How the Payments Market Is Solving Environmental Concerns

The payments market has a handful of ways it can address sustainability. Instead of pivoting to digitized banking, which seems like a solid solution at first glance, market players must turn to alternative card materials, establish new partnerships, create a sustainable end-of-life card disposal program, and rethink supply chain and manufacturing processes.

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Market Overview

While payment card materials like recycled Polyvinyl Chloride (rPVC) and Polylactic Acid (PLA) are growing at Compound Annual Growth Rates (CAGRs) of 29.2% and 25.1%, respectively, through 2026, first-use Polyvinyl Chloride (PVC) is declining at a -3.8% CAGR, showing how serious the payments market is about making a pivot to sustainability.

  • Recycled Polyvinyl Chloride (rPVC): Easily the most dominant alternative payment card material in every region, rPVC shipments will hit the 638 million mark in 2026, which is more than triple the 177.5 million shipments in 2021. Between 2021 and 2026, rPVC payment card shipments will experience a CAGR of 29.2%.
  • Polylactic Acid (PLA): Growing at a CAGR of 25.1%, just a hair over 97 million PLA payment cards are expected to ship in 2026—more than twice the 31.7 million total in 2021. European banks are the most inclined to use PLA payment cards, accounting for more than half of global shipments throughout the forecast period.
  • Polyethylene Terephthalate Glycol (PETG): 33.1 million PETG payment cards were shipped in 2021, but that number will surge to more than 105 million units by 2026. The CAGR for the forecast period is 26%. Thanks to projects with Australia’s Westpac and Bank of Australia, the Asia-Pacific region is the primary beneficiary of PETG payment cards. By 2026, Asia-Pacific will ship 60.7 million of the 105 million units worldwide, or 58% of total shipments.
  • Reclaimed Ocean Plastic: Virtually non-existent in other regions, reclaimed ocean plastic payment cards will find a niche in North America with 63.2 million units shipping in 2026—nearly double that of 2021 shipments. Overall, 89.9 million units will ship in 2026, up from 44.7 million in 2021—growing at a CAGR of 15% through the forecast period.

“Recycled PVC (rPVC) will become, by far, the largest replacement of first-use PVC in the payment card market, especially in Europe, where the presence of a high number of major card vendors, such as Thales, IDEMIA, and Giesecke+Devrient (G+D) have established rPVC as a mainstay material.”  – Sam Gazeley, Industry Research Analyst at ABI Research

 

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Key Decision Items

Be Wary of Fully Digitized Banking

Digitized banking may mitigate the environmentally harmful impact of plastic cards and physical documents, but there’s a catch. An increase in digitization will bring about greater reliance on Information and Communications Technology (ICT), the cloud and mobile infrastructure, and data centers. A higher level of power consumption means a significant increase in carbon emissions released into the atmosphere stemming from these technologies. As it stands, a fully digital approach to banking is not the answer.

Focus on Sustainable Payment Cards and Understand the Different Materials Available

Instead of leaning on digitization, banks and financial institutions must focus on the manufacturing level of payment cards. It’s time to create distance between the organization and environmentally harmful first-use PVC, as consumers want to connect with brands that share their values.

As mentioned in the market overview, the four main alternative materials that players in the payment market are using are:

  • Recycled Polyvinyl Chloride (rPVC)
  • Polylactic Acid (PLA)
  • Polyethylene Terephthalate Glycol (PETG)
  • Reclaimed ocean plastic

Customers will increasingly expect their chosen bank to use these sustainable materials to meet climate agendas. Failing to do so runs the risk of losing a competitive edge.

Manufacturers Should Use Renewable Energy Sources for Critical Production

To address the environmental issues that come with the manufacturing of Point of Sale (POS) terminals and Integrated Circuit (IC) boards, manufacturers should use renewable energy sources for critical production stages, follow green manufacturing processes like ISO 14001, and reduce the volume of plastic required per chip. Some companies are removing magnetic stripes and numbering/expiration dates on their payment cards to cut back on the plastic volume.

Cut Down on Transportation in the Supply Chain

The frequent transport of raw materials and finished products just adds to the collective supply chain carbon footprint, as it requires fuel. Card manufacturers and banks must team up together to launch more timely communication channels and more efficient ordering processes, leading to the scaling back of the frequency of air, land, rail, and sea transport. Finally, finding local suppliers is another effective way to reduce the carbon footprint of the supply chain by reducing the distance traveled.

Form Strategic Partnerships

Smaller companies like neo and challenger banks could use the strategic advice and resources of more established ecosystem players to meet their Environmental, Social, and Governance (ESG) goals. Well-established brands must be willing to be forthcoming with a helpful hand if the payments market as a whole is to meet its net-zero emissions goal. Banks can also leverage available tools that are specifically designed with an eco-friendly goal in mind, e.g., Doconomy’s carbon footprint tracking feature for banks to offer to customers.

Collaboration with mission-aligned non-profits is important when it comes to collecting sustainable materials. To illustrate, by teaming up with environmental organization Parley for the Oceans, Giesecke+Devrient (G+D) created the Convego Parley Ocean card.

Create an End-of-Life Card Disposal Program

To promote a circular economy, banks need to use aggressive marketing to educate consumers on their end-of-life card disposal process. Banks should make sure it’s crystal clear to consumers how to properly dispose of their cards once they expire, or else they will simply follow local regulations that often are not environmentally beneficial. This would mean creating informational blogs, customer onboarding, sending instructional emails when a customer’s credit card is about to expire, etc. Moreover, allying with local recycling centers can streamline end-of-life card disposal. One option that is worth exploring for card issuers is to use an intermediary recycling and disposal program to maximize the reusability of waste material.

Be Responsible with Marketing Eco-Cards

Consumers are savvier than ever and will catch on to companies that use unethical “greenwashing.” If a payment card is made of only, let’s say 10% sustainable materials, it shouldn’t be advertised as a “sustainable” or “green” card. In other cases, companies may label a card as “biodegradable,” but the results only incur in highly controlled environments and not in a real-world scenario, such as a landfill. Some helpful enablers that card manufacturers and issuers may need to consider include:

  • Make certain that local recycling solutions are used to limit transportation.
  • Wherever possible, simplify the recycling process by watering down the card design, such as removing components and using undecorated colors.
  • Closely manage card incineration processes to keep toxic gas emissions down.

Key Market Players to Watch

Dig Deeper for the Full Picture

To learn more about how banks, financial institutions, and vendors are addressing sustainability when it comes to payment cards, including alternative materials, market pioneers, regional forecasts, end-of-life card disposal, and more, download ABI Research’s Alternative Solutions for Sustainability in the Payments Market research analysis report.

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This content is part of the company’s Digital Payment Technologies Research Service, which includes research, data, and analyst insights.