Consumer Attitudes Shift Further Towards Sustainability in the Payment Cards Market

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By Sam Gazeley | 1Q 2022 | IN-6436

As the push for more sustainable business practices continues, banks and financial institutions are looking at ways to revise the smart card.

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COVID and COP26 Pressures on the Payments Industry


Sustainable and environmentally friendly smart card materials have been present in the market for a considerable number of years without gaining permanent and significant traction. Now, with an increased awareness of the global ecological situation and a growing eco-conscious consumer base, the smart card market and major ecosystem players are looking to make sustainable substrates and practices a mainstay.

Primarily focused within the payments and banking market, sustainable and alternative substrates to PVC open a number of opportunities for the major ecosystem players. It provides banks with a way to offer alternative materials that appeal to end users, who are conscious of the environmental impact of the cards they carry and demonstrates a bank’s or financial institution’s willingness to take seriously their role of corporate responsibility. End users can sport a payment card that is made of a sustainable material, such as PLA (polylactic acid) or reclaimed ocean plastic and be seen as involved in preserving the global ecosystem. For smart card personalization solutions providers, a market opens for personalization solutions, which caters specifically to myriad requirements of alternative and sustainable substrates where typical PVC personalization equipment may not function to its full potential.

This was already in progress before the COVID-19 pandemic began, as payment regulators and financial institutions had already started connecting sustainability to their corporate purpose and actions in line with sustainable practices from other markets. Coupled with initiatives from Mastercard to reduce first-use PVC in the payment cards market, and after COP26, the momentum towards ecological practice in payments is only accelerating, making it the flagship smart card market for a sustainable roadmap.

Shifting Consumer Attitudes Towards Ecological Practice


As the pandemic has provided consumers ample time to stop and think about the consequences of excessive consumption and unsustainable business, there has been a paradigm shift in expectations that users and customer have about the businesses and organizations they transact with. This includes reflecting more on environmental sustainability concerns as many consumers, especially in Western developed economies, now actively choose to avoid single-use plastics in pursuit of a more sustainable lifestyle, something which is picking up speed considerably in the payments market. However, this is not to suggest that only consumer attitudes are pushing financial institutions towards sustainable practices, since the COP26 UN Climate Change Summit saw around 450 banks committed to accelerating the move to a reduced output of carbon and protecting the global ecosystem.

With payment cards now an essential instrument for everyday life, banks and financial institutions are proactively responding to growing consumer demand for more sustainable payment cards made from materials such as recycled PVC, reclaimed ocean plastics, PLA, and PETG.

As a document, the payment card is a visible and clear physical link between the brand of the bank itself and the customer. With a huge number of payment cards in circulation around the globe (over ten billion in 2021) and the majority of these constructed of first-use plastic, there exists a real opportunity for a bank to demonstrate its commitment to a more responsible and sustainable future. It is important to state that a shift in payment card substrates is not the silver bullet to finally address the issue of sustainability in the smart card market; however, it can become a clear signal of intent as financial institutions can look outside of the card form factor towards other areas of the ecosystem, such as personalization, carbon offsetting, and investment into ecological movements.

Part of the rising demand for sustainability from today’s consumers means that there is an inherent expectation that the banks that consumers transact with must play a positive role in driving socio-environmental initiatives, with the consequence of boycotting and moving to competitors if they do not see their values reflected in everyday practice. Financial institutions are beginning to latch onto this now, understanding the importance of connecting positively with customers on this global issue and issuing payment cards, which are physical brand representations of the bank themselves, increasingly constructed of sustainable materials as a tangible expression of their bank’s commitment to a sustainability agenda.

Crypto and Digital: Help or Hindrance?


With the clear and present pressure to drive sustainable approaches in the payments market, and with increasing movement from regulators, banks and issuers may explore the options of pivoting away from the physical payment card and toward digital only payment instruments. However, this has the potential to be a poor choice as the prime example of cryptocurrencies such as Bitcoin or Ethereum have demonstrated that inadequately designed digital payment solutions can have a negative impact on the environment due to the exorbitant consumption of energy.

Many neo and challenger banks have begun to issue digital payment cards as a priority, before issuing physical payment cards. Shifting to digital payment cards via digital wallets places a greater stress on cloud and mobile infrastructures which are known to have a high impact on environmental sustainability, though the impact of such solutions needs further investigation as to how it measures up against the manufacturing, personalization, and issuance of physical cards.

Cryptocurrencies, while becoming increasingly popular, still operate in somewhat of a liminal market space, unable to find economic legitimacy. The primary fear from the perspective of a government is that it will erode control over their nations currency, while the banking sector is concerned it will undermine their industry. Despite this, there is significant movement from some countries who are moving towards legitimizing cryptocurrencies as a Central Bank Digital Currency (CBDC). Another interesting development is that neo and challenger banks, which are well placed to demonstrate sustainable practices, are increasingly including value-added services such as crypto trading which seems to convey a mixed message to a consumer looking to transact with a financial institution which reflects their sustainable values.

Of course, the link between cryptocurrency and energy consumption is only negative due to the continued global reliance on fossil fuels and non-renewable power. Indeed, to shift consumer attitudes to cryptocurrencies and position them as a positive, developments will need to continue as it relates to renewable energy production. However, some nations have forged an advantage in this market space. Paraguay, for example, generates almost all of its power nationwide from hydroelectricity, meaning that cryptocurrencies mined in-country will sport a much lower carbon footprint than that of non-renewable energy. As such, Paraguay has positioned itself as the cryptocurrency paragon of Latin America and it is likely, as developments continue in renewable energy, that other nations will seek to pursue this avenue.