The ecological impact of the disappearance of cash

As we embrace digital payments, the number of digital transactions is growing at an annual rate of almost 14%. Some countries, such as Sweden, are even on the verge of becoming cashless economies. This new trend has many environmental specialists wonder what the ecological impact of the disappearance of cash would be.

Beyond the ethical questions posed by cashless payment solutions – liberty of choice, respect of privacy and exclusion of vulnerable people – digital economies also raise the issue of their impact on the environment. First believed to be eco-friendly, the death of cash could in fact lead to increased carbon emissions, with digital transactions exclusively relying on a polluting industry.
We all appreciate the convenience of cashless payments: no need to wonder if you have enough change, to withdraw cash at an ATM or to look for coins. Cashless payments are quick, efficient and effortless. Yet, there is one thing they are not: good for the environment. Indeed, cashless payment solutions require both to manufacture devices and use data centers and communication networks to operate, and these industries are among the worst for our planet.
Let’s focus on data centers and communication networks. They allow the traffic of data as well as their storage. When you use an electronic device to pay, the information will be processed by these centers and then stored for a long period of time. These centers are particularly polluting due to the energy they consume to function: their power and cooling systems run 24/7. In 2016, data centers worldwide used 3% of the global electricity production – over 40% of what England consumed. With data traffic continuously increasing, data centers will double their electricity consumption every 4 years – meaning we’ll have to build new power plant at a rate we cannot keep. Moreover, more than 80% of the energy we use comes from fossil fuels (coal, oil, gas). Despite efforts to reduce our footprint on the environment and develop renewable energy, a surge in energy demand means we will not be able to decrease our consumption of fossil fuels and, in the next 20 years, fossil fuels will still account for 77% of the global energy production.
In terms of greenhouse gas emissions, data centers currently create 2% of the world’s carbon emissions – a similar share than the aviation industry. Again, scaling up data centers to respond to users’ demand will cause greater carbon emissions. A recent study found that by 2025, the communication industry (data centers, communication networks and the manufacturing of communication devices) will emit more carbon emissions than any country except the US, China and India. As long as data centers rely on polluting supplies of energy, paying with digital transactions means increasing our carbon footprint.
Cash, on the other hand, is transmitted from one person to another without processing data and storing it. Their carbon footprint is therefore less important and limited to the carbon emissions created upon their production and distribution. In addition, governments are working to mitigate these emissions by adopting green approach to cash manufacturing and cash recycling. For example, the government of Canada is using polymer notes – their production releases less carbon emissions than paper note and they last longer - while the Bank of England is turning shredded notes into plant pots and storage boxes.
So next time you pay for something you bought, think twice about the currency – material or digital – you will use. Though cash is not perfect, it remains the greener option when it comes to transactions. Using cash can also be a lever to ensure the digital payment industry works toward preserving the environment by developing new solutions for their technology to pollute less.

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The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

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