The Ecological and Environment Advantages of Cash Over Digital money

Digital money prevails in our world, and this implicitly, but strongly, affects the environment. At the same time, there is a much more environmentally friendly alternative to electronic payments, and this is cash. It wins from the relatively low energy consumption of the production process and eco-friendly materials.

shot: eco friendly beauty

What is the most environmentally friendly payment method? No one has yet conducted a full-scale study that would compare environmental benefits of cash and cashless payments, but there are several facts that we tried to put together.

Banknotes and digital money have the same meaning but are of different origin. Paper money is printed at special enterprises that use raw materials, labor, and other industrial factors, and electronic payments are only possible thanks to the Internet, extensive network of computers and other equipment. Unlike cash, the latter mainly consume electricity. So, which industry consumes more energy and pollutes more?  

Let’s look at cash first. Here, for example, one of the most common currencies in the world, the euro. In 2003, approximately 3 billion euro banknotes were printed. In the same year, the European Central Bank conducted a study in which it found out that there were just about eight banknotes per each European for a whole year.
The annual environmental effect of these bills, including production and extraction of raw materials, printing, storage, transportation and disposal, was equal to only one 60W light bulb that each of these citizens left on for 12 hours.

And what about digital money? Data centers alone, without which the cashless payments industry cannot exist, consume 10% of the total world energy consumption. This is more than a couple of power plants produce in a whole year.

The number of non-cash transactions is growing. If we multiply the figures on energy consumption by the increased number of transactions, we will see that the future guarantees us a higher burden on the energy industry, and accordingly, on the environment. Part of this load could have been eliminated if electronic payments were at least partially replaced by less energy-intensive cash.

In addition, recycling and recovery of materials play a big role. As for cash, the cash recycling process is handled by central banks. They receive most of the unfit banknotes, and then send the money for recycling. For example, the Central Bank of England makes fertilizers from old paper notes, and turns old plastic banknotes into plant pots and storage boxes.

Other countries have similar practices. For instance, Reserve Bank of Australia recycles old plastic bills into pellets that can be used for producing building components, plumbing fittings, compost bins and other household and industrial products. And the Bank of Japan even makes toilet paper out of worn-out bills.

This approach stems from the long-standing mandatory requirement of recycling bills according to particular standards. It is impossible to get rid of old and unsuitable banknotes by simply throwing them away – in this case, counterfeiters can get them and use the old money for illegal purposes. Disposal of worn out bills is a long-term practice, and it has become greener along with the general growth of environmental trends.

Some banks, such as Bank Negara Malaysia, even put secondhand bills, that were deposited in the bank earlier, back in use. “Up to 74% of the banknotes that we will issue this Hari Raya [national holidays] will be fit banknotes, compared to when we first started, when the figure was very low, around 13%, said the bank’s Currency Management and Operation Department director Azman Mat Ali.

But how does this process occur in a cashless society? As mentioned above, cashless society mainly consumes electricity. At the same time, the share of renewable materials in the global electricity production is only 8.4 percent, that is, more than 90% of energy can no longer be recovered.

The situation with plastic cards – another integral part of a cashless society – is even more difficult. First, they are not as easy to collect as cash. We bring torn and soiled banknotes to the bank, hoping to receive an equivalent bill in exchange.

However, most old bank cards simply end up in trash, because they don’t store money, but the bank account does. Also, many plastic cards are made of polyvinyl chloride (PVC), which is cheap but practically impossible to recycle.

And even after the plastic reaches the recycling plants, it is not so easy to get rid of it as toxic substances leak into water, soil and even air. “PVC contaminates humans and the environment throughout its lifecycle during its production, use and disposal, says Greenpeace.

While all plastics pose serious threats to human health and the environment, few consumers realize that PVC is the single most environmentally damaging of all plastics.”
All in all, digital money is a complex system that includes many participants. However, it pays too little attention to environmental issues, and this situation is unlikely to improve in the near future. At the same time, the cashless finances have already begun to have a negative impact on the environment, and unless we do something, we may end up buried in thrash – literally.

Article written by 

Edward Lawrence.

Edward is an independant environmental consultant helping small to medium-sized companies to make the ecological transition to a lower carbon footprint.

Officially submitted to EnvironmentGo!.
Published byOkpara FrancisHead of contents.
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