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Source: Press release

The issue of climate change has become increasingly important for many European consumers in recent years. Numbers of blue chip companies and large financial institutions in Europe have invested in launching their own carbon footprint reduction initiatives.

It follows that some card issuers, when looking at new ways to attract business through pricing and enhancements, are targeting environmentally aware consumers with green incentives. The new green corporate Visa ClimaCount card, which is set to be rolled out across Europe, will take advantage of this growing concern regarding climate change in the West.

RePay International – which is partnering Visa Europe for the launch of the Visa ClimaCount Card – is an offshoot of Netherlands-based company Tendris, an investor in various consumer products to counterbalance carbon emissions. RePay has a history of looking into carbon discharge and offering offsetting as an incentive for electronic payments. With the framework for offsetting, and the carbon emission calculator and IT infrastructure already in position, RePay expects each country-wide rollout to take four to six months.

RePay CEO Patrick Bunnik says: “We began with the concept in the Netherlands in 2004, looking primarily at the consumer markets. Back then it was a real niche product because climate change was not really on the radar of that many people. Now, on the other hand, it is a proven business model because the knowledge about climate change has increased. Looking at the surveys we have seen so far, between 80 and 90 percent of the people we asked are at least aware of climate change and the environmental impact of the things they are doing and spending their money on.”

With the consumer ClimaCount card model – which is targeting individuals and will be launched in the US in early 2009 – the offsetting initiatives are part of the business model and, therefore, paid for by the card issuer. In this case, the carbon-offsetting scheme replaces another incentives, such as loyal rewards, which the bank might otherwise invest in to make the product more attractive.

For commercial cards, such as the Visa ClimaCount, the bill is footed by the cardholder’s employing company, unless the issuing bank chooses otherwise. Visa estimates that the expected cost of the offsetting scheme will be around 0.65 percent of spend. Although costs depend on the size of the portfolio, they put the “all in” running costs of the initiative at between €3 ($3.80) and €5 ($6.40) annually per account, including IT solutions and web interface. Bunnik maintains that interest rates on the product, although they will depend on the issuing bank and region, will “not differ from the average APR in the local market”. Visa Europe confirms the their target sectors for the corporate ClimaCount card includes SMEs, large commercial companies and the public sector.

Repay International owns and manages the ClimaCount calculator which is used to determine how much a consumer’s Visa ClimaCount purchase has added to their carbon footprint and, thus, the amount that needs to be offset.

Bunnik says: “ We make a model for each individual country because prices and spend levels differ, VAT levels differ, and even the carbon emission per euro spent are different for each nation. We always work with a local model. It starts with the information that comes from an individual credit card transaction, so based on merchant category codes in combination with monetary value. For example, if you have bought an airline ticket on the internet, we can see the name of the airline, and also that it is an online transaction; these different elements have an impact on the calculator.”

He explains how the method for carbon emission calcultation has evolved into the mature model now being adopted for the Visa ClimaCount card in Europe. “When we started it was quite simple, but now we are calculating it on a much more detailed level. We do not only have our merchant category codes but we also use other public information when looking at the hotel, airline or car rental company a consumer has chosen. Each company has a different environmental impact, so we look at them separately to make sure we are calculating the carbon emissions in the best possible way.”

Customers can also track the green ventures that the contributions made on their behalf support. The ClimaCount website, which provides quarterly progress updates on its environmental schemes, also allows consumers some measure of choice regarding where investments are made.

Naturally, interest in Visa ClimaCount will vary between countries depending on how much awareness and proactive action there is concerning climate change. Luc Janssen, head of commercial products at Visa Europe, says: “We expect France, the UK and the Nordic region to be the first movers, but we have a lot of internet from Visa members around Europe.”

Bunnik adds that possible markets to target next could include Japan and Australia, based on their highly developed cards industries and the prevalence of environmental consciousness among nationals.

Click here for more information about Visa Europe