Cash or credit? One is better for the planet, study finds

Source: By Xiaoqing Pi, Bloomberg • Posted: Thursday, October 18, 2018

Consumers can help save the environment by choosing card payments over cash, according to a study by the Dutch central bank.

The energy consumed by a debit card transaction could light an 8-watt bulb for 90 minutes, compared with two hours for a purchase using bank notes and coins, the researchers wrote in a working paper published Monday. Their work is based on 2015 data from the Netherlands, where debit cards made up about 99 percent of all card transactions.

With some 19 billion bank notes and 116 billion coins in circulation in the 19-nation euro area in 2015, increased card usage could reduce the region’s ecological footprint. More energy and resources are needed to facilitate cash transactions — copper and tin are used for coin production, transport trucks burn fossil fuel, and ATMs consume electricity.

The environmental impact of debit-card transactions is more focused on a single item: The machines retailers use to process payments account for three-quarters of emissions. If those terminals used renewable energy and weren’t kept on standby mode all day, even more energy could be saved, according to the researchers.

Still, while switching to plastic would be the environmentally friendly option, the impact would be relatively small. Both payment methods only accounted for 0.015 percent of carbon emissions in the Dutch economy.