We live in a world that is all about buying and selling, and thus, we rely on our different payment methods. And believe us, there are many of them available. From the traditional use of paper money to cryptocurrency to the endless supply of digital payment options, there is no shortage of ways to pay for things.
But all this begs the question of how these different payment methods affect the planet. As consumers, we are more aware of the ways that our activities harm or help the world we live in but how do the different payment methods stack up?
The Different Payment Methods
The many different payment methods we use have an inevitable impact on the planet.
- Crypto
Cryptocurrency refers to a currency based on blockchain technology and is one of the newer payment methods around. Cryptos have had a bit of controversy regarding their environmental impact as those tokens based on a proof-of-work consensus need a lot of energy to operate.
However, projects in the crypto space have been working to combat this impact for years and this is often done by switching to a proof-of-stake consensus. Top tokens like Ether did this and many new tokens are following this lead. As Goran Radanovic writes, many upcoming Coinbase listings are based on proof-of-stake, making them much better for the environment.
- Paper/Metal Money
Paying for things using paper notes and metal coins is the most traditional method and while it is still used today, it carries a significant environmental impact. The paper money, naturally, requires a large amount of paper to print every year and this impacts the tree population. We also have to consider the sheer energy use required to fell the trees, print the notes, extract metal, mint coins, and much more.
Using paper/metal money worldwide has a big cost to the environment, especially during periods of deflation and economic crises like the COVID-19 pandemic. During these times, governments print/mint more money to stabilize the economy but this can end up hurting the environment.
- Digital Wallets
Digital wallets like PayPal offer a convenient way for customers to make payments to merchants all over the world simply using computers and mobile devices. And, as several reports have pointed out, eliminate much of the waste and carbon emissions associated with paper/metal money. Because these are done through devices and point-of-sale (PoS) machines, they have much less global warming potential than other payment methods. On top of this, the energy requirements to complete such transactions are generally low.
- Credit/Debit Cards
Credit and debit cards are an interesting example because they simultaneously reduce carbon impact while also creating waste of their own. On the one hand, a credit/debit card typically only needs to be made once and then it can be used for years. Unlike paper money, the average person will only use a few dozen in their entire life. This means fewer emissions from printing, less tree loss, and much more.
But we have to remember that credit and debit cards are plastic and metal themselves. The chemicals used to develop and colour them can pollute the environment in many cases and when these cards expire, they are not usually recycled. Instead, they end up in landfills where, being non-biodegradable, they will spend hundreds of years harming the environment. So while they benefit the planet in one way, they undo some of these benefits in other ways.
- Cheques
Cheques are not used quite as often as they used to be. This is perhaps a benefit as they were not a very green payment method. First, they are made of paper, which means that tree loss, water usage, and other planet-harming activities are needed to make them. This is even worse if a single consumer has multiple checkbooks or if it is their preferred way to pay. You also have to consider the traveling they require. Cheques need to be physically presented before they can be used, and this means lots of travel (likely by car) to pick up the checkbook, deliver cheques, and cash them. Besides not being good for the planet, cheques are much less convenient compared to other available payment methods.
- Bank Transfers
The impact of bank transfers on the environment largely depends on how they are completed. If they are done virtually, there will be some emissions via the data centers used to process them, though this is still lower than the impact of cash. If they are done in person (I.e. deposits into the payee’s bank), we have to factor in the impact of traveling, as well as any paper forms or receipts needed in the process.
How to be More Eco-Conscious While Spending
With the varying levels of environmental impact from all these different payment methods, it is worth looking at the ways to be more green as you spend.
- Use Green Cryptos
As we’ve said, not all cryptos are the same and while some generate a lot of carbon emissions, others do not. If you want to enjoy all the benefits of crypto while still preserving the environment, opt for proof-of-stake tokens like Ether and Solana. These use very little energy and also have many perks such as fast transaction speeds and scalability. There are also cryptos in the market that are specifically designed to benefit the environment, with a portion of their profits going towards conservation costs. These would be a good idea as well.
- Offset Carbon
Because navigating the modern world almost inevitably causes some form of waste, there are more resources than ever before to offset them. Many projects allow you to calculate how much carbon emissions you create, taking into account your travel, living habits, and even your preferred payment methods. After calculating this, these projects can help you offset them for a fee. This money is used to plant trees and engage in other carbon reduction efforts. If you are particular about saving the planet, consider this.
- Save on Paper
Several of the least green payment methods like paper money and cheques have to do with transferring money via paper means. As such, a great way to protect the environment is to cut down on your paper use or eliminate it altogether. If you must use a checkbook, ask for the smallest size possible. Look at every merchant you patronize and try to find non-cash ways of paying for their goods and services. Sometimes, it’s simply a matter of asking at the location or checking online for alternatives.
- Avoid Unnecessary Transactions
Whether you’re using paper or non-paper payment methods, you’re generating more waste the more transactions you complete. And while it might take a bit of work, you’re best off reducing your number of transactions. This can include having one big grocery shop each week instead of smaller ones every day. It could mean buying fewer clothes and making fewer impulse purchases. It could mean pooling together large purchases with friends and saving on endless receipts and payments. Again, it might take a bit of effort but with enough research and the right mindset, it can be done.
- Use Digital Cards
To eliminate plastic use with credit and debit cards, consider using digital cards instead. Many banks allow you to access digital versions of their cards via an app, letting you opt out of getting a physical one. Another option is things like GooglePay and ApplePay that remove the need for physical cards.
While it is not yet the norm, a few digital banks are opting out of providing plastic cards altogether. If you do decide to use plastic cards, look into the possibility of recycling them. Banks like Santander allow customers to send in expired cards for recycling and there are more resources than ever for this.
- Use Your Influence
One person alone cannot save the planet but you can get those you know to take on more green behaviours. If you run a business, for example, you can begin to prioritize digital payments over cash and encourage your customers to use these methods. You can reach out to others in your school, work, and so on to adopt better payment methods and this can go a long way over time. You can also educate your friends about the ways that they can reduce their carbon footprint and even share the tips in this article.
Conclusion
Payment methods are a complicated affair. On the one hand, we need them as they are the way that we navigate the world around us. On the other hand, our choice of payment method might actually be harming the world we live in. As we’ve outlined in this article, different payment methods come with different levels of waste and carbon emissions. But rather than give up on spending altogether, there are a few practical measures we can take. From choosing lower-emission payment methods to reducing our spending, we can make a difference one purchase at a time.
