News

The challenges of cash recycling

Cash-recyclers are small, but they have a big future.

June 15, 2006

About the author: Bryan Harris is the editor of SelfService.org, the Self-Service and Kiosk Association's Web site. Harris, who regularly writes about the self-service industry, recently wrote an article about theRetail Systems showin Chicago.

Cash-recyclers are still limited in their capabilities and uses. Large cash-recyclers hold hundreds of bills, compared to thousands of notes in bill dispensers. The interest in recyclers as an alternative to validator/dispenser combinations continues to grow, and companies are continually improving their recyclers to meet industry demand.

Self-Service and Kiosk Association editor Bryan Harris queried two experts in the cash-recycler field: MEI-Mars Electronics' Neil Young and JCM American Corp.'s Dave Elich to learn the benefits, challenges and future of cash-recyclers.

SelfService.org: What are the key benefits of cash recycling?

Young: The immediate advantage is the cost savings associated with reducing the amount of float (bills needed for inventory) required to start up a self-service application. Over the long term, there are costs associated with cash management, which includes refilling the seed inventory and clearing and securing the cash. When retailers use the same cash that is paid in to dispense, they reduce these charges significantly. Recyclers also reduce employee contact with cash, delivering additional savings through reducing commercial cash-handling fees, shrinkage and cash-room activities.

Recyclers also improve the consumer cash experience by consolidating the input and output of the cash into a single device. One device to replace two separate devices means less space required, fewer container bins and cassettes to handle and store cash, and less communication ports required to control it.

SelfService.org: What indicates the demand for cash-recyclers?

Elich: There is a general trend to automate more and more retail transactions. When you do that, you have to do it in a cost-effective way, both in terms of size and in effectiveness. Those combined factors drive the demand.

SelfService.org: What are the design and implementation challenges? How can they be overcome?

Young: Recyclers are complex devices involving mechanical, software and electronic components. The products will be useless at best, and turn away customers at worst - if they are not functioning properly.

Early-entry models have not worked out all the bugs, are not reliable enough, and are not designed to optimize security and dispense the denominations of cash demanded by today's consumers.

Some of the specific challenges are: reliably accepting and transporting low-quality street money, designing a mechanism to make it easy to replenish denominations as needed, determining capacity requirements in terms of specific denomination types (which vary by industry, application, location and geographic markets), and closing the cash-management cycle to avoid cash-handling on the floor.

Addressing these needs requires the design of a recycler as a complete system. Integrating recyclers into new-product platforms - such as OEPTs (order-entry and pay terminals) for the quick-serve and c-store industries, and self-checkout systems for the grocery and chain-store industries - involves first understanding the footprint, power and communications requirements of the component. Then it requires working with a payment-systems vendor that understands the requirements and can provide the tools needed to integrate the component.

SelfService.org: Do you believe cash-recyclers will eventually replace acceptors and dispensers in machines that use both?

Elich: Not only do we expect cash-recyclers to replace acceptors and dispensers, but we expect kiosks with cash-recycling technology to replace more and more cash-drawer operations. Think about what happened when VCRs first hit the market. There were issues of consumer acceptance, size constraints and cost considerations. Over time, as consumer acceptance of the product increased, improvements were made and costs came down. Compare that to the automatic-transaction industry. Over time, we can expect that operator-acceptance of the product will increase and the cost will decrease. There is a marked trend in the industry toward more and more automation, and as that increases, we expect recycling to increase.