The transition to contactless payments offers a rare opportunity to meet another priority by ushering in sustainable payment cards.
Through the Covid-19 pandemic, business operations and consumer interactions with their finances have fundamentally changed. The past year has seen a major acceleration in the shift away from cash, with the pandemic driving industries and consumers alike to ramp up the use of contactless options for a touch-free payment experience.
Periods of drastic change like these present potent opportunities to drive other evolutions that create an emotional response. One such opportunity is to prioritize a move to more sustainable products, such as more eco-focused cards.
The challenging scenarios fueled by the pandemic have many major brands and organizations re-assessing where their values line up. Over the past year, sustainability and environmental justice have seen major commitments from top business leaders, from the use of green energy to a concerted focus on ESGs (environmental, social, and governance priorities). Initiatives like community development, pollution and waste management, and the mitigation of carbon emissions are all examples of ESG considerations.
Major consumer-product companies like Unilever and P&G have led sustainability efforts like creating goals for net-zero emissions for their products from cradle to shelf, committing billions to climate-friendly initiatives, and moving away from PVC in their packaging.
Companies like Dell, Ikea, and HP, as part of the NextWave initiative, have also committed themselves to keeping plastics in the economy, and out of the ocean, by establishing the first global network of ocean-bound plastic supply chains.
Companies across the financial-services industry have also committed to sustainability. Emerging digital banks like Unifimoney have embraced eco-focused initiatives, including the adoption of payment cards and products that use upcycled materials.
Other major financial institutions and global banks have committed to sustainable finance, allotting billions to investing, financing, and advisory activities to help customers accelerate the adoption of clean energy, sustainable transport, and responsible waste management, among other initiatives.
Call to Action
Over the past year, there’s been a call to action from consumers hoping to see aggressive action from both public and private institutions on the environmental front. In a recent Boston Consulting Group report, 87% of consumers surveyed said companies should integrate environmental considerations into their products, services, and operations to a greater extent than they have in the past.
By doing what consumers demand, even when it is more difficult, businesses are viewed as innovators that are working for the greater good. The tide is turning as companies realize the massive impact and public support that comes from investing in environmental initiatives in an effort to become more sustainable.
In a time of major disruption, it’s an encouraging sign that companies are continuing to take a stand to prioritize sustainability and create frameworks for others to follow in their footsteps.
The increased prevalence of contactless-payment options is another good example of responding to consumer demand and innovating for the greater good. Contactless payments were already on the rise prior to Covid-19. But as concerns over the safety of touching card readers or point-of-sale terminals rose, so did the desire for cards that you can use to wave and pay. According to a recent survey from the National Retail Federation and Forrester, the acceptance of contactless cards rose to 58% of respondents in 2020, up from 40% in 2019. Of the retailers that accept contactless payments, 94% expect the increase to continue over the next 18 months.
As we continue to settle into our new normal, consumers may come to expect contactless cards as a standard offering from their financial institution. Visa’s “Back to Business” study noted that nearly two-thirds of consumers globally would switch to a business that installed contactless payment capability over an existing relationship (with the assumption that factors like price, selection, and location are equal).
A Sustainable Option
While contactless payments have steadily become a higher priority for financial institutions, the pandemic has heightened the necessity to create contactless options for payments. As institutions capitalize on this need, there’s an opportunity to make sustainability a part of transitioning card portfolios to contactless cards. This will need to be a priority for financial institutions that want to retain and grow their customer base.
The push to create payment products in a more sustainable manner has been coming to a head in recent years. The United Nations, for example, created the Principles for Responsible Banking, where over 200 banks have joined the movement to start a new future for banking.
One of the ways that financial institutions can demonstrate a commitment to sustainable practices is through the use of payment cards made with recycled or reclaimed materials, like ocean-bound plastic and recycled PVC. CPI Card Group commissioned a survey, conducted by an independent research firm, that found that 94% of consumers say they are concerned about the amount of plastic waste in the oceans.
Further, some 87% of respondents find the idea of an ocean-plastic card appealing, and 53% are willing to switch to another financial institution offering cards with the same features and benefits.
If consumers are willing to switch institutions for contactless card options, adding cards made with eco-focused materials to the mix could offer a competitive differentiator.
Financial institutions have an opening to introduce products and services that resonate with environmentally conscious consumers. It’s an opportunity to simultaneously embrace payment card options that are contactless and reduce first-use plastic. Now, it’s clear that there’s no better time to drive the convergence of two trends that have risen in prominence over the past year—and meet growing consumer demand and help create a healthier planet in the process.
Historically, in times of crisis, companies need to invest to “recover better,” as opposed to just trying to get back to business as usual. By leading the way for others in the industry to follow, we’ll be able to expand our capabilities and show true progress, despite the hurdles caused by the pandemic.
And, by doubling down and investing in more sustainable payment products, the financial-services industry can serve as a pioneer in welcoming a new age of eco-focused change and innovation.
—Guy DiMaggio is senior vice president and general manager of Secure Card and Sustainability Solutions at CPI Card Group.