Green Finance, Member Exclusive

It’s digital, but is it green? The effects of payments on the environment, in 4 charts

  • Payments won't be green until we tackle the emissions inherent to the smartphone industry
  • In 2021 the e-waste generated globally weighed as much as the Great Wall of China.

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It’s digital, but is it green? The effects of payments on the environment, in 4 charts

Within the lifecycle of a penny or dollar, waste is produced at multiple junctions. Moreover, end-user equipment like ATMs adds to the overall energy consumption. Incinerated waste and electricity produced from non-renewable resources contribute to climate change. However, over the last decade, card-based payments have taken center stage, and while one may have expected that our old woes of adding to global waste and emissions would have disappeared, they haven’t. These “digitally advanced” methods are only making the planet hotter.

Unfortunately, in-depth research into the effects of digital payments on the environment is scarce. Current analysis relies on a study done in the Netherlands on the environmental impact of debit card transactions. By analyzing the life cycle of a debit card and observing the surrounding ecosystem, the study found that most consumer-facing equipment, such as the card and terminal, contributed to 90% of the environmental impact. 

Figure 17: Environmental Impact breakdown of debit card payments in the Netherlands in 2017. 

Pie Chart: 
74.6% Terminal 
14.7% Datacenter (mostly energy use)
10.70% Debit card (most card body)

100% Stacked Bar Chart: 

37% Terminal Material 
9% Terminal Transport
27% Terminal Energy 
9% Debit Card Body 
9% Datacenter Energy Use
10% Other
Source: World Line, URL, Pg. 35

Unlike previous speculation, data centers are inconspicuous relative to the waste and emissions produced by consumer-facing parts of the ecosystem. The research also found that in the Netherlands, the impact of a single debit card transaction was equal to 3.78 grams of CO2-equivalents, which is the same as “leaving on a low energy 8W light bulb for one and a half hours.”

Unfortunately, even if we were to make a radical shift towards greener payment cards or alternative methods like card-not-present payments, we wouldn’t be able to effectively cut down on the financial industry’s impact on Earth. The problem goes even deeper. 

Mobile costs

Lotfi Belkhir and Ahmed Elmeligi show in their research that smartphones are the most harmful consumer-facing electronic product currently being used by the payments and financial ecosystem. This is largely because of two reasons. Firstly, the supply chain behind smartphone manufacturing and retail is built upon emission-heavy mining and shipping processes. Secondly, these processes have to be repeated often, because with the rising demand for smartphones, their short lifespans continue to necessitate frequent buying, hence adding to more waste.  

Relative Contributions of ICT Categories in 2010 and 2020

(First value will be from 2010 and second from 2020 for each category)

Tablets: 0% , 0%
Displays: 9%, 7%
Notebooks: 8%, 6%
Desktops: 18%, 7%
Communication Networks: 28%, 24%
 Data Centers: 33%, 45%
Smartphones: 4%, 11%
Source: Assessing ICT global emissions footprint, URL , 2018 , Fig 5, Pg.45

Electronic waste

EEE or Electrical or Electronic Equipment are the primary source of e-waste. In 2021, the world generated 57.4 million tonnes of e-waste. That amount of waste outweighs the Great Wall of China. Sadly, our great wall of waste does nothing to add to the aesthetics of our world and does everything to harm it. Americans throw out over 350,000 cell phones and 120,000 laptops every day. A study by WHO on e-waste found the US to be amongst the biggest e-waste producers in the Americas. According to the UN, about 10% to 40% of all e-waste in America is exported for dismantling. The picture below shows the contribution each country in the Americas makes to e-waste.

E-waste status in the Americas in 2019

Key Facts: 
13.1 Mt | 13.3 kg per capita
e-waste generated

9.4% | 1.2 Mt
e-waste documented to be
collected and properly recycled

10 countries
have a national e-waste legislation/policy or regulation in place

$14.2 billion USD value of raw materials in e-waste 

26.3 Mt CO2 equivalents  potential release of GHG emissions from undocumented wasted fridges and air conditioners

0.01 kt amount of mercury from undocumented flows of e-waste

18 kt 984 amount of BFR from undocumented flows of e-waste

Countries with the highest e-waste
generation per sub-region: 

E waste Generated: 0.1 Mt | 7.8 kg per capita 
Amount Recycled: 1% | 0.001 Mt
Population (in millions): 16
Jamaica 18 kt

Northern America: 
E waste Generated: 7.7 Mt | 20.9 kg per capita 
Amount Recycled: 15% | 1.2 Mt
Population (in millions): 367
USA: 6,918 kt
Canada: 757 kt

Central America:
E waste Generated: 1.5 Mt | 8.3 kg per capita 
Amount Recycled: 3% | 0.04 Mt 
Population (in millions):176

Mexico: 1.220 kt
Guatemala: 75 kt
Costa Rica: 51 kt

South America:
E waste Generated: 3.9 Mt | 9.1 kg per capita
Amount Recycled:  0.7% | 0.03 Mt 
Population (in millions): 425

Brazil: 2.143 kt
Argentina: 465 kt
Colombia: 318 kt
Source: The Global E-waste Monitor, URL, 2020, Pg. 72

But crypto could solve this:

We are moving away from cards and cash, into the brave new world of cryptocurrency – that would be real if it didn’t take so much energy to keep digital currencies up and running. Sabrina Rochemont shared the image below in her research on the environmental effects of payment methods. The grid in the image paints a fuller picture of how each method performs relative to others in terms of its energy consumption, recyclability, emissions, and raw material use.

Grid describing the relationship between various payment methods. 

Going left-to-right
X Axis: Emissions to Raw Materials Use 
Going Top Down: 
Energy Use to Current Recyclability 

1) Cryptocurrency mining, ICT infrastructure such as Data centers, and ATMs are neutral on the X axis and High on the Y Axis. 

2) Point of Sale dominates the Top RIght half 
3) Smartphones are high in Raw materials use and low in Energy Use. (mid right position)
4) Coins are high in Raw Materials Use and are not very recyclable. They are positioned on the bottom right. 
5) Banks notes in cotton or polymer  dominate the lower middle of the grid.
Source: Sabrina Rochemont, URL, 2018, Pg. 20

Turns out, I lied, and this is 5 charts. The final one (see below) shows you the annual energy consumption of bitcoin in comparison to a bunch of countries. It seems that it takes the same amount of energy to keep the lights on in Bangladesh as it does to keep the mining machines humming for Bitcoin.

Bar Chart showing the Energy Consumption of a Collection of Countries and Bitcoin
1) Bitcoin consumes as much energy as Finland, Venezuela, RB and Bangladesh (under 10 Terrawatt hours)
2) Highest consumers of energy are China (over 4000 Terrawatt hours) and United states (just under 4000 Terrawatt hours)
Source: Cambridge Bitcoin Electricity Consumption Index, URL

Apples to Oranges comparisons aside, the energy consumption of the mining industry is huge. According to Jared Huffman, a recent study on cryptocurrency mining operations in upstate New York shows that these activities have pushed up annual electric bills by about $165 million for small businesses and $79 million for individuals. Moreover, congressman Jared Huffman (D-Calif.) and U.S. Senators Elizabeth Warren (D-Mass), Sheldon Whitehouse (D-R.I.), Edward J. Markey (D-Mass.) and Jeff Merkley (D-Ore.) and Representative Rashida Tlaib (D-Mich.) have sent a letter which “highlights the effects of cryptocurrency mining on the environment”. Their findings reveal that the industry is responsible for a significant amount of emissions. 

So, what is going to be our magic cure-all to decades of ignoring our impact on the planet? So far, we have none. Unsurprisingly, the only solution is the old one: switching to renewable sources for our energy demands, asking our organizations to switch to greener practices, and consuming mindfully.

If you care about the planet and want to find out more, sign up for our upcoming Banking on the Planet conference, where we will dive deeper into how we can use data to measure climate risks and their mitigation. 

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