Eco-friendlier services within digital transformation: challenge and opportunity for digital payments

Sebastien Mandron, CSR Officer & Real Estate Officer Worldline, discusses the challenges faced by the payments industry regarding CO₂ targets, how payment providers can optimise digital payments to reduce emissions and what Worldline is doing to support its customers in their digital transformation journeys.

What are the challenges that the payment industry faces regarding CO₂ emissions?

Along with other areas of the global economy, the payments industry faces many challenges regarding CO₂ emissions among other sustainability goals. The effects of climate change are increasingly being seen and discussed, with environmental, social and governance (ESG) goals and reporting being top priority for almost all large global organisations. Decarbonisation and a general trend towards renewables and minimal waste also impact processes and products currently supported across the payments industry.

"There are several major challenges we currently have to meet," says Sebastien. "With cash, for instance, there are high environmental implications, especially regarding ATMs and associated printed receipts and papers. How can payment providers improve the efficiency and lower the footprint of ATMs when cash remains so popular?"

Being so global, payment providers such as Worldline have to be aware of local preferences for payments and access to financial infrastructure. Not all global regions use the same types of payments; therefore, addressing issues across payment types is essential rather than focusing on the perceived 'worst offenders' in terms of emissions and impact. "For instance," continues Sebastien. "In Belgium or France, the use of ATMs varies, as does the physical distance between ATMs. The farther a user has to travel - the greater the carbon impact of that overall usage. So, it's not just about considering the offerings themselves - it's necessary to also consider the infrastructure around them, broader social preferences and changes and providing multiple, realistic solutions."

Therefore, the increased demands of consumers that digital services bring have to be balanced with the necessary steps towards a greener, more sustainable future. Digital payments are also increasing, combining the challenge of expansion and development with lowering emissions and committing to ESG reporting.

Citizen demands and better visibility on sustainable challenges are also a key consideration. Whilst good for driving sustainable trends, they also put pressure on many businesses, that must flex and adapt to meet them. In turn, these businesses require new CSR perspectives in making the right decisions and adjusting their operational approach.

How can digital payment transactions be optimised to reduce their environmental footprint?

As the uptake of digital transactions has been rapid, especially during and since the global COVID-19 pandemic, optimisation opportunities need to be identified and activated. For many payment providers, banks or merchants, doing so can significantly impact their overall environmental footprint and help them align with carbon regulations and global environmental targets.

"A big opportunity for improvement lies within transaction paper receipts," suggests Sebastien. "Despite payments going digital, many merchants, vendors and customers still receive printed receipts, whether they need them or not. By removing this and any other associated physical documentation or by-products of a transaction, payment providers can transfer the associated carbon impact to digital means, which often are much easier to offset through more efficient services and infrastructure."

Furthermore, by reducing the time needed to process a transaction, payment providers can improve efficiency across the entire process. This reduces usage and contributes to lower emissions or power usage for infrastructure and digital systems. This, combined with a shift in mindset towards future-proof, modular and efficient systems and infrastructure, can increase the life of digital services, minimising future resources needed to overhaul or introduce processes.

Digital payment services form only one link in the overall chain. Throughout, there are many opportunities for positive environmental impact or change, from sustainable buildings and energy sourcing to recycled materials and responsive and automated systems. For instance, at the point of sale, physical hardware such as payment terminals can be switched to more environmentally friendly, low-power alternatives. Each stakeholder at each step in the payments chain has a part to play in the shift towards a greener future for all.

What about the environmental impacts of a cash transaction?

Cash vs digital is an ongoing debate. With cash transactions, there are a wider variety of environmental impacts to consider. For instance, the production of coins and notes results in environmental impact depending on the materials used and how they are sourced, printed and distributed. You also need to consider the impact of loss, wastage, storage and degradation.

The way that society interacts with cash also has an impact. For instance, as previously mentioned, using ATMs has a broad and significant environmental impact, as Sebastien details. "For the example of ATMs, you have to consider the distances people go to get their cash - for some countries, this can be very significant. Other considerations include the associated infrastructure for that ATM, power, security, construction, maintenance, etc.; it doesn't start and end with the physical act of using the ATM itself."

While digital transactions are not yet fully optimized on an environmental point of view, stakeholders can more easily switch the resources needed to support the infrastructure and processes to renewables and sustainable methods. Additionally, with a global shift away from cash as a primary form of payment, investing into digital sustainability can have a much more significant future impact. For this, it's essential to consider local differences. For instance, cash remains an important part of local economies in many developing markets and emerging regions. Therefore, also offering solutions to make these processes more sustainable is crucial to supporting a global effort.

How is Worldline engaging in actions to reduce the environmental impacts of digital transformation?

All stakeholders throughout the entire chain must make changes to their processes to meet carbon goals and sustainability regulations. As digital transformation increases innovation and the types and numbers of products and services available, it becomes increasingly important to design and develop new offerings in a more sustainable way.

From changing approaches to shifting mindsets, all aspects of a business need to be assessed to make the appropriate decisions regarding product design and support. For instance, an effective approach is by using a life-cycle assessment. This is a methodology for assessing environmental impacts associated with all stages throughout a product or service life cycle, from manufacture to disposal or recycling.

"A life-cycle assessment is the most advanced method for assessing multiple environmental impacts," says Sebastien. "It's standardised, meaning actions are tangible and realistically implementable, plus it allows for accountability. Returning to the example of paper receipts - why is a receipt provided? How is it provided and manufactured? What happens to that receipt after issuance? These are all aspects that would be assessed and identified."

Utilising a life-cycle assessment can provide eco-design leads, making it easier to identify the areas in which the most impact can be made in reducing associated environmental impacts.

There are many ways in which payment providers and financial institutions can improve the sustainable and eco-friendly status of their services, products and infrastructure. For Worldline, this has included a move from resources that emit unnecessary CO₂ emissions and lowering electricity consumption. Switching to sustainable sources of power is a key aspect of digital transformation - it holds huge potential.

Worldline also works on digital sufficiency - including minimise unnecessary power usage. This can be across the company as a whole. "We are investigating how we can 'switch off' throughout our IT infrastructure and other associated processes," says Sebastien. "All companies can take action in their data centres, IT departments and general company sections to save energy and resources. It requires a broad effort from all business areas to succeed."