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Will retail cash recycling result in lower quality cash?

December 17, 2013 by Brendan Burge

Many of the manufacturers of retail cash smart safes are starting to talk about the viability of smart safe recycling devices. It is widely accepted that retail smart safes are the next big trend in retail cash management, but will cash recycling result in a lower quality of cash?

If banknotes are recycled at the retail level and moved from smart safes to in-store ATMs and cashier drawers, how will banknotes be cleaned? I believe it is already true that the smart safes deployed by CITs and banks have resulted in less fitness processing.

Certainly central banks care about the quality of cash in circulation, as do most people. No one wants banknotes that are dirty, torn or otherwise less than "fit" in their purses and wallets.

However, with the growing popularity of cash forecasting and inventory optimization software, retail and central bank inventories are being reduced to their lowest possible threshold.

When a retail bank or CIT pulls vault cash to supply retail cash orders and there isn't enough fit cash to satisfy demand, it is a common practice to make up the shortfall with lower quality, unfit banknotes. If circulated notes do not find their way to cash processing operations as frequently as they have in the past, how will lower quality banknotes be culled from circulation?

Is it realistic for manufacturers to incorporate retail fitness sorting into smart safe recycling machines? Will this make machines overly expensive? Will they become too large to fit in the small footprint desired by most retailers?

Lastly, does anyone in the banknote handling industry even care?

It seems to me that central banks need to investigate the impacts of smart safe recycling before the technology catches on — and catch on it will, in my humble opinion. Perhaps it would be wise for manufacturers, CITs and banks to come together to debate this potential problem.

I feel that without industry debate ,the eventual result will be reactionary central bank retail recycling policy that will result in unnecessary cost and equipment retrofitting or replacement.

What do you think?

Read more about vault cash and cash management.