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The environmental impact of digital payments

Digital payments have emerged as a significant force in the payments industry, and with good reason. These transactions are more convenient, more secure, and offer many new benefits for both merchants and consumers. But the digital age also comes with its fair share of challenges. To help merchants tackle the environmental impact of these new payment methods, this article examines the pros and cons of digital payments and the ecological impact of these services.



What are digital payments?

Digital payments are electronic methods of making a purchase. They can take many forms, but the most common forms include credit and debit cards, mobile and online banking, and cryptocurrency. The most widely used digital payment method is credit cards, followed by online and mobile payments. Credit cards allow consumers to make purchases by entering their credit card information and making a payment. This article focuses on debit cards, made possible through debit or direct banking. 



Debit cards allow consumers to withdraw money directly from their bank accounts. This payment method is popular due to its ease of use and widespread availability. According to a report by the World Bank, more than 2 billion people around the globe use debit cards. This popularity, however, comes at a cost. Debit card transactions generate more carbon emissions than credit card transactions because every debit card transaction requires the consumer to type in their PIN as a safety measure.



The pros of digital payments

There are undoubtedly many benefits of using and accepting digital payments for businesses and consumers. Whether you use a

secure credit card reader available here, or you process online payments.

  • Convenience

  • Security

  • No need for cash

  • Low operational cost:

  • Increased sales

  • Reduced carbon emissions 

  • Return of customers

  • Reduced risk of fraud



The cons of digital payments

Hand in hand with the pros of using digital payments and accepting them as a business, are still some valid concerns such as;



  • Privacy issues

  • Poor customer experience

  • Security concerns

  • Fraud risk

  • Interruption in service

  • Lower revenue

  • Large technological products need to be created for physical card readers and payment terminals such as digital kiosks.



The environmental impact of digital payments

Like the environmental impact of all payments, the ecological impact of digital payments depends on which method is used and the merchant's situation. For example, paper-based processes have a high carbon footprint, whereas digital payments can have low or no environmental impact. Paper-based payment methods have very high carbon footprints because they are printed and require fuel to print and distribute. Paper-based payments also require a lot of water to produce. 



Digital payments and online shopping, on the other hand, have relatively low carbon footprints compared to traditional methods. This is because digital platforms don't require fuel or water for their operations and don't generate a lot of waste. However, let's not forget that the high number of plastic cards issued for digital and cashless transactions will need to be disposed of, as will the terminals used to take payments and data servers to handle online payments so that we can expect large numbers of waste in the future associated with old and discarded cards. And this is all before we get to the damage crypto mining causes to the environment with its vast amounts of energy required to generate the currency.