The following is one of thirteen commentaries that will appear in the ATM Future Trends Report 2012. Contributors representing several segments of the industry provided their insights on issues and trends they believe will shape the industry during the next five years.

Expenditures in Europe related to wholesale cash distribution amount to 84 billion euros annually, according to the report The Future of Cash and Payments 2010 by Retail Banking Research. The long-term solution to this problem — and a main objective of the Single Euro Payments Area program — is to incentivize a shift to electronic payment instruments. In the mid-term, however, it is necessary to increase the efficiency of wholesale cash distribution based on harmonized processes.

In line with this approach, the European Payments Council, which represents the European banking industry in relation to payments, launched an initiative to standardize the size of ATM cash cassettes and cash transport cases and to create interoperability among Intelligent Banknote Neutralization Systems.

There are almost 400,000 ATMs installed across Europe. The single and multi-denomination currency cassettes, which sit inside each ATM's cash dispenser, come in a wide variety of dimensions and sizes. Cash cassettes and ATMs are increasingly protected by IBNS. Today, IBNS need to be customized for different cash cassette models and ATM types. This lack of standardization in the ATM landscape is one of the factors contributing to the substantial cost of wholesale cash distribution in SEPA.

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The provision of an open ATM cash cassette standard will decrease maintenance costs. The economies of scale resulting from the introduction of common standards in this area will lead to further cost reductions.

Making standard size receptacles available also will allow empty cassettes to be replenished with deposits retrieved from a different ATM in the same locality. This standardization initiative therefore responds to, and takes advantage of, the trend to deposit cash at ATMs.

Last, but not least, is the environmental benefit: a "one-size-fits-all" approach allows cash-in-transit companies to efficiently store cash cassettes in their trucks, thereby reducing the number of cash transport journeys required.

Interoperability among IBNS also will increase the choices of providers active in the cash cycle. These providers will no longer be forced to rely on specific IBNS compatible only with a limited number of cash cassette models, ATM types and/or ATM cassette delivery cases. Standardization in this area ensures streamlined procedures when activating or deactivating these systems.

As a result, less time and effort is required to familiarize staff with the wide variety of procedures existing today. There is potential for more cost reduction once the needs of different styles for the same system disappear. The funds and efforts dedicated today to manage the variety of models can be concentrated and oriented to new developments, such as enhanced security.

The EPC, however, is not calling for a "big-bang" replacement of the current equipment, but rather a gradual evolution in line with equipment lifecycles. Following a further feasibility and business case analysis, the EPC will reach out to all relevant stakeholders active in the cash cycle, with specific proposals aimed at advancing this initiative.

Leonor Machado is general manager at Caixa Geral de Depósitos, with responsibilities in the area of payments. Machado also is the chair of the Portuguese Single Euro Payments Area group. With a background in economics, Machado worked in various fields, including international trade and cooperation and development, before joining the banking sector.

Gerard B.J. Hartsink is the chair of the European Payments Council and is a senior advisor to the managing board of ABN AMRO Bank. Hartsink also is chair of CLS Bank, board member of LCH Clearnet, convenor of ISO 20022 Registration Management Group and board member of Society for Worldwide Interbank Financial Telecommunication.

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