Filenews 10 July 2024 - by Theano Thiopolou
Digital transactions are more environmentally friendly than cash, according to a report by the European Digital Payments Industry Alliance on the environmental impact of electronic payments.
It was found that in 17 of the 18 impact categories subject to the analysis, digital payment has a lower environmental impact than cash: a cash payment emits CO2 as much as 2.1 digital payments in Italy, 5.9 in Germany and 23.5 in Finland.
This means that if an average consumer chose to pay only through digital payment, in one year they would save the CO2 equivalent of 37 single-use plastic bags in Italy, 49 in Germany and 74 in Finland. The impact varies depending on the development of the country's digital payment infrastructure. Finland, for example, is the most advanced among the three countries, with the lowest use of cash.
According to the report, there has been significant uptake of digital payments across European society in recent years. This trend has enabled consumers and store owners to benefit from seamless and secure transactions while mitigating the payments industry's environmental footprint. However, the lack of an EU-wide harmonised approach to digital payments creates obstacles.
The findings of the study recorded in the report show that the following policy measures are key to enable a significant reduction in the carbon footprint in the payments sector:
1) Facilitate the development of sustainable payment infrastructure, through increased use of electronic payments, support for small and medium-sized enterprises in accepting digital payments.
2) Making digital infrastructure more sustainable by increasing the lifespan and recycling of payment cards and terminals, promoting cardless payment solutions, and boosting the energy efficiency of data centers and cloud infrastructure.
3) Facilitating green behaviour by businesses and consumers, through public awareness campaigns focusing on the social and environmental benefits of digital payments.
The implementation of these policy recommendations will require coordinated and joint action by the various industry players involved in a digital transaction, from terminal manufacturers, payment service providers and banks, to policymakers and consumers.
However, only a few Member States have so far presented national initiatives to promote the use of digital payments and there is no harmonised approach at European level.
Incentives to businesses
EDPIA encourages regulators to take a more direct role and develop initiatives to actively promote sustainable digital payments.
In 14 of the 19 euro countries, cash remains the dominant form of payment. The report notes that the European Commission should ensure tax advantages for SMEs in accepting digital payments and subsidising merchants for terminal costs.
This could also be supported by a public/private project such as 'Poland's cashless programme', which supports entrepreneurs to accept cashless payments by providing them with free, commission-free terminals in the first year.
