How banks are boosting the eco-friendly cards movement | PaymentsSource | American Banker

With banks and payment companies paying more attention to the environmental impact of payment cards, traditional plastic is giving way to more sustainable alternatives.

Bank of America , Bank of New Hampshire, Bank of Ireland, Spanish-based CaixaBank, Citigroup, HSBC , U.S. Bank, London-based Starling Bank and Netherlands-based Triodos Bank have recently rolled out payment cards made from more eco-friendly materials. The goal is to reduce reliance on single-use plastic that's incredibly harmful to the environment.

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

Card networks are also encouraging the shift. Mastercard last year announced that as of Jan. 1, 2028, all newly produced Mastercard plastic payment cards will be made from more sustainable materials, including recycled or bio-sourced plastics.

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

Even with these efforts, eco-focused cards remain a small portion of the overall card market. They are, however, gaining traction. At the end of last year, about 9% of cards in circulation in North America were eco-focused; that's expected to rise to 23% by the end of 2028, according to data from Nilson and CPI Card Group. "If banks are not thinking about it today, they need to be thinking about it," said John Lowe, chief executive of CPI Card Group.

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

In 2023, Bank of America transitioned to plastic credit and debit cards made from at least 80% recycled plastic, according to a spokesperson. U.S. Bank offers eco-friendly debit cards made with recovered ocean-bound plastic. It also offers multiple credit cards made from recycled plastic.

Most banks implementing more eco-friendly solutions have opted for recycled plastic in part because the cost difference is minimal—generally in the range of a penny to 10 cents. "For most banks you're probably in the nickel category unless you're doing something more atypical," Lowe said. The fancier the card, the more expensive it is, he said.

While acknowledging that recycled plastic isn't a perfect solution, industry participants said it's more cost-effective than other options and a good transition to more eco-friendly practices. "Plus, plastic lasts many years with little degradation. This keeps costs down, and a long lifespan and replacement cycle reduces the total amount of plastic needed," a spokesperson for Mastercard wrote in an email.

Costs are typically higher for payment cards made from corn or wood — though that hasn't stopped some banks from going this route. Bank of New Hampshire, a $2.5 billion-asset bank, for instance, uses polylactic acid, or PLA, which is commonly made from corn, for its debit cards — at a premium of 30 cents more per card than what it paid for first-use plastic. It's a cost the bank is willing to absorb for the environmental benefits, said Eric Carter, the bank's digital solutions and innovations officer. Many customers are environmentally conscious and the biodegradable option helps ensure the bank's cards stay top-of-wallet, Carter said. "We're hoping the increased lift will offset the additional cost."

Two years ago, Bank of Ireland began rolling out bio-sourced debit and credit cards across its entire portfolio, after first offering the product to university students in 2020. These cards are more than 80% bio-sourced from renewable materials derived from field corn. Not only do customers view this type of product favorably, but it's also good for the environment, the bank said in announcing the shift. When the card's lifespan is over, it takes six months to break down unlike traditional plastic cards, which take around 400 years to decompose, according to the bank's marketing materials.

Some banks have also opted to introduce cards made from wood, though it's less common, in part due to the greater cost. The wooden cards used by GLS Bank of Germany cost triple what it was paying for corn-based cards, Alexander Schulz, senior advisor of payment transactions at GLS Bank, told American Banker in a recent interview. However, the mutual bank was looking for a way to stand out, and wood cards served the purpose.

Bank boards typically will object to eco-friendly cards if the cost is deemed too high, Eric Grover, principal at Intrepid Ventures, a Minden, Nevada-based corporate development and strategy consultancy, wrote in an email. Nonetheless, he sees a place for eco-friendly cards in the market. "Issuers offer cardholders a range of benefits, including fee-free cards, cash-back [and] frequent-flier miles. A card made of recycled plastic or wood would provide value to some consumers, to do their own virtue-signaling," he wrote.

"The only thing better would be ditching physical cards altogether, and moving completely to mobile wallets and contactless," Aaron McPherson, principal at AFM Consulting Partners in Boston, wrote in an email. However, people are quite attached to their physical cards, so I don't think you can mandate that."