Impact of cashless payments
How switching from cash and card payments to digital methods has a positive impact on the environment
Introduction
Switching from cash to digital payments offers significant environmental benefits, especially in Africa’s informal economy, where cash remains the dominant form of payment. A study from Sweden’s KTH Royal Institute of Technology found that replacing cash transactions with digital payments could lead to lower carbon emissions and resource use. Here, we explore the environmental impact of this shift, especially when considering that the average individual in the informal economy makes around 730 cash payments per year, or about 2 cash payments per day.
1. The environmental impact of cash production and use
Producing cash is resource-intensive, requiring water, metals, and energy. The KTH study shows that the environmental cost of producing and transporting cash adds up significantly over time. For an individual making 730 cash transactions annually, this reliance on cash contributes to unnecessary carbon emissions and resource consumption.
Cash production involves mining and refining metals for coins and producing paper and inks for banknotes. Each of these stages has a notable environmental footprint. If a single transaction emits around 2.6 grams of CO2, then switching from cash could save nearly 1.9 kilograms of CO2 per year per person. While this might seem small individually, across millions of people in the informal economy, the environmental impact is substantial.
2. Reduced emissions from cash transportation
Physical cash requires extensive logistics, from secure transportation to ATM replenishment. Armoured vehicles transporting cash contribute to carbon emissions, particularly in urban areas with high transaction volumes. A report by the European Central Bank calculated that secure cash transportation emits several hundred thousand tonnes of CO2 annually across Europe, and a similar trend applies to cash-dependent regions in Africa.
If Africa’s informal economy switched to digital payments, the need for cash logistics would decrease. For a city with one million people in the informal economy, each making 730 transactions per year, the cumulative CO2 savings could amount to over 2,000 tonnes annually. This reduction in emissions underscores how digital payments like Blipply can contribute to environmental goals.
3. Reducing plastic waste from debit/credit cards
Beyond cash, traditional debit and credit cards also have environmental costs. Made from plastic, these cards contribute to long-term waste, especially when replaced every few years. Each card is estimated to generate around 150 grams of CO2 during production, which is avoidable with virtual wallets. For millions of users switching to platforms like Blipply, the reduction in plastic waste and manufacturing emissions would be significant.
Mobile wallets, which replace physical cards, cut down on plastic use and associated environmental costs. By eliminating the need for card issuance, Blipply and other digital payment platforms support a reduction in plastic waste and emissions from card production, transportation, and disposal.
4. Waste and resource savings
Cash has a limited lifespan, requiring frequent replacement, especially in economies where money changes hands frequently. For those making 730 transactions annually, worn-out banknotes contribute to waste and resource depletion. Banknotes must be regularly reissued, which generates waste and uses up raw materials.
According to a report by the Bank of England, note disposal can generate thousands of tonnes of waste each year. A shift to digital payments would reduce this waste substantially. For every person in the informal economy who switches to digital, up to 1.3 kg of waste per year from obsolete banknotes and coins could be eliminated.
5. Financial inclusion with environmental benefits
Digital payments are not only environmentally friendly but also play a critical role in financial inclusion. In Africa, mobile payment platforms like Blipply allow unbanked individuals to participate in the digital economy. As more people adopt digital payments, the need for physical cash decreases, supporting both financial inclusion and environmental sustainability.
The Consultative Group to Assist the Poor (CGAP) reports that mobile wallets reduce transaction costs and increase convenience, especially for underserved communities. By lowering barriers to digital payments, Blipply helps users avoid the environmental costs of cash, supporting a more sustainable and inclusive economy.
6. Key metrics
To summarise the potential environmental benefits if an individual making 730 transactions per year switches from cash and card payments to digital payments:
CO2 Savings: By avoiding cash, individuals can save around 1.9 kg of CO2 annually. Multiplied across millions of users, this amounts to thousands of tonnes of CO2 savings.
Plastic Reduction: Using mobile wallets instead of plastic cards could prevent 150 grams of CO2 emissions per person annually from card production.
Waste Reduction: Each person who switches to digital could save up to 1.3 kg of waste annually from reduced need for banknote replacement.
Transportation Emissions: Reducing cash logistics in a city of one million people could cut CO2 emissions by over 2,000 tonnes each year.
Impact if 10 million people switch to virtual wallet payments
If 10 million individuals in Africa’s informal economy were to shift entirely to digital payments, the estimated collective environmental savings would be:
CO2 Emissions: Approximately 20,000 tonnes of CO2 saved annually by reducing reliance on cash and plastic cards.
Plastic Reduction: Around 1,500 tonnes of CO2 avoided from card manufacturing.
Transportation Emissions: 100,000 tonnes of CO2 saved by reducing cash transportation needs.
Waste Reduction: Roughly 13,000 tonnes of waste avoided by minimising cash and card disposal.
Key takeaway
The total environmental savings from transitioning 10 million people to digital payments annually include over 120,000 tonnes of CO2 and 13,000 tonnes of waste, equating to removing more than fifty thousand cars from the road or preserving large forest areas for carbon absorption. This transition not only supports sustainability but also enhances financial inclusion, fostering both economic resilience and environmental stewardship. Another way to put it, for every 500 people that switch cash and card to digital payments it has the same effect as removing one car.
Switching to digital payments is a small but impactful step toward environmental sustainability. By reducing reliance on cash, we can decrease carbon emissions, conserve resources, and reduce waste. For regions like Africa, where digital payment adoption is growing, embracing platforms like Blipply would contribute meaningfully to both economic inclusion and environmental conservation.
The findings from KTH and additional global studies make a compelling case for a cashless, cardless future. With every transaction made digitally, users are contributing to a more sustainable and inclusive economy—one where financial tools are accessible to all, environmental impact is reduced, and underserved communities can engage in secure, efficient, and cost-effective financial systems. By supporting digital payments, we’re paving the way for a greener future that not only minimises our carbon footprint but also opens up financial opportunities for millions in previously cash-dependent regions.
