Are Credit Cards Bad For The Environment?
Tue, Feb 26, 2008
I was at the coffee shop this morning and, much to my dismay, did not have three dollars with which to pay the lady for my sanity and large muffin. This led to me reaching for plastic charge cards, which, if you didn’t know, means she now has to foot some of my bill.
See, credit card companies assume the risk that something bad will happen in between the time I receive my product and they receive their money (the merchant gets theirs instantly)–and therefore take a small percentage for their trouble.
I always feel bad when this happens in a mom-and-pop business, which my coffee shop is as Starbucks has yet to conquer my block and probably has no interest in it. But if credit cards are bad for small business owners, who may only get 95 cents on the dollar, what do they do to the planet?
Directly, not much. And I’m guessing that if we’d go so far as to abolish cash, they’d be awesome. But there’s one problem: that’s not happening, and it’s been proven that credit makes us all greedy. Credit cards do increase the consumption of paper on a phenomenal scale (You going to balance your charges? Really? Then you don’t need a copy of your receipt for that mochalatte, ok?). For one thing, we get a lot of receipts for items we didn’t used to in the past, and when we do, we get two where there would have been one in the past (bear in mind, I’m treating checks vs. cash as equals, even though they’re not; that’ll make your head explode). Then there’s the millions of processing machines (when’s the last time you saw a knucklebuster?) and the power that they draw.
Add to that the fact that credit cards are made of a plastic blend starring such tough to recycle all-stars such as PVC, and credit cards seem like they may be the bane of humanity.Of course, cash isn’t much better–the U.S. still makes our money out of a majority cotton blend, which is raised on a steady diet of petroleum-based fertilizers, and our coinage is comprised of copper, zinc, nickel, tin, and manganese in varying combinations, all of which require some serious effort to mine and refine. Credit cards in a stand-alone capacity would doubtless represent a serious upgrade over this system, especially with the abolishment of the gold standard.
The wild card? The aforementioned article about credit cards increasing our consumer spending habits. As we spend more, all of our resources become depleted in the “race to replace.” This invention aside, credit cards seem to serve as a method of magnifying your present footprint; if you already do more harm that good, credit simply magnifies it; if you live a green lifestyle, consider living cashless one facet of that.
By new Environmental Graffiti contributor Ben Ray. Ben is a freelance writer, check him out at What’s Required
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February 26th, 2008 at 4:59 pm
Might want to check a few things if for UK readers. As far as I am aware the merchant doesn’t get the money straight away, as in article, far from it.
Depending whether you use credit or debit and contract etc. The merchant has to pay a fixed fee or %. They also have the hire/rental etc of the terminal/connection.
The money taken off the card first goes to the system operator not the merchant. This is how the money is made. Millions of transactions all earning interest for the time the operator holds the money, the merchant doesn’t have it. Mom and Pop coffee shop have to wait, they are the last in the queue for the money. The money is else where earning interest. Not in their account, so they may be paying interest if overdraft is required due to the lags in the cashflow times. How long they wait for the money for the coffee and muffin depends on their arrangements with operator and banks. They might wait a month, less the fee, less the rental, less the bank charges etc. This is the basic UK business model, would have thought similar over the world. From card to operator then finally to the merchant.
Remember credit means society borrows off the future to live for today. With $ trillions owed on credit it is a massive problem in any climate change ecological stability strategy for the future. Credit is a massive driver of global unsustainable development.
February 26th, 2008 at 11:51 pm
The problems associated with borrowing aren’t present with check cards (or ATM cards with a Visa or MasterCard symbol). They allow the convince of not carrying cash but don’t cause you to go into debt. They are still made of plastic, but that can be changed, perhaps into corn based plastic instead of PVC.
February 27th, 2008 at 3:44 am
To clarify, the way the cash-flow works is as follows:
The merchant swipes your credit card; at the end of the day, the machine does what is called a “batch”, which means it reports all of the charges to the processing company. At this point the business is (with rare exception) in the clear–the processor has assumed the risk, because that’s what they get paid to do, and the money from that day will be in the merchant’s bank account in 3-4 business days.
As far as fees go, usually the direct deposit the merchant has set up to receive credit operates the other way at this point–at the end of the month, they will automatically have withdrawn a fee that represents the lease on the swipe machine, a percentage of all sales, and probably a per-transaction processing fee. Well, and probably other things, too; some processors are bigger dicks than others.
You can see the mouthful that all is; with only a 3-4 day lag, it was just easier for me to say “it’s instantaneous”, even when it’s not. And you raise a very valid point that the processor keeps the interest they make in that lag, giant evil corporation that they are.
As far as debit cards solving debt-related issues, that’s true–but they still don’t slow our increase in consumption. People just spend more when they don’t see the cash, as silly as it is.