Why Understanding Payments is Key to Greener Cities

Every element of green city life plays a role in shaping a sustainable future. These spaces are about more than parks and investing in renewables; instead, they focus on developing entire interconnected systems that work to reduce emissions and promote greener lifestyles. One element that doesn’t get enough attention? Payments.

From the systems used to the impacts of tracking payment data, learn more about why financial transactions are key to developing greener cities in this guide.

What are green cities?

Green cities are designed to reduce the environmental impact of our urban spaces. The infrastructure of the cities is built on sustainable concepts and practices, such as:

• Eco-friendly construction

• Fully electric public transport

• Efficient waste management and recycling

• Preservation of natural green spaces

Greener cities also promote more eco-conscious lifestyles for both residents and tourists. For instance, greener cities often encourage recycling by having clearly labelled bins around the city that make it easier for users to sort their waste responsibly. 

Why is it important to have green cities?

Urban areas, including cities, are responsible for almost 80% of carbon emissions from energy use. With dense populations and a whole lot of business, it’s no surprise that they tend to be big polluters.

The emissions created don’t stay within the cities, either, but have a widespread impact on surrounding areas. They also contribute to our total pollution created as a species, playing their part to fuel the climate emergency.

Creating greener cities is about fighting back against climate change and protecting our planet from disaster. It’s also about improving the quality of life for residents, with many sustainable initiatives supporting cleaner air, efficient public transport, and cleaner rivers. 

This is a widespread, multi-faceted movement, and one that payments are a key part of.

How can payments support greener cities? 

Understanding both the positive and negative impacts of different payment methods is crucial to developing fully sustainable cities. Let’s take a look at why they’re so important:

The environmental impacts of cash

Cash payments have a global warming potential that’s 5.9% higher than digital payments. The truth is that our traditional payment methods simply aren’t sustainable, and there are a few reasons for this:

• Cost of raw materials: Coins and notes are made using valuable resources. In the UK, our notes are coated in a thin layer of polymer, which is a type of plastic derived from oil. The impact of this is widespread, from the negative effects of obtaining the oil to the growing issues of microplastics.

• Transportation: Vast numbers of coins and notes need to be shipped around the country to enable cash payments. In fact, 35% of total emissions related to cash payments are due to transportation, making this a key concern in green cities.

• Waste and replacement: Coins and notes wear out, requiring replacement, sorting, and recycling. All of this uses energy, creating an endless cycle of emissions just to keep physical money in circulation.

Understanding the difference in environmental impact between cash and digital payments helps green cities make the right choices. Not only can city officials use these insights to implement digital payment options, but they can also educate residents to make more sustainable choices when out and about.

Reduce waste from payments

Many payments generate unnecessary waste, like physical receipts and printed tickets. All of this adds up, adding to the strain on our planet’s limited resources and our landfills.

By understanding this impact, green cities can prioritise the digitisation of receipts and tickets. In London, users can tap in and out of the underground to pay for their travel, removing the need for physical tickets entirely.

Encouraging public transport use

Switching to more efficient payment systems supports other eco-friendly initiatives, including public transport.

By implementing a contactless transit payment system, public transport becomes faster and more appealing to use. As we mentioned above, users don’t have to queue to pay for tickets; instead can simply tap their card to make a contactless payment and jump on board. This cuts down on wait time and creates a smoother system.

Encouraging the use of public transport is vital in green cities. Buses reduce emissions by 42% compared to car journeys, while trains see a reduction in emissions of a massive 73%. From air quality to climate change, this simple switch can have a huge positive impact on our cities and our planet.

Promote sustainable banking

Beyond digitisation and contactless payments, creating greener systems also involves understanding how we handle our money.  

In green cities, we should see the promotion of more ethical banking. This includes:

• Raising awareness on how our money is used by banks.

• Highlighting how certain banks are funding the climate crisis (such as by investing in fossil fuels and companies notorious for plastic pollution).

• Ensuring residents have access to alternatives, including ethical banks with transparent investment portfolios.

This shift also opens up room for alternative payments, including in the decentralised finance (DeFi) and crypto industries. These systems are redefining financial ecosystems by offering better traceability, and a sustainable crypto project could fit perfectly into the ethos of green cities.

Tap into city data

By understanding payments and moving towards a more digital system, green cities can tap into a wealth of data.

When people make contactless payments, their transactions are tracked. This creates a digital path of how they move, what they purchase, and how they engage with the city’s services. 

For green cities, this is a powerful tool for decision-making. It can provide insights into the most popular times and routes for travel, for instance. City planners can then use the knowledge to reduce congestion and improve efficiency when moving around the city.

Payment data can also be linked to waste reduction. Insights into the purchase of single-use products and takeaways, for instance, can highlight specific hotspots where councils need to focus on recycling. This might be through increasing collections, adding more recycling facilities, or even launching campaigns to reduce waste.

Final thoughts

The way we make transactions carries an environmental footprint that’s often overlooked. As cities strive to become greener and more connected, they have a unique opportunity to rethink how payments fit into a sustainable future, steering society towards a more efficient, ethical approach to money.

For more eco-friendly initiatives, keep up to date with our focus on sustainability.