Cash, card or cryptocurrency? Which is better for the planet?

Hands holding an open wallet with bank cards and cash in it.
Photo by Emil Kalibrado on Unsplash.

These days we're more aware than ever that a carbon footprint is attached to pretty much everything we do. From the food we eat to the transport we use, everything has an impact on the environment. Even how we choose to pay for products and services can make a difference.

With this in mind, we did some digging to help better understand the impacts of different payment methods.

Cash is still king

Graphic illustration of bank notes and coins.

Despite all the news pieces and statistics on increased digital payments, cash still remains the most widely used payment method in the world. According to the G4S 2018 World Cash Report, of 24 countries surveyed, 18 used cash for more than 50% of transactions. The question is how sustainable are notes and coins?

In Australia, banknotes are made from polymer - i.e. plastic. Now the word plastic might set off alarm bells, but using plastic does mean the notes are more durable and will therefore stay in circulation longer than paper notes. On the Reserve Bank of Australia website it says that polymer banknotes can be recycled into products such as 'building components, plumbing fittings, compost bins and other household and industrial products.' To add to this, a 2008 media release from the Royal Australian Mint says that damaged coins are assessed 'for recycling into new coins.'

Principal Sustainability Consultant from Edge Environment, Joana Almeida says, "Cash, as an object is the ultimate reusable item: some notes and coins remain in circulation for decades." She adds that cash does require infrastructure and energy to be moved around and dispensed. According to Almeida, a UK study found that ATM machines were the main source of carbon emissions for cash use.

Card - paying with plastic

Graphic showing hand holding multiple bank cards.

Bank cards aren't called pieces of plastic for nothing. Most are made from polyvinyl chloride (PVC) and, according to US plastic recycling company Earthworks, around 10 billion new plastic cards are put into circulation every year. Most of these are thrown away, adding millions of kilograms of plastic waste to landfills.

Currently Woolworths has a gift card recycling program, but we couldn't find evidence of any bank card recyclers in Australia. Fintech firm Hay brought out the first ever biodegradable bank card available in Australia at the end of last year, but there are still plenty of PVC cards being produced and thrown away.

Our verdict? We know plastic takes thousands of years to break down, so with billions of PVC bank cards in circulation, this is a problem. In fact, plastic bank cards could even be called the plastic straw of the banking industry. That said, we would still recommend asking your bank for advice when it comes to disposing of your old card. You never know they could have a recycling program in the works.


Graphic illustration of someone sitting in front of a laptop, cryptocurrency mining.

Just in case you're not entirely sure what cryptocurrency is, here's a quick definition from Investopedia:

'A cryptocurrency is a digital or virtual currency that is secured by cryptography ... Many cryptocurrencies are decentralised networks based on blockchain technology.'

Cryptocurrency has been around for a long time. In fact, Bitcoin (possibly the most well known type) was created in 2009. However, it has only been in recent years that more and more people have become concerned with the high carbon emissions produced by cryptocurrency mining. This is the process in which new crypto coins are discovered, by way of high powered computers solving complex mathematical equations.

Cryptocurrency mining is time consuming and energy intensive, hence the large carbon footprint. In fact, according to a 2019 study published in Joule, the annual global carbon emissions of Bitcoin are comparable to levels produced by Jordan and Sri Lanka.

Almeida says it would be interesting to know how emissions produced by cryptocurrency compare to other uses of the internet, such as everyday data storage and online video streaming. She says, "Whether or not [cryptocurrency mining] will become a problem depends on how different countries that host the mining infrastructure track towards decarbonisation of their energy grids."

Digital payments

Graphic illustration of mobile phone payments.

With Google Pay, Apple Pay, Samsung Pay and even Fitbit Pay available, making payments with one swipe of a smartphone has never been easier. These are often called 'digital wallets.'

Almeida says, "For digital payments the emissions sources would be the embodied carbon of the phone and the infrastructure required to run the network. We speculate the energy required to actually transfer data across the internet to be the main emissions source."

To explain this further, Almeida says studies show that transferring 1GB over a 4G network with a smartphone, uses around 0.15 kWh of energy. That's the equivalent of around 120g of CO2. So although the actual manufacturing of the phone itself does have a carbon footprint, the energy it takes to transfer data across networks could actually be more carbon intensive.

In short, a digital wallet is basically a place where you can store payment details. When you pay for something this information is used to electronically transfer funds to the person or company you are paying. Ergo data is transferred, leading to energy use and carbon emissions.

Clean energy, plastics, digital wallets ... where does this leave us?

At the moment cryptocurrency mining has a worryingly large carbon footprint. However, this could change at the flick of a renewable energy switch. If countries were to move over to clean energy, cryptocurrency mining would not be so much of a problem for the environment.

In terms of cash and card, it's possible that cash could be the more sustainable option. While banknotes are made from plastic in Australia, they generally stay in circulation longer than PVC bank cards (which usually expire after three years).

Digital wallets inevitably have a digital carbon footprint, as does everything we do on the internet. As Almeida points out, it would be interesting to compare the digital carbon footprint of digital wallets to other digital services such as video streaming, email delivery and online media storage.

Clearly more research needs to be done in this area. Although, it doesn't hurt to think twice about how you use your phone, or even how you dispose of your next bankcard. Want to read more like this? Head over to our life and money hub, where you can read about everything from why your money decisions matter to understanding private health insurance.