer preferences regarding the 2020 pandemic, it found that the evolution toward contactless methods has accelerated, as people look for ways to make purchases with minimal risk. This would only stimulate the adoption of modern payment methods. This clearly results in benefits to the environment.
However, there are some potential downsides to the general environmental damage that can come with digital devices, such as phones, wearables and point of sale devices that will include new payment systems. There are also concerns about the environmental impact of cryptocurrency mining, which will play a role if and when cryptocurrencies become a larger factor in digital payments. But these risks exist on their own. This means that the move towards electronic transactions often does not cause a proliferation of hardware or crypto-mining projects that can harm the environment - it is just exploitation of them.
Overall, it makes sense at this point to initially view digital payment as a positive development for sustainability efforts, and the payments industry is heading towards a greener future.
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