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Exclusive: Open banking payments generate 4x fewer carbon emissions than cards, GoCardless finds

Card transactions are responsible for over 400,000 tonnes of carbon emissions each year, switching to account-to-account payments could reduce that to just 100,000 tonnes.

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Zbynek Burival/Unsplash.

In the race to embrace modern payments, turns out there’s yet another good reason to switch to open banking payments and finally ditch your bank card. 

It’s better for the environment.

That’s not just because bank cards are made from plastic, which certainly adds to their carbon footprint, but also because of the more complex nature of card payments, making each transaction more energy-intensive.

According to new research from payments giant GoCardless, research that AltFi can exclusively reveal, a typical card transaction generates around 0.53 grams of CO2 emissions versus 0.13 grams for account-to-account payments.

The reason is the convoluted eight stages involved in a typical card transaction, as data bounces between the merchant, payment processor, card provider and bank.

While the data involved are microscopic, around 75 bytes according to GoCardless, times that by eight jumps, and then by the 787.5bn card transactions made each year, and you have a vast amount of data that needs to be processed.

In total, GoCardless estimates that global card payments result in over 472,000 GB of data—or nearly 500 Terebytes—and the energy needed to move all that data is what gives card transactions a footprint of 416,742 tonnes of CO2 emissions.

Combine this with the 293,525 tonnes of CO2 emissions generated by creating all those cards in the first place, and you have a giant environmental footprint.

“Our recent study reveals it’s not only what we buy that can make the difference -- how we pay for things can play a part too,” said Ben Knight, head of environmental sustainability at GoCardless.

The answer given by GoCardless is to switch to a less energy-intensive payment method. 

Account-to-account payments or open banking payments only require data to be sent between two parties, which would reduce the carbon footprint of card payments to just 104,222 tonnes of CO2 emissions.

Add to that the fact that no plastic cards are needed, and in Knight’s eyes, there’s a clear winner.

“This won’t be a silver bullet; there are many factors at play, including the energy the payment company provider uses to process their transactions,” he says.

“We also recognise that changing the way you pay may seem like a small step in tackling these big environmental issues. But one small action multiplied by millions of people can add up very quickly.”

It might just be a winning argument. In a recent YouGov survey of 2,258 UK adults, GoCardless found over half (57 per cent) of respondents would be willing to switch payment methods if it meant reducing their environmental impact.

Although, just one in six (18 per cent) would be willing to give up paying by card entirely, so there might still be some persuading needed.

The full GoCardless research report 'Payments, plastics, people and the planet' is available on its sustainability page here shortly, and Knight will be joining AltFi to discuss some of his findings at AltFi’s Festival of Finance 2022 this Wednesday.

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Ben Knight

Head of Environmental Sustainability


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