November 30, 2015
First and foremost, recalibration of equipment – including ATMs, self-service checkouts, vending machines and gaming machines – will be required in order to ensure these machines are polymer ready. It is believed, for example, that £45 million will need to be spent on the UK’s 70,000 ATMs alone. What’s more, due to the smaller size of the new notes, the rails that hold the notes in place inside the ATM cassettes will need to be moved closer together for the polymer notes, meaning that typical ATMs will either be able to hold and dispense paper versions of the note or polymer versions – not both.
For retailers that self-fill their ATMs, this will increase banking charges during the period in which both types of notes are in circulation, as they will be unable to recycle the paper notes. Further exacerbating this is the fact that there are approximately three billion paper notes in circulation that will need to be returned before they become demonetised, and a huge number of these notes are likely to be presented to retail outlets.
Preparing for change
The extent of the scale of equipment recalibration required to adapt to the new polymer notes and the 12-sided £1 coin will be different for each individual business; while some machines may only need to be updated remotely, for instance, many will demand manual upgrades, with older hardware likely to need replacing altogether.
Early engagement between retailers and equipment manufacturers is therefore crucial in the lead-up to the introduction of the new money to ensure businesses have a plan in place for their machinery and will be ready to comply with new requirements. Yet it is also of huge importance that retailers seek independent advice in order to understand the way in which their individual organisation’s equipment will be affected. It will, of course, be in manufacturers’ best interests for customers to purchase a range of system enhancements; retailers must therefore be savvy to their own business needs to avoid unnecessary costs through non-essential replacements and upgrades.
Retailers will also need to bear in mind potential resource issues for equipment manufacturers and maintenance firms. Suppliers will only have limited resources for upgrades during the initial period of high demand, so there is a risk that some retailers may fall down the priority list and not get their upgrades scheduled in time. Retailers therefore need to put real pressure on their suppliers and ensure that they are a priority by negotiating key performance indicators early around timescales, and seek clarity about costs – particularly during migration.
In this period of transformation, the costs of incorporating the new cash into the economy are considerable, and it is more important than ever that businesses leverage cost saving opportunities. A huge amount of change and disruption in the cash landscape is afoot and retailers must act now, ensuring that not only are they aware of developments, but are equipped with a strategy that will ensure their hardware, software and supplier relationships are optimised in preparation for the transition to polymer and the new £1 coin.