Wednesday, August 25, 2021
Future of Cash
Wednesday, August 25, 2021
LINK 1, who run the UK’s main shared interbank network of cash machines, has commissioned a report to look at how the UK’s cash distribution industry can reduce its carbon footprint.
The report, authored by cash and card consultants Ron Delnevo and Debbie Smyth, starts by making the point that cash and card payments have an extremely low carbon footprint.
For cash, the priority areas to address are the power required by ATMs and the transportation of cash because these have the most impact on the environment. The report makes clear recommendations about actions needed to get to net zero carbon emissions, with green energy and the localisation of cash distribution offering the most significant benefits.
The paper starts by explaining what greenhouse gases are, and how a standard ratio is used to convert each of the seven gases into equivalent amounts of carbon dioxide (CO2) based on their global warming potential (GWP). The ratio allows a common term, carbon dioxide equivalent (CO2e) to be used when measuring the GWP of activities.
Although the focus is on cash, the paper also considers the GWP of other payments.
It cites sources that calculate smartphones, and their use, account for 1% of global emissions, mainly from their manufacture and transportation, and information communication technology (ICT) 2 2.5% of global emissions.
Within this, data centres account for 1% of global emissions with each smartphone, if kept for two years, being responsible for 52.5kg CO2e. The power to operate payment systems, including point-ofsale (POS) terminals and ATMs, and their associated data centres, falls within the ICT figure.
To reduce the power requirements of ATMs and POS terminals, the paper suggests changes to increase power efficiency such as passive coding, heat ‘sink’ attachments and the ability for devices to ‘sleep’ if not in use.
POS terminals have shorter lives than ATMs because their software and functionality changes more frequently, they are cheaper to buy and experience more faults. The result is, the paper suggests, that they are less likely to be recycled.
For ATMs in particular, ATM manufacturers can design machines with direct current (DC) based PC cores, less wiring, based on mobile chipsets, that have lower power requirements, increased efficiency within the power supply unit, lower energy LED lighting and improved weather proofing, which reduces power consumption. The UK power industry has a goal of zero power emissions by 2030, which would reduce the carbon footprint of payments very significantly.
The paper suggest that each cash withdrawal makes five payments before the cash re-enters the cash cycle, a number that is not used in comparisons with card payments. Despite that, to reduce the fossil fuel emissions related to transportation of cash in the cash cycle, the goal has to be fewer miles travelled to fill and service ATMs.
Some suggestions to reduce the carbon impact of transporting cash are:
When bulk movements of notes or coins are required between wholesalers the use of transport is maximised (limited by weight and/or insurance).
Work towards the replacement of fossil transport fuel with renewable electricity. Note that carriers are currently constrained by technology, but this is under constant review. Lighter vehicles, driver training to reduce fuel consumption aided by telemetric technology to measure usage and performance, less engine idling and improved route planning are amongst best practice deployed already.
Deploy ATMs with greater cash capacity. This may require increases in ‘across the pavement’ limits and depends on the risk appetite of interested parties.
Encourage merchant replenishment of ATMs / ‘smart’ replenishment, along with greater use of alternatives to ATMs for cash issue and depositing, including greater use of Post Offices, cashback in shops and shared bank branches.
Local smart depositing, co-ordinated ATM and shop cash pick-ups and drop-offs, reducing change through the elimination of pricing pointing (no more pricing of items at 99p) and more rounding of cash spend amounts.
Key elements for consideration for the operation of ATMs and associated equipment were:
Reduce overall ATM numbers by eliminating duplication not justified by usage whilst maintaining access. The paper suggests that for every 1,000 fewer ATMs there are, the current power usage reduces by 2%, along with fewer journeys. Minimise power usage by ATMs, eg. full utilisation of stand-by potential/ powering off at night or when the site is closed (subject to security running on a separate power supply).
Deploy newer, more power-efficient ATMs.
Smarter maintenance, with more preventive and remote engineering taking place.
Utilise shared engineering resources.
Move to more environmentally friendly power sources.
This paper is future focused. It starts providing context about climate change and the need for action, outlines the current situation in the UK for payments in general and cash in particular, and then considers cash distribution stage by stage.
There is considerable detail in the paper and specific recommendations, all in the context of achieving net zero carbon emissions by 2050. There is a lot to do if that is to be achieved.
2 Data centres, networks, cryptocurrencies, television, phones computers consoles, tablets etc