Your Cash Europe Ltd, handles over 78 million ATM transactions a year and over £3 billion in cash.
The humble £5 note has caused a stir following its recent facelift with the new polymer version proving to be a welcome addition in the UK. Attempts were made to controversially rip it up on live TV, while we are also being told certain editions have made some of the new notes worth substantially more than the standard £5. Headline grabbing stunts aside, the fact is the launch of the new polymer notes herald an exciting development for consumers and the payments industry alike.
Further encouragement comes from the Bank of England's ongoing investment in polymer notes and the cash payments industry as a whole. The new £5 note will be succeeded by a £10 polymer note in 2017 and a £20 polymer note by 2020, demonstrating the Bank of England's positive strategy to ensure the future of cash in the UK.
At YourCash, we have already installed an ATM dispensing polymer notes in a college, where the demand for £5 notes is particularly strong for obvious reasons and the company is already preparing for the respective introduction of the £10 and £20 polymer notes set to come into circulation from 2017.
Introduction will necessitate a far greater level of organisation from the BoE and ATM providers alike to ensure a smooth implementation. The manner in which the BoE have prepared retailers for the introduction of the new £5 note has been impressive, and this smooth transition bodes well for the greater changes ahead with the introduction of the £10 and £20 notes.
Ultimately, the primary purpose of the new note is to reduce the chances of counterfeiting. Fraudsters around the world that have attempted to make replicas of other country's polymer notes have had to produce a substitute material as the polymer material used is not easily acquired. Furthermore, printing onto plastic is far more difficult than paper and the polymer note also includes reflective metallic strips that are complex to create and apply convincingly.
All in all, it is almost impossible to make a fake note that will pass as genuine which is absolutely crucial in the polymer note's design. In 2015, around 243,000 BoE forged banknotes were taken out of circulation with a face value of approximately £5m. Counterfeit notes are worthless, they cannot be exchanged for the genuine article and both consumers and retailers in possession of fake notes can find themselves considerably out of pocket as a result. For this reason alone, the introduction of a safer bank note is hugely beneficial for both the payments industry and consumers.
The durability of the new plastic note also means that is far less prone to losing value through wear and tear - they will even survive microwave radiation, being submerged in a cup of coffee and the most vigorous setting of your washing machine. This level of endurance may encourage more consumers to carry cash, which in turn will have a positive impact on smaller retailers who are often hit worst by the cost of card payments. With this in mind, the polymer note will be a positive factor in increasing the UK's small, independent retail sector.
Recently there has been substantial investment in the digital payments industry and the landscape of alternative payment options has grown considerably. Every digital payment innovation has claimed to be more efficient than cash yet none have rivalled the level of security notes and coins offer, even with the matter of counterfeits.
The practical nature and reliability of hard cash has allowed it to remain a dominant payment method in the UK despite the introduction of alternative digital methods. The introduction of the polymer note will no doubt enable cash to remain consistent in the market and continued investment into its development will help ensure consumer choice when it comes to making a payment.
In fact, the rise in payment options has not only broadened consumer choice but encouraged us all to be hybrid spenders and I believe that in the next few years the payments industry will reach an equilibrium between cash transactions and digital. Take a look at the book industry; many were quick to predict that the introduction of the e-reader would be the death of the printed paperback. Whilst at first there was a flurry of Kindle purchases, over time a balance was reached between digital and hard copy purchases. Consumers liked the choice; they may choose to take their Kindle on their commute, but still wish to read a real book at home.
And balance is something we are witnessing between options in the payments industry. Whilst last year the digital payments industry overtook cash in the volume of transactions that were made, we have equally experienced growth in a demand for ATMs. In fact, new data released by research firm RBR established that global ATM cash withdrawals grew by 7 per cent in 2014 with a total of 92 billion withdrawals made. This figure is predicted to increase to 104 billion by the end of this year, and a massive 128 billion by 2020.
I think that the more options made available to consumers, the more they want and expect. We may take pleasure in splashing the cash on the high street but also enjoy the comfort of online shopping from home. Similarly to keeping an eye on our spending by counting the pennies in our purse whilst also checking our bank balance online. Having multiple options and finding the best deals is key to the savvy modern consumer and this extends to payment preferences.
As mentioned, a lucky few have certainly got a very good deal from the £5 polymer note since its release. Those in possession of one of the first printed notes have been able to cash in their fiver on eBay for up to £800. Others have opted to give their first polymer fiver to charity, highlighting the significant role cash pays in charity donations.
For small businesses, independent retailers and micro-businesses, cash is an absolute necessity for customer transactions, paying bills and employees. In the UK, SMEs account for 99% of private sector businesses, meaning cash is an important failsafe for the foundation of our economy.
Ultimately, whether it is the introduction of a safer polymer note or advancement and improvements in card payments, financial innovation in all its forms, should be commended. And we are set to see that the introduction of polymer notes in the UK will bring with them a durable influence on the future of cash.
