Article

Will businesses be forced to pay for polymer notes?

Polymer notes have undeniable benefits, but these come at a cost to ATM deployers and others involved in the cash cycle.

November 13, 2013

by Matthew Shaw, head of marketing, Cash Management Solutions

This September, the Bank of England announced proposals to introduce polymer notes to replace paper notes in the U.K. But while feedback has been generally positive, there are concerns for businesses operating in the cash industry.

Cash machine manufacturers have been anticipating the coming of polymer for some time, and so new cash counting equipment can be relatively easily recalibrated. However, older equipment may need replacing and the scope of the potential changes required is broad — for example ATMs, cash cassettes for ATMs, vending machines, retail cash office technology, cash processing machines and counter cache machines.

According to Brendan Doyle, CEO of Cash Management Solutions, the decision taken by the Bank of England to move to polymer notes makes sense. 

Paper note after being submerged in red wine.

Polymer note after being submerged in red wine.

"They are more durable and therefore the long-term costs of production will be lower," he said. "They are also currently more difficult to counterfeit and this brings benefits to the whole payments system."

However this is not necessarily "end of story." Doyle said there might well be costs involved for businesses that deal with cash.

"The concern is that businesses, as end users, may be on the hook for the upfront costs of implementation, and may not be given the information, support and time required to fully understand the implications," he said.

As yet, businesses have not been given an idea of the costs of the changeover. As part of the process, the Bank of England has undertaken a consultation process to research the potential costs. 

CMS will be taking part in the consultation process; the company will call for full transparency of any anticipated costs, as well as the assurance that the impact to businesses operating in the cash industry will be as limited as possible.

While the consultation process is underway, businesses should consider three major concerns associated with the change to polymer notes:

• The initial outlay required might have direct impact on the capital costs for a number of businesses that have already made an investment in ATMs, POS equipment, vending machines and backoffice cash-counting technology;
• The costs of new equipment to the cash processing and cash in transit industry may be great enough to have an impact on the cost of cash for banks, independent ATM deployers, building societies and businesses in the short to medium term; and
• The level of investment required to process cash might rise, creating further barriers to entry in an already concentrated industry — which will have long term consequences for competition and ultimately, pricing and service quality.

In all, though, the biggest concern will be that businesses will not be given enough time or information to be able to influence the outcome and ensure that they are not disadvantaged.

Cheshire, England-based Cash Management Solutions is an independent company delivering intelligent cash solutions. The company manages $20 billion in cash annually for more than 12,000 sites in 25 countries. 

Read more about vault cash and cash management.

photos: all images Bank of England