Why A2A Payments are the Perfect Payment Method for the Circular Economy
Sustainability is no longer a mere buzzword; it’s a moral and ethical responsibility for businesses, governments, and consumers alike.
The ever-growing concerns surrounding climate change, carbon emissions, and resource depletion now drive an urgent need for sustainable business practices — making it abundantly clear that we all must adopt more sustainable practices to protect the planet for future generations.
Thus, the circular economy has emerged as a crucial solution to reducing waste, promoting reuse, and conserving resources. Yet, businesses need payment systems that align with these goals to make the circular economy framework viable.
Account-to-account (A2A) payments powered by open banking offer these enterprises a low-cost, efficient, and secure way to conduct transactions within the circular economy. While sustainability remains the ultimate goal, the circular economy serves as the vehicle to get us there, and A2A payments are the perfect payment method to support this journey.
In this article, we’ll answer a fundamental question: What is the circular economy? We will also analyse its payment methods, the circular economy principles, and the distinct advantages of A2A payments and how they support this sustainable economic model.
What is the circular economy?
The circular economy is an economic system aimed at eliminating waste and the continual drain of resources. As the European Parliament describes it, the circular economy is a model of production and consumption that involves numerous steps, such as leasing, reusing, repairing, and recycling existing materials to extend a product’s lifecycle.
Unlike the traditional linear economy, which follows a take-make-dispose approach, the circular economy seeks to close the loop on production and consumption by extending product life cycles and promoting sustainable resource use. From an environmental standpoint, the traditional model contributes significantly to resource depletion, waste generation, and pollution — all accelerating climate change and degrading ecosystems.
The EU wants to achieve a circular economy by 2050, aligning with its overarching climate neutrality goal. As such, this ongoing shift away from the linear model is not just an environmental or moral imperative, but a political and economic endeavour as well.
Circular economy principles and why the the circular economy is important
The linear economy contributes to environmental degradation, resource depletion, and increased carbon emissions. Meanwhile, the way resources are extracted, processed, consumed, and thrown away drives what the UN refers to as the “Triple Planetary Crisis” — the crises of climate change, biodiversity loss, and pollution/waste. The circular economy mitigates these critical global challenges, and offers a sustainable alternative, by prioritising reusing and recycling.
One of the most important principles of the circular economy is economic resilience. By reducing reliance on finite natural resources, the circular economy helps to strengthen supply chains and minimise vulnerabilities to resource shortages and geopolitical tensions. This is especially critical as the global population grows and resource demand increases.
Waste reduction is also one of the core circular economy principles. For example, did you know that the traditional linear economy generates 92 million tons of textile waste yearly? Unfortunately, much of said waste typically ends up in landfills or polluting natural environments. In particular, the circular economy in fashion is essential for reducing waste by encouraging the reuse, refurbishment, and recycling of products and materials.
By minimising waste and promoting cleaner production methods, the circular economy in fashion and beyond, reduces pollution, including greenhouse gas emissions and toxic waste, contributing to a healthier environment.
Benefits of the circular economy
The circular economy brings numerous benefits to society, the environment, and businesses alike. However, the most obvious benefit is the maximisation of resources. By maximising the use of resources, the circular economy reduces waste and lowers the environmental impact of production and consumption.
As of 2020, the EU generated 2.1 billion tonnes of waste. However, this figure would be significantly lower if the EU had already achieved its goal of becoming a circular economy. Keeping materials in circulation for longer is one of the most important circular economy principles. Meanwhile, designing products for reuse and recycling conserves resources and drives innovation in product design and waste management. This, in turn, can foster new business opportunities and stimulate economic growth, all while generating employment.
Furthermore, the circular economy contributes to pollution reduction and the conservation of natural resources, which helps to support communities and protect ecosystems. As more businesses adopt circular economy principles and practices, they become more sustainable and resilient, reaping long-term social and environmental benefits. This economic model promotes sustainable growth and ensures that economic development is accompanied by environmental responsibility.
Payment methods used in the circular economy?
In the circular economy, businesses rely on various payment methods, but traditional payment methods — like credit cards, debit cards, and digital wallets — present several challenges.
- Credit/Debit Cards: While credit and debit cards are widely used, they often have high transaction fees, which can be burdensome for small businesses operating within the circular economy. Additionally, these transactions may involve intermediaries, slowing down processing times.
- Digital Wallets: Digital wallets offer convenience, but they also come with intermediary fees, and can disrupt the cost-saving goals of circular economy businesses.
- Bank Transfers: Although bank transfers are secure, they can be slow and less user-friendly, which may frustrate consumers and hinder the seamless transactions that circular economy platforms aim to provide.
Many traditional payment methods erode profit margins and slow down cash flow, which can be especially problematic for small enterprises that rely on quick turnaround times. Traditional payments also expose businesses to higher levels of fraud and chargebacks, which can also pose additional risks.
For more information on payment methods, please see our dedicated article: Understanding Payment Methods.
Instant A2A Payments as an emerging solution
Open banking-powered instant A2A payments, such as those offered by Brite, provide a direct, low-cost alternative that eliminates many of the inefficiencies associated with traditional payment methods. These payments allow businesses to transfer funds directly from one bank account to another — bypassing intermediaries like card networks or payment processors, both swiftly and securely.
The direct nature of A2A payments significantly reduces transaction fees and speeds up the transfer of funds, improving cash flow for businesses in the circular economy. Additionally, the enhanced security features of A2A payments — including Strong Customer Authentication (SCA) and ID verification — make them more secure than traditional payment methods. This level of security aligns with the ethical and transparent values central to the circular economy.
The benefits of instant A2A payments in the circular economy
Instant A2A payments provide multiple advantages for businesses operating within the circular economy:
- Security: A2A payments employ strong customer authentication (SCA) and ID verification, reducing the risk of fraud and unauthorised transactions. By requiring direct authentication from the payer, A2A payments provide businesses with a secure, transparent payment method that aligns with the ethical principles of the circular economy.
- Speed: With instant or near-instant transfers, A2A payments significantly improve cash flow, allowing businesses to operate more efficiently. This is particularly valuable for businesses relying on quick turnover, such as those involved in second-hand goods or peer-to-peer platforms.
- Ease of Use: A2A payments eliminate the need for consumers to navigate multiple apps or platforms, simplifying the payment process. For businesses, integrating A2A payments into their systems is seamless and user-friendly, improving customer satisfaction.
- Low Cost: A2A payments offer lower transaction fees than card payments, helping businesses maintain healthier profit margins. The savings from lower transaction costs can be reinvested into the business or passed on to customers, reinforcing the affordability and accessibility goals of the circular economy.
To learn more about the benefits of A2A Payments, be sure to read our detailed A2A Payments explainer.
How instant A2A payments support the circular economy
As the circular economy grows, more businesses recognise how A2A payments can make a real difference in their operations. From auction houses to tech refurbishers and second-hand marketplaces, companies are embracing this payment method. Because it’s not just about reducing costs — it’s about making transactions smoother and more secure.
For businesses focused on sustainability, A2A payments help to streamline processes and, most importantly, extend the life of products by encouraging reuse and recycling. It’s a simple, efficient way to keep resources in circulation while supporting a more sustainable economy.
Auction Houses: Auctionet
One company that exemplifies the use of A2A payments within the circular economy is Auctionet — a leading European online auction platform specialising in second-hand goods. Auctionet allows users to bid on and purchase furniture, antiques, and art, all of which help reduce waste by extending the lifecycle of products.
Through A2A payments, Auctionet has streamlined its payment process, enabling faster and more secure transactions for sellers and buyers. A2A payments remove the need for intermediary payment services, reducing fees and ensuring that sellers receive their funds faster. Additionally, Auctionet has implemented SCA to enhance security and minimise fraud, which is critical in the auction industry where large sums of money are often involved.
As our customer case study highlights, Auctionet has benefitssignificantly from A2A payments, particularly regarding cross-border transactions.
Auctionet operates across multiple countries, and A2A payments have helped reduce the friction and costs associated with international payments, which are typically higher when processed through traditional payment methods like credit cards. This cost reduction directly supports the circular economy by making it more financially viable for consumers to purchase second-hand, thereby encouraging more sustainable consumption habits.
Refurbished tech: Right to Repair Directive
The refurbished technology sector is another area where A2A payments arehighly beneficial. Companies like nordic brand Swappie, which refurbish and sell second-hand smartphones, are playing a critical role in reducing electronic waste (e-waste). By refurbishing devices that would otherwise end up in landfills, Swappie is extending the life cycle of smartphones, making them accessible to a broader range of consumers.
Swappie’s success is also bolstered by the broader Right to Repair Directive, an EU law aimed at making repairs easier and more accessible to consumers. This directive requires manufacturers to design products that can be easily repaired and mandates that repair information is made available to third-party businesses and consumers.
Additionally, the global demand for refurbished electronics and smartphones continues to rise. According to a recent report, used smartphone shipments are expected to reach a market value of approximately $110 billion by 2027. This growing market showcases how circular economy businesses, powered by secure and efficient A2A payments, are capitalising on the trend toward sustainability and waste reduction.
Second-hand clothing marketplaces
The second-hand fashion industry has also seen a surge in popularity, and platforms like ThredUp and Vinted are leading the charge in making sustainable shopping accessible.
Both ThredUp and Vinted allow users to buy and sell pre-loved clothing, which not only helps people clear out their wardrobes but also reduces the environmental impact of textile waste. In a world where fast fashion dominates, second-hand marketplaces provide a refreshing alternative that encourages thoughtful consumption.
However, what makes the circular economy in fashion possible behind the scenes? A2A payments. By offering a low-cost, quick, and secure way to handle transactions, A2A payments ensure that sellers get their money fast without being hit by hefty fees. This smooth process makes it easier for people to embrace second-hand shopping, and for many, the financial savings from lower transaction costs are just as appealing as the sustainability aspect.
With A2A payments, buying second-hand doesn’t just feel good for the environment— it makes good financial sense too.
Embracing instant A2A Payments for a sustainable future
As businesses continue to adapt to the pressing need for sustainability, it’s clear that the circular economy is not just an ideal. It’s a practical solution to some of the most urgent environmental challenges we face. By reducing waste, extending the lifecycle of products, and promoting reuse, the circular economy fosters a more responsible way of consuming and producing goods. However, for this model to truly thrive, it requires financial infrastructure that is just as efficient and sustainable.
This is where instant A2A payments come in. Offering businesses a secure, low-cost, and fast way to process transactions, instant A2A payments — such as Brite A2A Payments — are perfectly aligned with the principles of the circular economy. Brite A2A Payments streamline payments and remove the inefficiencies and costs associated with traditional methods, allowing businesses to focus on what truly matters: creating lasting value and reducing their environmental impact.
By embracing A2A payment solutions like Brite, businesses can reinforce their sustainability commitment while enhancing operational efficiency. Whether it’s auction platforms, refurbished tech providers, or second-hand marketplaces, A2A payments are already proving to be a game-changer for businesses dedicated to driving the circular economy forward.
Incorporating A2A payments isn’t just a financial decision — it’s a step towards building a more sustainable, resilient economy for future generations. As more businesses and consumers make the shift, it becomes clear that A2A payments are a critical part of this new economic landscape. Now is the time to integrate them into your business model and help propel the circular economy toward even greater success.
Are you interested in seeing how A2A Payments can benefit your business and support your sustainability goals? Contact our team today to learn more.
