Green Payments: How Digital Payment Systems Contribute to Sustainability

We all are aware that the global temperature is rising. While the earth’s climate has been changing since it was formed, the current warming is happening at an accelerated rate that has never been seen in the past 10,000 years.

Hence, sustainability has become a critical focus for many as it can reduce the effects of climate change. So, every industry is now developing various ways to become sustainable, minimize carbon footprints, and conserve energy.

The payment industry is no different.

In fact, it’s one area where sustainability has made significant improvements in the last few years. As the traditional payment method impacts the environment, more and more businesses and consumers are opting for green payment solutions.

This article will explore how digital payment systems contribute to sustainability and how you can join this movement. But before that, let’s quickly understand how the traditional payment method impacts the environment.

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Impact of the traditional payment method on the environment

Traditional payment methods involve bills and coins, which involve physical bill production. This requires high energy consumption at data centers, chemical usage, and paper pulp production. Traditional payment methods also include various credit and debit cards, creating a lot of plastic waste.

• Extraction of resources like copper, nickel, zinc, etc, that are used in coin production
• Harvesting and cutting down of trees along with chemicals for bill production 
• All the currency production units have a heavy consumption of energy
• Traditional currencies use significant amounts of water for metal refining, printing, paper production, etc. 
• Heavy amounts of plastic and chemicals used for card production

Needless to say, traditional payment methods heavily impact the environment.

The solution?

Green payments.

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What are green payments?

Green payments are a sustainable and effective method to reduce carbon footprint. Over the years, some great eco-friendly innovations have been made that can significantly reduce environmental impact.

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Benefits of green payments

Green payments have many benefits that contribute positively to sustainability:

Environmental impact

Green payments significantly reduce carbon emissions and consume less energy and resources than traditional payment methods. Since notes, coins, and cards are not printed and transported, green payments are sustainable.

Cost savings

As you save energy and reduce waste, you also save costs in the long run. So, if you are still contemplating switching to green payments, this is your cue!

Compliance regulations

Global climate change is a serious concern, and many organizations, including various governments, are taking active measures to promote sustainability. For example, the UAE aims for net-zero emissions and sustainable practices.

It launched the UAE Energy Strategy 2050 to reduce emissions and contribute to renewable energy. As a part of this program, it also launched the UAE Green Agenda 2030 to transition to a green economy. Switching to green payments can help you adhere to compliance regulations and guidelines. 

Build a positive image

Finally, by building a culture of sustainability, brands can make a positive image for themselves and attract customers who care about the environment. 

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Key innovations for sustainability in payments

As sustainability is becoming a primary concern worldwide, we can experience various innovations that reduce wastage, promote energy conservation, and minimize carbon emissions.

The payment industry is not far behind, and we can witness some key innovations in this field. In fact, 49% of small and medium business owners in the UAE already offer green payment options as a growing customer demand. This will only see an uptick in the current months.  

Digital wallet and contactless payments

With digital wallets and contactless payments, we have significantly reduced the use of credit/debit cards, thus reducing plastic waste. This has also reduced the need for paper receipts while streamlining the entire payment cycle. 

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Mobile payments

Mobile payment is another key solution for sustainable payment that’s gaining popularity. As smartphone and internet usage is on the rise (In 2023, 10.07 million people in the UAE had internet connectivity while 9.69 million people had mobile phones out of a population of 10.17 million), mobile payments are becoming a common way of payment.

They significantly reduce carbon emissions, tree cuttings, and paper waste and decrease energy consumption. Mobile wallets like Apple Pay, Google Pay, and Samsung Pay are accelerating consumer adoption of sustainable payment methods.

Mobile payment is not limited to smartphones but can be integrated into various payment solutions, including the web, smartwatches, and wearables like fitness trackers and rings, offering consumers more choices to make payments sustainably. 

QR code payments

QR code-based payments are another green payment method that is gaining traction, particularly in Asia. Generating a QR code is easy with platforms like PayBy. All you need to do is create a merchant account, access the QR code generation feature, and you’re ready to accept payments from customers in a sustainable way!

Biometric authentication

Biometric authentication is a revolutionary green technology that promotes sustainability in the payment solution. With biometric authentication, you can significantly reduce the use of credit and debit cards, which in turn reduces plastic waste and the consumption of raw materials and energy needed for their manufacture. For example, by partnering with PayBy, you can easily enable customer biometric verification.

Blockchain and cryptocurrency

Blockchain is a decentralized and transparent payment technology that can process payment without any intermediaries' intervention. It's fast, efficient, and, above all, a sustainable digital solution. It reduces transaction costs and significantly reduces carbon footprints.

Cryptocurrencies are considered environmentally friendly because they don't need to be printed and can operate within renewable energy-backed networks.

Cloud-based payment system

Cloud-based systems are energy efficient compared to traditional data centers as they share computing resources. This enables efficient server capacity utilization, thus reducing energy consumption and carbon emissions. Additionally, they offer scalability and flexibility, which further encourage businesses to adopt cloud-based payment systems.

Green data center

Payment processing consumes substantial energy. So, companies are focusing on investing in renewable energy sources for their green data center. 

Eco-friendly payment cards

Many banks and financial institutions are now developing eco-friendly payment cards made from recycled materials and biodegradable plastics.

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Future of green payments

As new green technologies emerge and regulatory guidelines become stringent, businesses and consumers can expect to adopt green payments more widely.

For example, as the Internet of Things (IoT) advances, it will be crucial to enable more devices to interconnect for a smoother payment ecosystem, minimize carbon emissions, and reduce energy consumption.

International organizations like the World Bank and the United Nations have played key advisory roles and emphasized climate concerns. The annual sessions of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change show that green payments are now a global agenda.

The government established the Network for Greening the Financial System (NGFS), a global association that promotes sustainable payment solutions.

As more customers adopt sustainable payments, more businesses will offer green payment solutions and vice versa. In the coming days, we can expect more sustainable payment usage in healthcare, education, government services, etc.

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Adopting sustainable payment solutions with PayBy

If you’re concerned about protecting the environment and want to adopt green payment solutions, partnering with PayBy can be a great idea.

With solutions like PayBy, you can integrate green payment methods with a virtual account and digital wallet or a payment gateway, direct pay, QR code payments, etc.

PayBy is licensed by the Central Bank of the UAE and has received the highest financial service approvals to conduct Stored Value Facility (SVF) and Retail Payment Services (RPS) operations. It is also trusted by some of the leading brands in the UAE. 

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