Now is the highest time for all industries to join the efforts and provide their best abilities to support meeting the emissions target. Payment industry is not an exception to these efforts.
For simplicity of this blog, let’s assume that digital translates to less emission. In reality - digitisation represents the highest potential for the emission reduction, but it does not deliver anything automatically.
From its very beginning the payments business relies on electronic connections between the payer and the payee. As in many other industries, we have had a less digital limitation, often called “last mile” and it relates to the way the payer identifies him or herself and therefore, how the payment is initiated. Historically plastic cards with the payer information on it, had either a magnetic stripe, or a chip. It is also clear we already have the technology to address this “last mile”. But that’s not all we can do. Here is a list of directions I propose:
Almost all new ways of payment do not require payer to identify him/herself with anything physical other than a mobile device. Today the data, including personal data, is easily migrated to a smartphone. We see rapid growth of tokenization and wallets such as Apple Pay, Google Pay or other ways of payment, that are fully based on the smartphones’ ability to keep data and wireless transfers secure. We, as an industry, have a responsibility to provoke consumers to opt towards such methods where plastic card is only optional, not necessary. The major initiative in this field is to replace card delivery by ability to tokenize it in a wallet. Let me rephrase it as this is important detail: replace, not give an option to tokenize the card that has been delivered. Once a card has been produced – the emission benefit is lost.
Experts say that one plastic card production is an equivalent of 20 g of CO2 emission. We can reduce it by 75-80% by producing the card from alternative materials. If card production is necessary, we should invest in minimizing harm it makes to the environment. All major producers and all major personalization centers are ready to provide such a possibility.
I can only agree to the wide-spread idea that the biggest potential benefit coming from electronic payments is information. Building sustainable business is a chance to materialize such benefit. Payment method, card, wallet, application, aggregates all our payments. Moreover, it can aggregate information on what we buy. From this point we are only one step away from information on what carbon footprint we generated by our purchases. There are functionalities that can translate our list of transactions into carbon footprint. Moreover, a great best practice is to give the consumer a chance to compensate his or her footprint financially.
Each entity, engaged in a method of payment, should also calculate its’ carbon own footprint. It requires collecting information on carbon footprint from all its vendors, cooperants and engage in a constant pressure on reduction. This topic, however, is a separate, long story that requires dedicated focus and exceeds the scope of this blog.
Companies, with PSPs as no exception, should continue investments to migrate processes to paperless and allowing customers to fully interact with the PSP in a digital way and automating internal processes. As this also includes convincing as many customers as possible to utilize digital channels it easily becomes most expensive point in the list.
In summary there is a list of initiatives that payment industry should undertake, if it wants to build a sustainable business. The major powers are digitization and information - these are the foundation of the industries prosperity. Let’s use them for a good cause.