The MasterCard commercial goes something like this – while watching a live hockey game (obvious venue for a hockey playoff commercial) one couple notices that another couple seated one row in front of them are using their MasterCard to pay for small purchases like soft drinks and hotdogs. While commenting on this “unique” behaviour, the couple buying the food respond that using their MasterCard is so much easier and faster than using cash – and safer too. Now me being a very big supporter of cash, I am obviously biased to believe cash is usually faster and easier. The question of safety however hangs in the breeze, as both forms of payment have risk.

Is a credit card safer than cash? Both can be stolen, definitely. A credit card can be reported stolen and will no longer work. If your cash is stolen, it is gone. So really, which is safer? Before I could find and answer to this, I came across an article from on the Finextra website, titled “US charges eight over $45m ATM theft“. The article describes the following facts of the case:

The scam saw hackers spend several months working to gain access to the computer networks of credit card processors, stealing pre-paid card details and upping the balance limits, say court filings. The data was then sent to cells of ‘cashers’ around the world who used it to make counterfeit cards before being sent PINs to make ATM withdrawals.

The first operation carried out by the gang, on 22 December, targeted a processor that dealt with transactions for pre-paid MasterCard debit cards issued by the National Bank of Ras Al-Khaimah PSC in the UAE. More than 45000 transactions were made using the stolen information, costing the bank and processor around $5 million.

The second attack, on 19 and 20 February, targeted a processor that serviced MasterCard pre-paid debit cards, this time issued by the Bank of Muscat, in Oman. In just 10 hours casher cells in 24 countries executed 36,000 transactions and withdrew about $40 million from ATMs.

WOW – $45 million dollars! Although the criminals were caught, not all of the cash was recovered. Who pays for this? All credit card companies will tell you that the cardholder is not responsible and that the losses, if unrecoverable, are covered by the company. But where do they get the money? From fees charged to retailers and interest charged to those who do not regularly pay their whole balance each month. So really, all cardholders pay the cost of stolen or hacked cards.

Is cash or a credit card easier. While MasterCard is spending significant dollars looking for “interns” to prove this point in a series of TV commercials, I think the true answer is this – pay with cash, receive your change and that is the end of the transaction. Pay with a credit card, sign the slip or enter your PIN code and … that’s not the end of the transaction. You will still have to wait for your next statement or check on-line to make sure you were charged correctly and then pay your balance. That seems like a whole lot more effort to me.

In the final analysis as to whether MasterCard is better than cash (or any credit card really), I offer the following checklist:

• Can a criminal steal personal information from the notes in my wallet?
• Is it really easier to use a credit card?
• Is a credit card transaction really faster?
• Can you track my cash payments and build a profile of me to sell to advertisers?

After careful consideration of the answers to those questions and anecdotal comments from associates, friends and family - is MasterCard better than cash? No! Is any credit card better than cash? No!

There you have it – cash wins almost every time – no matter how the credit card companies spin their research, cash is still king in the payments world!

The post MasterCard is Better Than Cash appeared first on Counting On Currency.

Alas, like many of our readers those of us at Counting On Currency will not be able to attend this most prestigious banknote event. For those of you not attending and for those of you who will be there, we offer here a brief summary of this years conference.

Featured Presentations

ON THE JOURNEY TO PRODUCT COMPLIANCE: A SAFE BANKNOTE FROM AN INK POINT-OF-VIEW - René Berger, Head of the Analysis & Product Compliance Group, SICPA

COMMON DETECTOR INTERFACE (CDI) FOR CENTRAL BANK SORTING MACHINES - Harald Deinhammer, Senior Research and Development Expert, European Central Bank

MAJOR UPGRADE OF BSP’S PRINTING FACILITY - Elizabeth Dejarme, Acting Deputy Director, Banknote Production Unit, BSP

THE GREEK ECONOMY – CHALLENGES ON THE ROAD TO A NEW GROWTH PARADIGM - Ms Eleni Dendrinou-Louri, Deputy Governor, Bank of Greece

POLYMER BANKNOTES – THE NIGERIAN EXPERIENCE - O.M. Fakiyesi, Head, Currency Planning & Development, Central Bank of Nigeria

BUSINESS CONTINUITY PANEL - Coordinated by Mark Gould, Senior Vice President & Deputy Product Manager, Federal Reserve Bank’s Cash Product Office

PREPARING FOR THE LAUNCH OF THE US $100 NOTE: LESSONS LEARNED AND THE PATH FORWARD - Michael Lambert, Deputy Associate Director, US Federal Reserve Board

PICTURE THREAD – ADDING A HUMAN TOUCH TO BANKNOTES - Emmanuel Larroumet, Regional Sales Director, Arjowiggins Security

KINEGRAM – INTEGRATED SECURITY - Peter Muehlfelder, LEONHARD KURZ

1+1 NOT EQUAL 2 - Victor Nesterenko, National Bank of Ukraine and Matthias Gygi, KBA Notasys

MEASURING BANKNOTE LIFE – AN AUSTRALIAN PERSPECTIVE - Alexandra Rush, Senior Analyst, Note Issue Department, Reserve Bank of Australia

CODE OF CONDUCT FOR LOCAL RECYCLING - Chris Salmon, Bank of England

SWEDEN’S VIEW ON A CASHLESS SOCIETY - Bjorn Segendorff, Advisor, Sveriges Riksbank

RECENT TRENDS, CHALLENGES AND INNOVATIVE PRACTICES IN THE DISPOSAL OF SOILED BANKNOTES IN INDIA - Mr. BP Vijayendra, Chief General Manager, Reserve Bank of India

BANKNOTE DATA ACQUISITION: BENEFITS AND CHALLENGES FOR CENTRAL BANKS - Keith Williamson, Technical Sales Director, De La Rue Cash Processing Solutions

International Association of Currency Affairs – Special Events

Tuesday May 14th – 4:00PM to 4:30PM – Currency Hall of Fame Induction Ceremony

Tuesday May 14th – 4:30PM to 5:00PM – Annual General Meeting

Wednesday May 15th – 12:30PM to 1:30PM – Intellectual Property Panel – THIS EVENT IS SOLD OUT!

Wednesday May 15th – 6:30PM – Gala Dinner featuring the IACA Excellence in Currency Awards Presentations

For further information on any of the presentations and events noted above, you can find more details at The Currency Conference website.

ABOUT THE CURRENCY CONFERENCE

The Currency Conference began in 1992 at the request of Central Bankers responsible for Cash, who recognized the need for a unique conference to address their specific areas of interest, their challenges, and their desire to network with their peers in other countries. Fourteen very successful conferences later, the Currency Conference remains the premier industry conference for Central Bankers. 

The Currency Conference brings together the key officials in the currency issuing departments around the world in a secure and interesting environment to share their experiences and to network with each other and the top industry leaders. We provide the best policy driven, international agenda to justify their attendance. We focus attention on our Central Banks and Government Bank Note Printing Works and commercial attendance is limited.

With the global economic situation, we feel it is more important now than ever to continue to provide a secure forum for key officials from the world’s Central Banks and Bank Note Printers to meet and discuss efficiencies, best practices, new strategies, as well as the latest technologies and solutions for their operations.

Sponsors of the Currency Conference include the world’s leading suppliers to the currency industry and an extensive exhibition of their new technologies and products are included in the program.

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Deciding to launch the Cash Processing Operations Opinion Survey was not easy. First, there are many more qualified companies that are professional survey and market opinion businesses. Second, our methodology is unscientific and meant only to try and tap the opinion and participation of our audience.

It is not often that an industry opinion survey springs from the grass roots. With the Cash Processing Operations Opinion Survey, we at Counting On Currency are attempting two simultaneous experiments. We want to see if our grass-roots readership is interested in providing unfiltered and anonymous opinions. We also want to see if the method we are choosing to deploy the Cash Processing Operations Opinion Survey and subsequently report on the findings, will work as we hope.

The Cash Processing Operations Opinion Survey will remain active for at least one week. The results will be posted live and will be made available through a link at the bottom of this post. Please contribute when you have a spare five minutes – and please feel free to encourage your peers to participate. Check back every once in a while to see the results.

The Cash Processing Operations Opinion Survey is brief – only 20 questions – and you don’t need to respond to all of them if you don’t want to or if they are not relevant to your role within the industry.

Please click the links below to take the survey, or view the results as they accumulate

The Cash Processing Operations Opinion Survey

The Cash Processing Operations Opinion Survey Results

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Our good friends at Currency News have offered us the opportunity to repost their recent article (March 2013 Issue) featuring the technology of nanothentication, also known officially as High Speed Nanocrystallisation. Without the security advances available from technologies like High Speed Nanocrystallisation, the life expectancy of currency in general would be greatly influenced by hitech counterfeiters. Like many who cam before and have yet to be known, we owe these technologists and scientists a debt of gratitude for assuring our secure future – until the next leap-frog!

Next Phase of New Optically Variable Feature

Based on High Speed Nanocrystallisation

Researchers at the Lebedev Institute of Physics of the Russian Academy of Sciences in Moscow have developed a new technology that generates graphic designs with unique optically variable effects in the bulk of the substrate material. Their research is said to expand the range of optically variable devices currently available for banknotes, both paper and polymer, and is aimed at providing a simple, unambiguous and easy to verify public security feature.

Initial developments were first unveiled at the 9^th Pan European High Security Printing Conference in St. Petersburg last year and targeted cotton-based substrates (see AN Vol 18, No 7), but is now available for polymer materials as well.

The core technology is based on short pulse laser interactions with matter and involves growing ordered nanostructures in the substrate material by exposing it to calculated laser radiation. In the case of paper, the substrate is first impregnated with a specially developed solution containing source material (metal salts) for nanostructure formations. Desired graphic designs are formed from resulting nanostructures, comprising a multitude of individual nanocrystals which are fused with the substrate in micro channels (50 μm-150 μm diameter), produced by laser-induced thermal energy.

The process of formation of the nanocrystal clusters occurs in just 10 nanoseconds  and has been subsequently characterised as high-speed nanocrystallisation in laser plasma. Despite high plasma temperatures of around 3500°C essential for crystal growth, the extremely short duration of the process prevents the paper from charring and allows embedding the structures in a matrix material without penetrating it all the way to the back.

 The fabricated images exhibit distinctive properties and can be used to authenticate a document on all levels – overt, covert and forensic examination. Their most distinguishing characteristic is unparalleled fluorescence in the UV spectrum. with an emission intensity higher than the amplitude of the fluorescence excitation spectrum, which is usually proportionate in UV inks and fibers.

Also Now for Polymer Materials

The technology has now been further developed for use on polymer-based substrates. In contrast to paper, where the metallic appearance is preserved regardless of the viewing angle, images formed in polymer-based materials display dynamic optical transitions. Rainbow-like spectral variations can be observed on tilting of the substrate in reflected light, while in transmitted light images remain monochrome and near-transparent in colour.

The effects stem from unusual properties and behaviour of crystals at nanoscale level and arise from confinement of the movement of electrons to small regions of space in three dimensions. With reductions in size down to tens of nanometers, the behaviour of individual atoms begins to dominate, changing the optical properties of crystals which absorb and emit light of a particular wavelength, depending on their size and orientation in the bulk material.

According to Prof Sergey Maximovsky and Grigory Radutsky, who have developed the technology and already own both Russian and international patents for its use on paper, the latest advances have the potential of taking optical sophistication in banknotes to a new level. The striking effects are easily recognisable, very simple to communicate but highly complex in their nature and consequently represent a serious barrier to counterfeiters.

The technology can be implemented either in the process of substrate production or as a film for stripes and threads with apertures, and the inventors are currently in discussion with several banknote printers about using both technologies in currency.

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It would seem that anyone asked that question has an answer, yet no matter how much thought they have devoted to the subject the vast majority of them, myself included, missed on critical element. That factor is so important at this fragile stage in the world economy that it could be argued to represent job security for those of us who derive our living from currency management.

Many articles and editorials have crossed our desks espousing different theories on the cycle and longevity of cash as a payment device. In particular every single player in the alternative-to-cash payment arena – Visa, Mastercard, American Express, PayPal, Union Pay, BitCoin, etc. – has research purporting to indicate the predictable demise of cash. As I was reading a recent essay authored and presented by Mr. John C. Williams, President and CEO of the San Francisco Federal Reserve Bank I came to understand that in the arena of payments instruments, the largest player is rarely involved in any industry discussion or active stewardship. Many decades of global availability and global payment acceptance have made the American Dollar the premiere payment and value storage mechanism of choice for societies in stress. It is the effect of political instability and financial market uncertainty to which I (in this editorial) and Mr. Williams (in his essay) theorize is a significant motivating factor in answering the question, “why does cash in circulation continue to grow?”. I offer the following from Mr. Williams essay:

The U.S. financial crisis ended in 2009, and confidence in banks has largely returned. So, why have cash holdings continued to rise? One reason is that interest rates are very low in the United States and many other countries, dramatically lowering the opportunity cost of holding cash. In December 2008, the Federal Reserve lowered short-term interest rates close to zero, and they have remained low since. As a result, checking and short-term savings accounts offer extraordinarily low interest rates, if they pay anything at all. People have little incentive to put cash back into the banks.

But there’s more to the story. Demand for U.S. currency is not only affected by events at home. What happens in other countries is also important. Europe’s financial crisis has played a powerful role in driving demand. As Europe’s crisis worsened in the spring of 2010, U.S. currency holdings rose sharply. And they continued to rise as economic and political turmoil and uncertainty about the future sent Europeans scrambling to convert some of their euros to dollars. According to one estimate, the share of U.S. currency held abroad rose from about 56% before the tumultuous events of the past five years to nearly 66% in 2012.

A possible expansion of this theory could add to our understanding as to why other internationally exchangeable currencies are also seeing increases in circulation volumes. As the research would appear to support, there is a growing demand for high denomination notes for purposes of value storage, easy portability and anonymity.

Why are holdings of currency soaring at the same time that Americans appear to be turning away from using cash to pay for purchases? To make sense of this paradox, it’s helpful to understand the reasons people hold cash in the first place. Economists have identified two basic reasons why people use currency. First, it is exceptionally convenient as a medium of exchange. Cash is easy to carry, it’s widely accepted, and it’s easy to divide for transactions of different sizes. Importantly, you can count on cash even when other payment methods might not be working, during power outages and natural disasters, for example. And cash has another advantage to users: It’s anonymous. Using cash keeps transactions away from the eyes of tax collectors, law enforcement agencies, and businesses that track the buying habits of individual Americans.

The second reason to hold cash is that it serves as a store of value. Keeping a hoard of currency—whether under a mattress, in a safe, or in a safe deposit box—is often viewed as a low-risk way to hold financial assets. That’s especially so during periods of political or financial turmoil. For example, during the recent financial crisis, some people may have withdrawn cash from accounts at banks and other institutions because they were afraid these institutions might fail. Around the world, during periods of political unrest or war, cash—especially the currency of a stable country like the United States—is seen as a safe asset that can be spirited out of harm’s way with relative ease.

Last and most certainly not least is the keystone effect of historically low interest rates. In the world of cash forecasting there is much debate on the topic of “lost opportunity cost”. Lost opportunity cost to the cash demand forecasting professional usually means interest and/or investment earnings that are lost or unavailable because capital is unnecessarily reserved as cash holdings. To the individual, company or government that is currently holding large denomination currency or contemplating converting capital to liquid currency that lost opportunity is measured as a combination of the income that capital could be earning if it were invested and the risk of leaving it exposed in an uncertain market.

Understanding the benefits and costs of holding currency helps clarify what causes the demand for cash to rise or fall. First, reflecting its role as a medium of exchange, cash holdings tend to rise as total spending in the economy goes up over time. Second, cash holdings tend to rise during periods of political and economic turbulence. Third, when the interest rate depositors can earn from a bank account goes up, the opportunity cost of holding cash is higher and people tend to hold less of it. Finally, increased availability of low-cost alternatives to cash will tend to shrink cash holdings, all else equal.

Lastly, I encourage all of you who are looking for any positive sign of the continuation and even growth of the cash industry to read this essay in its entirety. With the kind permission of the San Francisco Federal Reserve Bank and with the assistance of associates in the Cash Product Office, we offer a link to the downloadable version, here.

You can view Mr. Williams presentation in slide form here:

The post Why Does Cash in Circulation Continue to Grow appeared first on Counting On Currency.

On January 1st 2012 the Central Bank of Nigeria (CBN) implemented the Cash-Less Lagos Project. In fact Cash-Less is not really cashless, which is emphasized by CBN in the description of the Project:

The Central Bank of Nigeria (CBN) has introduced a new policy on cash-based transactions which stipulates a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The new policy on cash-based transactions (withdrawals & deposits) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)

Further in the Project description the CBN details the benefits to the public, business and the government. Arguably some of the benefits are rhetorical candy coating, while others offer open acknowledgment of criminal issues and their expected elimination (more likely a drastic reduction):

The new cash policy was introduced for a number of key reasons, including:

• To drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020. An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
• To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
• To improve the effectiveness of monetary policy in managing inflation and driving economic growth.

 

In addition, the cash policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including:

• High cost of cash: There is a high cost of cash along the value chain – from the CBN & the banks, to corporations and traders; everyone bears the high costs associated with volume cash handling.
• High risk of using cash: Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents.
• High subsidy: CBN analysis showed that only 10percent of daily banking transactions are above 150k, but the 10percent account for majority of the high value transactions. This suggests that the entire banking population subsidizes the costs that the tiny minority 10percent incur in terms of high cash usage.
• Informal Economy: High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
• Inefficiency & Corruption: High cash usage enables corruption, leakages and money laundering, amongst other cash-related fraudulent activities.

I think we can agree that encouraging a more reasonable use of cash is a good thing if you are trying to curb crime. It is interesting to note that when Nigeria decided to implement the Cash-Less Lagos Project, they worked very hard to anticipate and predict the response from the criminal element. In a recent interview Mr. Olatunde Ogunsakin, the Commissioner of Police (CP) incharge of the Special Fraud Unit (SFU), Nigeria Police Force outlined his efforts to respond to increased cybercrime as well as police corruption. In a true display of leading by example the slogan “Bail is Free” is prominently displayed on doors, walls and other high visibility locations in his Units offices. Officers police each other and any report of an officer receiving or attempting to coerce a bribe are met with swift and meaningful action.

Apparently becoming a cashless society is not without challenges. Given the withdrawal restrictions within the Cash-Less Lagos Project, the average person should easily be able to conduct their daily lives without impact. Ideally it will also dramatically impact the underground cash economy either by forcing legitimacy or by changing the medium of exchange. In many ways crime is like water – it has to go somewhere. Build a dam or drain a lake but either way you aren’t eliminating the water. You are simply changing the flow. If cash is scarce in large quantities then criminals will find other methods to transfer wealth for product or service. Nigeria is focused on pioneering this unique approach to controlling the dark side of cash. We should both applaud them and take note of the results. I offer to you that there is not a country on the planet that wouldn’t benefit from a reduction in the criminal use of cash.

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Currency News February 2013

CashSSP – New Contract for 9 Central Banks

On 19 December last year, the nine central bank governors of Belgium, Netherlands, Luxembourg, Finland, Ireland, Cyprus, Malta, Latvia and Estonia signed a new contract for CashSSP – the integrated cash management system hosted by the National Bank of Belgium (NBB) together with De Nederlandsche Bank (DNB). These nine countries have acknowledged that it is getting too expensive to develop and maintain individual national systems and this is why they have chosen to run a common system. The signing ceremony took place at the Frankfurt premises of the ECB.

CashSSP (SSP stands for Single Shared Platform) is a logistical cash management IT system. It provides a common infrastructure which the central banks can use to save costs and harmonise cash handling in their exchange of notes and coins with their commercial banks and CIT companies.

The origins of CashSSP lie in a major business process re-engineering project that the NBB undertook in readiness for the euro launch, to do away with the paperwork associated with cash distribution and to enable all deposits and withdrawals to be undertaken electronically.

The system offers complete functionality to track and trace lodged and withdrawn currency, and interfaces with existing banknote processing machines, general ledger applications, accounting systems and local and global payment systems. As well as handling orders and deliveries of cash, vault management and note and coin accounting, it also provides statistics on cash for the European Central Bank.

Indeed, one of the major objectives of the system, besides flexibility and user-friendliness, is to stay in line with ESCB (European System of Central Banks) standards and regulations, as well as other international standards if applicable. To this end, CashSSP supports one of the two  ECB standards (tracing code and XML-formats), CIS2 (Currency Information System 2) reporting, EXDI (data exchange between National Central Banks) over Corenet V3 and the NBB, as the service provider, is actively contributing to the ESCB Shared Services domain. On the occasion of the recent roll-out of DECS (the European Data Exchange for Cash Services), all nine CashSSP partners were immediately DECS-compatible, with the  investment costs shared between them.

Marc Vanvooren, NBB’s Chief Cashier who has been involved in the development of CashSSP from the outset, believes it is the only central bank to have developed a modern central bank cash management system, succeeded in deploying it to other central banks and successfully hosted and serviced the application centrally. ‘A rare, even unique, example of a successful bottom up harmonization and cost sharing in the world of central banks.’ he said.

Caption: From left to right at the CashSPP signing ceremony in Frankfurt are central bank governors Liars Rimsevics (Latvia), Ardo Hansson (Estonia), Serge Kolbe (Luxembourg), Klass Knot (Netherlands), Luc Coene (Belgium), Erkki Liikanen (Finland), Patrick Honohan (Ireland), Panicos Demetriades (Cyprus) and Josef Bonnici (Malta)

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The Cash Single Shared Platform offers complete functionality to track and trace deposited and withdrawn currency, and interfaces with existing banknote processing machines, GL applications, accounting systems. CSSP is a centrally hosted and regionally deployed service made possible with secure generic communications. Remarks regarding the drivers for, birth and evolution of CSSP by Mr. Guy Quaden, governor of the National Bank of Belgium, summarizes the inception of the idea as a national platform first, which then tantalized it’s founders with international possibilities. Mr. Quaden’s remarks can be found here. The Cash Single Shared Platform promises:

CashSSP (SSP stands for Single Shared Platform) is a leading Logistical Cash Management IT System that is operational at the central banks of Belgium, The Netherlands, Luxemburg, Finland, Ireland, Cyprus, Latvia, Malta and Estonia to handle their exchange of notes and coins with their commercial banks and their cash in transit companies.

The process of the announcements for Lodgements and Withdrawals of currency is fully automated as well as the Lodgement and Withdrawal functions executed by the central bank cashiers and Cash Handlers. The system offers a complete functionality to track and trace the lodged and withdrawed currency and offers interfacing with existing banknote processing (sorting) machines, general ledger applications, accounting systems and local and global payment systems.

One of the major objectives of the CashSSP system is, besides flexibility and user friendliness, to stay in line with “European System of Central Banks” standards and regulations as well as other international standards if applicable.

CashSSP supports currently the ECB tracing code, CIS2 (Currency Information System 2) reporting, EXDI (data exchange between National Central Banks) over Corenet V3 and its service provider (the National Bank of Belgium) is actively contributing to the ESCB Shared Services domain. Upon roll-out of DECS (the European Data Exchange for Cash Services) at the ECB, CashSSP will support DECS from the start.

CashSSP is fully compliant with the ESCB Reference Architectures, Frameworks, Service Level Management Policies, Security Policies and Access Management Policies.

CashSSP is developed to work with any currency, accounting currency and packaging.

Imagine if you will, that the central banks of the US, England, Canada, Australia, China (ok – they probably already do this but with a slightly different implementation) were to implement a similar shared platform. Arguably this would not operate between central banks, but between the central bank and the financial institutions that use and manage cash on a daily basis. Is this “Big Brother” run amok in the vault or is this perhaps the logical evolution of modern cash management? Consider the benefits – all cash usage, movement and quality could be monitored on a daily basis – financial institutions would trade individual infrastructure costs for shared expense – all staff everywhere would be using a common platform, making generic training and support possible – inventory balancing (regionally), replenishment and removal could be forecast, managed and implemented on a national scale – inventory ownership and holdings compliance data – the list is long. On the other hand, it would take considerable cooperation and adoption amongst cash handling instituions like banks and CIT’s. It is unlikely that such a structure could grow organically as it did from the National Bank of Belgium for Cash Single Shared Platform. More likely is that it would be legislatively implemented with much outcry.

At this time I don’t think that commercial operators need fear that such integration is within their field of view. However if the Cash Single Shared Platform continues to grow and demonstrate the kinds of benefits it has so far, I think it highly possible that one or more central banks could try something similar and on a national scale. The EU has already gone there. Who is next to adopt a Cash Single Shared Platform policy and infrastructure?

The post Cash Single Shared Platform appeared first on Counting On Currency.

I was fortunate enough to recently be asked to give a presentation on the current and future states of cash handling, both domestically (North America) and internationally in markets with which I am familiar. Compiling the presentation was an exercise in combining and distilling common cash handling practices as they are applied in markets that have extremely different compositions and demands. The point of the presentation – and what had been requested by the organizers – was to identify high level options for coping with the future. Notwithstanding the fact that the design and make-up of cash will continue to evolve (for reasons of national promotion/identity and security), there are certain other drivers that will force the evolution of cash handling services.

FACTS

Cash will continue as a dominate payment mechanism

All customer levels will continue to have variable demands for cash

Central Banks will remove themselves from the daily cash cycle

Economies of scale and enhanced automation are affordable

In response to these changes we have a very few options. Some are more reaction to the unknown, unexpected or previously marginalized consideration. Some require a more visionary execution through interpretation and acceptance of a new kind of cash product.

FUTURES

Stay The Course

Outsource

Adapt to Opportunity

Change the Rules

The Facts and Futures contribute to a climate of change… or not. For purposes of our discussion and leave the ostriches, happily believing the world will not harm them, for another time. It is the banks considering Outsource, Adapt to Opportunity and Change the Rules who present the opportunity for the entrepreneurial CIT. The CIT in question will undoubtably need to be focused on Change the Rules as a business strategy.

One thing we know for sure and which became a topic of considerable discussion at the presentation that was the fuel for this article – cash handling is an exception based business. The nature of those exceptions are as varied as snowflakes. The reality is they start with the end-customer and have effects that ripple up the supply chain – often with magnified impact. From what I can tell in my limited experience there is a disconnect between most CIT’s and their banking customers. On the one hand, CIT’s need to assure security, longevity and profitability while competing in an often cut-throat environment. On the other hand, banks need reliable, consistent and secure services for clients that have ever-changing needs and circumstances.

The response from many players in the CIT industry has been to homogenize their products (because of competition many will tell you) and force rules on their customers. Rather than make the most of the exception based behaviour of their market, they try and blend, bend and intra-extrapolate metrics in a way that distorts the cost and value of the product at the same time. To hear a Vault manager describe a CIT submission for an RFP is like listening to a play by play on a professional ping pong match with the variety of pricing levels, triggers, thresholds, limits and surcharges that are applied to services that barely fit the request. There is no transparency anymore in the price for service relationship between many CIT’s and their customers. I don’t readily know why this is, which in itself warrants future debate – and it doesn’t matter which party(ies) perpetuate it. In my humble and decidedly biased opinion, there is room for CIT service that is a) constructed to embrace exception; b) is priced transparently and simply (and which won’t be the least expensive bid!); and c) is considerate of all service levels that may be required by it’s customers.There are both software and hardware solutions available today “off-the-shelf” that can allow a CIT to operate full service exception based cash services with a scaled investment equal to a (hopefully) growing demand. Previously a very significant investment was required, particularly in currency sorting hardware, to provide even initial capacity for a hopefully growing business – in the millions of dollars ($US). Software solutions capable of handling the complexities of processing and reporting multiple transactions for multiple bank customers were also not inexpensive. This was simply the environment created from niche software development demand in a high value and previously entirely manual environment. In summary, as the industry has continued to automate and standardize, previously expensive and rigid technologies have become considerably less expensive and much more adaptive, scalable and user-friendly.

Unfortunately many of the larger CIT’s have already made significant investments of capital, process and product positioning to easily adapt to an uncertain and evolving market. A new CIT or one that is small with aspirations of growth might have the option to upgrade a simple current deployment or implement a new solution from the ground up. With careful discussion and tireless relationship building a new rising CIT might be able to convince enough customers that exception-based service derived from obsessive cash disorder is worth more in an upfront and transparent contract that one based on multiplicity of situations, volumes and other variables.

In some markets I see CIT’s who are able (given regulatory, insurance and labor constraints) that are trying to work with their customers to bend the habitual rules or engagement and work together to ensure those who need cash get it and those who don’t can get rid of it. They are trying to adapt to new technology like smart-safes, recycling devices and on-demand automated cash ordering for ATM’s, Branches and other bank controlled cash repositories. They are trying to adapt to smart track & trace technologies and learning how best those technologies can best serve themselves and their customers. They are stifled by relentless demand, sometimes unreasonable risk and/or cost exposure and in general by a competitive environment that results in sub-standard service, concerned customers and a bleak economic forecast.

Your challenge, Mr. and Ms. Banker – no matter whether you are located in the East or the West, north or south of the Equator, is to seek out, promote and support the CIT partners who best understand and serve your customers needs in equal or greater proportion to yours

Your challenge, Mr. and Ms. CIT Executive is to provide services that are in sync with all levels of the supply chain for a transparent and simple fee that will ensure your customers delight at the value and your long corporate life.

We hope you both accept the challenge of building a better CIT service!

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