September 17, 2024, 8:31 am | Read time: 4 minutes
The differences between card payments and cash are usually quite obvious. However, a new study reveals an aspect many may not even have considered.
Who hasn’t heard the question in a restaurant: “Cash or card?” As a rule, consumers can pay outstanding amounts by card or cash in everyday life, whether in restaurants or when shopping for groceries, for example. Both options have their advantages and disadvantages. However, very few people are likely to think about environmental protection. For a new study, a group of researchers took a closer look at this factor.
Card payments and cash have a very different impact on the environment
According to an analysis by the Deutsche Bundesbank on payment behavior in Germany, cash is still prevalent. However, its usage figures are declining. In the meantime, 44 percent of survey respondents preferred electronic means of payment, and only 24 percent preferred coins and banknotes, while the remaining were neutral.
The fact that the majority, therefore, prefer card payments to cash is not a bad idea. Not only is the process faster and more convenient – it is also more environmentally friendly. At least, that is the conclusion of the study by Oxford Economics, which was conducted on behalf of the European Digital Payment Industry Alliance (EDPIA). The study focused on Germany, Finland, and Italy.
In their research, the experts found that an average digital payment directly at the point of sale (e.g., at the checkout) in Germany emits an estimated 3.06 grams of CO2. In contrast, a single cash payment is said to correspond to emissions of 18.07 grams. For comparison, In Italy, the values are 5.39 grams (card payment) and 11.50 grams (cash), respectively, and in Finland, 2.20 and 51.80 grams.
Paying in cash is as harmful as living for a minute
In general, the study states that the environmental impact of both payment options per transaction is relatively low. For example, a cash payment in Germany is said to emit about as much carbon dioxide into the air as a person produces in one minute.
In Finland, paying with cash is comparable to streaming Netflix for 60 minutes in Europe. This value is estimated to be around 55 grams. However, the widespread use of card payments and cash means that the total CO2 emissions add up considerably.
Nevertheless, in their conclusion, the scientists explain that the entire digital payment system only accounts for between 0.0023 and 0.0082 percent of a country’s total CO2 emissions. For cash, the figure is around 0.024 to 0.041 percent. Taking the CO2 emissions of a digital transaction from all the countries examined together would correspond to a standard Google query (consisting of two searches and three page views).
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What those responsible can improve
Even if the share of the overall environmental impact is said to be relatively low, there are still ideas for improvements, both for card payments and cash. In the digital sector, particular attention should be paid to the production of payment terminals and cards. This is because this is where the greatest environmental impact is created. This is caused, among other things, by the use of land and the consumption of water and fossil resources.
To counteract this, it is advisable to keep payment terminals in use for as long as possible. This would have a more positive impact than less material-intensive terminals or the recycling of payment cards. The operation of data processing centers could also become more environmentally friendly by relying on more energy-efficient cloud solutions. Of course, paper receipts for card payments should be avoided wherever possible. And doing away with cards altogether would also help.
ATMs made from better materials and used for longer can improve the carbon footprint of cash. In the future, those responsible should also pay attention to better materials in coin production. The distance traveled by cash is also critical, as it has to be physically transported to banks and ATMs, resulting in further emissions. Finland stands out in this respect due to its lower population density. One solution could be to withdraw cash in stores to avoid additional physical infrastructure.
The researchers admit that their study is not perfect. The figures are from 2022 and only apply to Germany, Italy, and Finland. Changes since then could already cause significant deviations in the results. In addition to other factors, there are also problems with the availability of various data, which is why assumptions also play a role. Therefore, further research is needed to validate the results.