The payments industry is a sizable carbon emitter and waste contributor, with plastic cards, their packaging and the energy used to process electronic transactions contributing to climate change.
With 7.9 billion people on the planet at the end of last year, there were the equivalent of three credit or debit cards in circulation for every human. That's based on 24.56 billion cards in existence, including five billion cards manufactured and shipped to consumers worldwide last year, said Chris Cantle, executive editor at the industry research firm Nilson Report.
Assuming the weight of a card is five grams, the cards entering circulation last year would add about 55 million pounds of material to the environment "that will eventually need to be disposed of responsibly,” Cantle said.
Waste created by scrapped cards pollutes the environment both in landfills and as debris that ends up in oceans. Meanwhile, carbon emissions from energy used to process transactions and manufacture the cards, whether they're metal credit cards or plastic debit cards, contribute to greenhouse gases in the atmosphere that absorb and re-radiate the sun's energy. Together, it combines to drive other climate change dynamics that are threatening the earth's conditions for life.
The estimated carbon emissions of those cards is close to the equivalent of “500,000 people taking a flight from New York to Sydney,” or 30 billion plastic bags, according to a report from Thales Group, an aerospace and defense company.
Traditional payment cards manufactured from polyvinyl chloride (PVC) contribute a massive amount of landfill waste around the world, Fiserv’s director of product strategy, Jamie Topolski, said in an email.
Nonetheless, properly disposing of cards can “be tricky from a security perspective,” Erin Simon, the World Wildlife Fund’s head of plastic waste and business, said in an email. Cards are made of plastic and the chips in them are made of glass and metal. Companies “could collect them and recycle them but that seems less efficient,” compared to consumers recycling cards themselves, Simon said.
Card packaging and transportation also adds substantially to the carbon footprint of the payments industry. Transporting a card for delivery, especially halfway around the world, can have a sizable impact on the cards' carbon footprint. "Flying a card over 10,000 km as part of an air freight shipment" adds to a card’s carbon footprint, a 2012 report by ICMA said.
Carbon dioxide equivalent (CO2eq) signifies the global warming impact of a product and is expressed in the amount of CO2 emissions caused throughout the product's life cycle. As major economies reopen after the COVID-19 crisis, carbon emissions are reaching pre-pandemic levels, according to a March 2 report by the International Energy Agency.
To tackle the rising credit card pollution, companies are trying to recycle cards. Earthworks Systems, a polyvinyl chloride acetate (PVCA) plastics and card recycler in the U.S., allows consumers to send their debit and credit cards for recycling.
Most credit cards are made of PVCA because the compound gives it stiffness, yet maintains some flexibility, A2A Studio’s creative director, Adam Wahler, said in an interview. A2A Studio, a Stamford, Connecticut-based company, helps financial institutions design and create their debit and credit cards.
“Recycling cards is tricky as they have chips, the plastic is not entirely reusable in some cases, and consumers don't know how to dispose them properly,” Wahler said. “Financial institutions are looking toward cards that are made out of recycled plastic that can be recycled again, but their cost is comparatively high.”
Recycled cards are a relatively new offering in the market and might be expensive ahead of a cost-cutting breakthrough, or until mass production and adoption picks up pace, Wahler said.
“These [eco-friendly cards] have had quality issues in the past, although quality is not as much of a concern because today’s products can be as durable as full PVC cards,” said David Shipper, a senior analyst at Aite Group.
Shipper authored an September 2020 report that surveyed 20 executives at card-issuing companies in the U.S. and Canada to understand how consumer and corporate attitudes are changing regarding environmentally friendly card material. About 80% of the card issuers said cardholders are more environmentally conscious than they were five years ago, the report found.
Card issuers [like Fiserv and ABCorp] that participated in the study are considering more eco-friendly card materials such as ocean-recovered plastic, recycled PVC or cards made from polylactic acid (PLA, which is polyester derived from renewables like cornstarch) that are as durable as PVC cards, the report said. Some 65% of the report's respondents see benefits from using recovered ocean plastic over other options.
“Many issuers see eco-friendly card material as part of their overall sustainability initiatives, and I expect to see more and more legacy and startup card issuers choose an eco-friendly product for some or all of their card portfolio,” Shipper said.
Alternative card materials
The neobank Aspiration has put environmental conservation at the forefront of its business model. The company offers customers the option of having their cards made from ocean-recovered plastic, along with letting them track their carbon emissions through their spending and donate spare change to planting trees.
Card issuers are also considering alternative card materials like metal, which is more durable and tends to be recyclable. For instance, Apple's digital-first credit card, issued in partnership with investment bank Goldman Sachs, also provides customers with titanium physical cards.
Titanium cards are recyclable, and could be considered more “eco-friendly compared to a PVC card with an EMV chip,” Shipper said. However, the cost of producing such a card might hinder mass adoption, he added.
Metal cards aren't new. They've been around since the launch of the legendary AmEx Centurion Card in 1999, but many companies like Teampay, Mastercard and Chase are increasingly offering metal cards to consumers.
The appetite for metal cards has increased in the past few years. CompoSecure, a New Jersey-based company that produces full and hybrid-metal cards, expects to issue 22 million metal cards this year, a 7% increase from 2020, April's Nilson report stated.
But people don't dispose of them properly, so they lay around rusting and polluting the environment, Wahler said. They're not feasibly as recyclable or reusable as PVC cards, he added. Given that, Wahler said he believes the recycled plastic and polylactic acid are better for the environment than metal cards.
If they had all the pertinent information, customers “will always pick an option better for the environment,” Wahler said.
“Recycled plastic cards have a lower environment and economic impact in their production and disposal compared to metal cards made out of steel,” he said.
Ditching cards altogether
As the demand for contactless and digital payments rose during the COVID-19 pandemic, many companies turned to issuing digital-first cards to customers, with an option to add a physical card.
Some 85% of consumers expect digital options when they shop in person, including contactless credit cards, mobile payment apps and mobile wallets, according to a 2021 Visa study. And the number of digital wallet users is expected to exceed 4.4 billion globally by 2025, up from 2.6 billion in 2020, according to a recent study from Juniper Research.
“Digital cards are a great alternative to single-use physical cards, such as gift cards,” Shipper said. “However, if given a choice, consumers are not ready to go digital-only, and will still choose to receive a physical debit or credit card. We are many years away from consumers abandoning their physical card and going 100% digital.”
That was clear in a recent study by payments processor Fiserv in which some 55% of consumers said they preferred physical gift cards, though they also favored cards made from sustainable materials.
Consumers demand change
An April study from Mastercard also found consumers have become more environmentally conscious since the start of the pandemic.
The card giant surveyed consumers from 24 countries and found that “58% of adults are more mindful of their impact on the environment” while “85% said they’re willing to take personal action to combat environmental and sustainability challenges in 2021.”
The changing consumer behavior will put pressure on companies to adapt and innovate to satisfy such consumer demand. They're more likely to “seek out companies that support earth-friendly initiatives or sell sustainable products,” according to the Aite report.
Companies' environmental efforts
Visa and Mastercard, which earn billions of dollars annually from interchange fees as a result of transactions, are taking steps to reduce their carbon footprints, and are urging their business partners and customers to do the same.
Visa transitioned to renewable electricity usage last year and set new sustainability goals for the coming decade in April. The San Francisco-based company aims to have net-zero emissions by 2040, Visa’s chief sustainability officer, Douglas Sabo, said in an email.
The card network partnered with the CPI Card Group in June 2020 to create the Earthwise High Content Card, which is made with 98% recycled plastic and aimed at reducing waste. PayActiv, an employee payments company, offers its customers the Earthwise cards, and Visa "is in conversation with a number of other issuers globally" to offer eco-fiendly cards to their customers, Sabo said.
“Visa’s partnerships in Europe have resulted in the first sustainable cards in some countries, including Ireland, where the central bank introduced a bio-sourced Visa debit card, and in Spain, where CaixaBank launched the first credit card made of 100% recycled plastic,” Sabo said.
In 2018, Mastercard established the Greener Payments Partnership with card-makers Gemalto, Giesecke+Devrient (G+D) and IDEMIA to improve practices in reducing first-use plastic for card manufacturing. “Our aim is to encourage all banks to issue more eco-friendly cards but also to collect and recycle them,” a Mastercard spokesperson said in an email.
The Purchase, New York-based company is working with U.K.-based HSBC and Starling, as well as Spain's Banco Santander to offer eco-friendly cards for customers that are made of recycled plastic.
"European banks have made more commitments to issue eco-friendly card materials, but this is a global trend," Shipper said.
Citi, the world's largest card issuer, aims to cut its greenhouse gas emissions and reduce its water usage by 30% by 2025, according to the bank. It also plans to reduce its greenhouse gas emissions by 45% and reduce its water usage by 30% in the same time frame.