Have you ever considered the environmental impact of payment?

“Environmental change is widespread, rapid and intensifying” according to IPCC

In the Navigating Digital Payments report published recently by the Worldline Discovery Hub, a chapter is dedicated to how payments can be made greener.

There is no doubt that this is a pressing issue. The Intergovernmental Panel on Climate Change (IPCC) recently published its latest findings, and it doesn’t make for pleasant reading. Their major conclusion is especially worrying as it states:

This basically means that the 2015 Paris Agreement requirement for countries to work together to significantly bring emissions down is failing. According to the IPCC, environmental “change is widespread, rapid and intensifying”.

Climate change impacts regions in various ways: increased rainfall, drought, rising sea levels etc. Each of them has huge impacts on the fragile interdependencies of our ecosystem. Biodiversity is threatened and ultimately the survival of our planet is at stake.

On a more positive note, we are now in a situation where both public and business consciousness has been prodded into action and there is finally a general recognition within industries that everyone must and can do their bit. This is of course also the case within the payment industry.

Lowering the carbon footprint: a good but still insufficient start

Companies in all industries are asking themselves “what can we do to do our bit?” We are bombarded with messages about CO2 emissions and the urgency of reducing our carbon footprint. Concerning payments, there have been few significant studies and stakeholders have mostly focused on lowering their own carbon footprint.

Here lies a problem. Whilst this is a well-intentioned start from individual stakeholders, it is not enough. Carbon is not the only component of our ecological footprint. Other gases such as methane, consumption of resources and energy, production of waste, etc. are all adding to an overall ecological footprint and pushing the planet beyond its limits. Moreover, the planet is so far along this path of destruction that we all need to find ways and means to repair the planet, not merely prevent the increase in damage. This sounds big and almost unachievable. Hence the need for a call to global action.

If you can’t measure it, you can’t improve it

The need is then to measure the environmental impact of payments before trying to reduce it. As the saying goes: “if you can't measure it, you can't improve it”.

Measuring the environmental impact of cash is a tricky issue. Of course, we use coins and banknotes, but we also require the infrastructure that provides and delivers money to the various economic stakeholders as well.

The impact of digital payment is even harder to assess. Measuring the environmental impact of an object, like a credit card for example, can be easily done. However, for a digital payment, which is not an object but rather a completely abstract notion, measurement  is not such an easy task.

Building on the operational aspects that  make up the “act of paying” itself., we can see all stakeholders and dig deeper into the parts that take place before and after the payment itself. Someone needs to manufacture POS terminals, smartphones and cards and ship them to the right place. Others have to set up the datacenters and the network infrastructure. And then others will, hopefully, take care of recycling the hardware and the infrastructure when they reach their end of life.

All these parts need to be considered, and this end-to-end perspective is what is called the Life Cycle assessment.

The good news is that some studies already exist and bring answers to these questions. If you want to learn more about them, have a look at our dedicated chapter about this in Navigating Digital Payments report, published recently by the Worldline Discovery Hub.

Success can only be collective

In our next blog post, we will explore the role that the different actors of the payment value chain can play to help reduce the environmental footprint of a payment. Indeed, according to us and many others, given the complexity of the overall value chain and its interdependencies, the only way to be successful is to join forces and be collective. Stay tuned!

Contributors

The four authors of this blog post are members of Worldline Discovery Hub, leading the track focusing on Green Payments and Sustainability by Design. They aim to help Worldline and the overall payment industry find the right balance between customer and user satisfaction, and sustainability.

• Louise Freer Jones has a track record in competitive and market intelligence positions and is currently an advisor within Financial Services,
• Olivier Maas is part of Worldline Labs. He is involved in R&D activities on environmental topics,
• Laurent Rousee is part of Group Operational Performance initiative, and in charge of the strategic offshore demand management,
• Anne-Claude Tichauer leads the merchant interaction ecosystem strategy within Merchant Services and mostly focuses on data leveraging and UX in order to offer merchants best-in-class services beyond payment.