Five ways to help payments companies reach net zero

Pay­ment ser­vice providers can play a piv­otal role in sup­port­ing society’s move to a low-car­bon econ­o­my, yet sev­er­al are strug­gling to attain their own net-zero tar­gets. Some strate­gies have been work­ing well, but much more needs to be done – even by the largest and best-resourced play­ers in the sec­tor.

Pay­ment providers should be well posi­tioned to cut green­house gas emis­sions – in their oper­a­tions, sup­ply chains and cus­tomer net­works – thanks to their abil­i­ty to track spend­ing and engage with buy­ers at the check­out. They can use their data insights and influ­ence to raise cus­tomers’ aware­ness of their car­bon foot­prints, inform them of their options and nudge them towards the most sus­tain­able ones.

That’s the view of Doug Sabo, chief sus­tain­abil­i­ty offi­cer at Visa, whose net­work “con­nects bil­lions of cus­tomers”. 

Sabo believes that his com­pa­ny has a “great oppor­tu­ni­ty to use its assets to inspire cli­mate action through enabling sus­tain­able behav­iour. It’s also a chance for us and the pay­ments indus­try to con­nect cli­mate action to a busi­ness case, align­ing with con­sumers’ demands and mit­i­gat­ing risks. We could do this by, for exam­ple, enabling seam­less pay­ments for elec­tric vehi­cle charg­ing.”

Here are five tips from pio­neer­ing pay­ment providers on how the whole indus­try can has­ten its progress towards net zero.

1. Rationalise and consolidate systems

One of the biggest con­trib­u­tors to pay­ment com­pa­nies’ car­bon foot­prints is the elec­tric­i­ty they use in their oper­a­tions. 

To reduce its CO2 emis­sions, North Amer­i­can Ban­card (NAB), par­ent of PayAny­where, has con­sol­i­dat­ed its sys­tems and oper­a­tions from six sep­a­rate data cen­tres into two, both of which use 100% renew­able elec­tric­i­ty. It has also equipped its call cen­tres with ener­gy-effi­cient Chrome­book devices. 

“We have learnt that com­pet­i­tive­ly priced, envi­ron­men­tal­ly friend­ly providers are out there,” says NAB’s chief infor­ma­tion offi­cer, Andy Bolin. “You just need to choose the right ones from the start. It’s eas­i­er to build a more sus­tain­able ecosys­tem now than to reverse-engi­neer it lat­er.”

2. Bring customers and networks on board

Per­haps the biggest oppor­tu­ni­ty for pay­ments providers to cut CO2 emis­sions lies in engag­ing with their bil­lions of cus­tomers and their huge sup­pli­er net­works. 

A 2021 busi­ness brief­ing by the Uni­ver­si­ty of Cam­bridge rec­om­mends that providers work col­lab­o­ra­tive­ly to shape new ser­vices that will counter cli­mate change. The doc­u­ment, Pay­ments for Net Zero, also high­lights providers’ abil­i­ty to use data-dri­ven insights to sup­port this by, for exam­ple, pro­duc­ing more tar­get­ed prod­ucts.

Sen­di Young, MD of pay­ments set­tle­ment sys­tem Rip­ple in Europe, says: “Organ­i­sa­tions should pri­ori­tise learn­ing from oth­ers and take advan­tage of part­ner­ships. We need to work as a col­lec­tive to make our indus­try ful­ly sus­tain­able.” 

To this end, Rip­ple has joined the Cryp­to Cli­mate Accord, a group of cryp­to asset providers with the shared goal of decar­bon­is­ing the indus­try.  

Pay­Pal, mean­while, is aim­ing to har­ness the pow­er of its 400 mil­lion cus­tomers to advance sci­ence-based action and align its offer­ings with their grow­ing inter­est in sus­tain­abil­i­ty. For exam­ple, its net­work of so-called return bars – loca­tions where shop­pers can hand back unwant­ed goods – enables prod­uct returns to impose a small­er car­bon foot­print than they would make via any mail­ing sys­tem.

A spokesman for Pay­Pal says: “We’ve learnt that enabling cli­mate solu­tions is not just about indi­vid­ual busi­ness­es; it’s also about mar­kets and ecosys­tems. Inno­va­tion and entre­pre­neur­ship are also essen­tial. We’ve invest­ed in start­up com­pa­nies that are test­ing ideas that can unlock new cli­mate solu­tions and address scal­a­bil­i­ty issues.”

Sabo reports that Visa’s decar­bon­i­sa­tion strat­e­gy has “evolved out­side our oper­a­tions. For pay­ment com­pa­nies, the trans­for­ma­tive oppor­tu­ni­ty is to enable oth­ers to tran­si­tion to a low-car­bon econ­o­my by inspir­ing and empow­er­ing the con­sumers and busi­ness­es that use our ser­vices to make more sus­tain­able choic­es.”

Visa has done this both direct­ly with bank clients and via a part­ner­ship with Ecoly­tiq, which enables them to obtain esti­mates of the car­bon foot­print imposed by their spend­ing habits. Clients also receive tai­lored guid­ance on how they could make more sus­tain­able pur­chas­ing choic­es.

3. Invest directly in removing carbon

Buy-now-pay-lat­er giant Klar­na has intro­duced an inter­nal tax on all its emis­sions, includ­ing in its sup­ply chain. This entails set­ting aside mon­ey to spend on decar­bon­i­sa­tion ini­tia­tives. 

Last year the fund totalled $1.7m (£1.4m). Ini­tia­tives have includ­ed four projects designed to remove 11,000 tonnes of CO2 from the atmos­phere. 

Klar­na believes that most car­bon-off­set­ting activ­i­ties aren’t as effec­tive at com­bat­ing cli­mate change as those that extract CO2 already in the atmos­phere, which is why it is focus­ing most of its atten­tion on per­ma­nent car­bon removal.

For its part, Rip­ple has com­mit­ted $100m to invest in car­bon-removal inno­va­tions, build­ing car­bon cred­its and enabling users to reduce their car­bon foot­print through a digi­tised cred­it token sys­tem. 

4. Commit to science-based targets

Pay­Pal is tar­get­ing net-zero green­house gas emis­sions, as defined by the Sci­ence Based Tar­gets Ini­tia­tive (SBTI), by 2040. It has already achieved its goal of procur­ing 100% renew­able ener­gy for its data cen­tres.

The com­pa­ny also has SBTI-based tar­gets for reduc­ing green­house gas emis­sions through­out its sup­ply chain. It plans to achieve them part­ly by per­suad­ing ven­dors to set their own tar­gets and work towards these. 

Visa has already achieved car­bon neu­tral­i­ty in its own oper­a­tions, accord­ing to its report­ing under the Car­bon Dis­clo­sure Project (CDP) frame­work. Mov­ing all of its premis­es on to 100% renew­able elec­tric­i­ty has been key to its suc­cess in this respect.

Like Pay­Pal, the com­pa­ny is tar­get­ing net-zero green­house gas emis­sions in its sup­ply chain by 2040. It plans to do this by par­tic­i­pat­ing in the CDP Sup­ply Chain pro­gramme, which encour­ages sup­pli­ers to mea­sure their emis­sions, set reduc­tion tar­gets and report on their progress towards these. Visa also uses its sup­pli­er code of con­duct to state its expec­ta­tions of them in this respect.

5. Use tech that’s sustainable by design

Pay­ment providers using dig­i­tal assets and blockchains can eval­u­ate and choose the most sus­tain­able part­ners from the start.

At Rip­ple, Young acknowl­edges that the cryp­to sec­tor has been put under scruti­ny from the envi­ron­men­tal lob­by – jus­ti­fi­ably so, because the process of ver­i­fy­ing trans­ac­tions on a blockchain con­sumes huge amounts of ener­gy. But she adds that providers have been work­ing to devel­op more sus­tain­able cryp­to min­ing meth­ods.

“We see great poten­tial for blockchain and cryp­to to forge new paths to zero car­bon,” Young says. “For exam­ple, the XRP Ledger blockchain is achiev­ing car­bon neu­tral­i­ty by con­firm­ing trans­ac­tions through a low-ener­gy con­sen­sus mod­el.”