How banks are driving the green card movement | PaymentsSource

As banks and payment service providers increasingly rely on Environmental impact of payment cardsConventional plastic is being replaced by more sustainable alternatives.

Bank of America Bank of New Hampshire, Bank of Ireland, the Spanish CaixaBank, Citigroup, HSBC US Bank, London-based Starling Bank and Netherlands-based Triodos Bank have recently launched payment cards made from more environmentally friendly materials. The aim is to reduce reliance on single-use plastics, which are incredibly harmful to the environment.

Most of these new cards are made from recycled plastic, although some banks have opted for cards made from biodegradable materials such as corn or wood. The latter are considered a more environmentally friendly, albeit more expensive, option than recycled plastic. Eco-friendly cards have gained popularity, in part due to increased corporate demand. Focus on the environment under pressure from shareholders, customers and employees.

Card networks are also promoting change. Mastercard last year announced that from January 1, 2028, all newly produced plastic payment cards from Mastercard will be made from more sustainable materials, including recycled or bio-sourced plastics.

Visa is also making efforts to reduce its reliance on the most environmentally damaging plastic. In 2020, Visa and CPI Card Group, which makes eco-friendly cards from recycled plastic, announced the Earthwise upcycled payment card, which is made from up to 98% upcycled material. In Europe, the card brand’s partnerships have led to sustainable cards in countries such as Ireland and Spain. And in May, Visa introduced a paper option for non-reloadable prepaid cards, a spokesperson said.

Despite these efforts, green cards still make up a small portion of the overall card market. But they are gaining traction. At the end of last year, about 9% of cards in circulation in North America were green; that share is expected to rise to 23% by the end of 2028, according to data from Nilson and CPI Card Group. “If banks aren’t thinking about it today, they need to be thinking about it,” said John Lowe, CEO of CPI Card Group.

HSBCFor example, is switching to a 100% recycled plastic format for its Premier debit and credit cards in the U.S., Brian Ahearn, head of unsecured lending in the U.S., said in an email.

In 2023 Bank of America According to a spokesperson, the bank has switched to plastic credit and debit cards that are made from at least 80% recycled plastic. US Bank offers eco-friendly debit cards made from reclaimed ocean plastic. It also offers several credit cards made from recycled plastic.

Most banks implementing greener solutions have chosen recycled plastic, in part because the cost difference is minimal – generally in the range of a penny to 10 cents. “With most banks, you’re probably in the nickel category unless you do something a little more atypical,” Lowe said. The fancier the card, the more expensive it is, he said.

Although industry participants acknowledge that recycled plastic is not a perfect solution, it is more cost-effective than other options and a good transition to more environmentally friendly practices. “Additionally, plastic lasts for many years with little wear and tear. This keeps costs low, and a long lifespan and replacement cycle reduces the overall amount of plastic needed,” a Mastercard spokesperson wrote in an email.

The cost of payment cards made from corn or wood is typically higher – but that hasn’t stopped some banks from going that route. For example, Bank of New Hampshire, a $2.5 billion bank, uses polylactic acid (PLA), commonly made from corn, for its debit cards – at a premium of 30 cents per card compared to what it pays for first-use plastic. That’s a price the bank is willing to pay for the environmental benefits, says Eric Carter, who heads digital solutions and innovation at the bank. Many customers are environmentally conscious, and the biodegradable option helps keep the bank’s cards in their wallets, Carter says. “We hope the higher buoyancy will offset the additional cost.”

Two years ago, Bank of Ireland began rolling out organic debit and credit cards across its portfolio, having first offered the product to university students in 2020. These cards are more than 80% organic and made from renewable materials derived from field-grown corn. This type of product is not only viewed positively by customers, but is also good for the environment, the bank said in announcing the switch. When the card’s lifespan expires, it takes six months to decompose, unlike traditional plastic cards which take about 400 years to decompose, the bank’s marketing materials said.

Some banks have also chosen to introduce cards made of wood, although this is less common, partly due to the higher cost. The wooden cards used by GLS Bank in Germany cost three times as much as cards made of corn, Alexander Schulz, senior advisor for payments at GLS Bank, told American Banker in an interview with The American Banker newspaper. current interviewHowever, the cooperative bank wanted to stand out from the crowd and wooden cards served this purpose.

Bank boards would typically object to green cards if the costs were deemed too high, Eric Grover, principal at Intrepid Ventures, a Minden, Nevada-based business development and strategy consultancy, wrote in an email. Still, he sees a place for green cards in the market. “Issuers offer a number of benefits to cardholders, including fee-free cards, cash back (and) frequent flyer miles. A card made of recycled plastic or wood would be of value to some consumers as a way to show their own virtue,” he wrote.

“The only thing that would be better would be to get rid of physical cards altogether and move entirely to mobile wallets and contactless payments,” Aaron McPherson, principal at AFM Consulting Partners in Boston, wrote in an email. “However, people are very attached to their physical cards, so I don’t think you can mandate that.”