The upcoming switch from paper banknotes to polymer notes in September will cost businesses £236 million to implement, says Brendan Doyle, CEO of independent payments consultancy CMSpi.
While the Bank of England has claimed the new notes will last longer and be harder to counterfeit, Doyle says the costs far outweigh the benefits and that the BoE is trying to solve a problem that doesn’t exist.
Staggering cost of implementation
Polymer banknotes are said to last at least 2.5 times longer than paper notes, therefore enabling the BoE to save itself around £100 million on printing costs over a 10-year period. The BoE has also set out to improve the integrity of the currency, claiming that the new notes will help tackle cash counterfeit fraud owing to their enhanced security features.
However, leading payments consultancy, CMS Payments Intelligence (CMSpi) has calculated that polymer banknotes will cost businesses a staggering £236 million to implement, due to the costs of upgrading and replacing cash-handling machinery such as self-service machines and ATMs.
Small shops will be particularly hard hit by the changeover, with many facing higher banking costs.
Solving a non-existent problem?
The BoE has said that the new security features of polymer banknotes will reduce cash counterfeit fraud. However, the value of counterfeit notes removed from UK circulation last year came to just £5 million, less than 0.01% of the £65 billion in circulation. In comparison, credit and debit card fraud stood at £479 million in 2014.
CMSpi CEO, Brendan Doyle said, “Long ago, criminals switched their attention to electronic fraud, so the £5 million worth of annual counterfeit cash pales in comparison to the £236 million burden polymer will place on the economy. It seems to me that the BoE is trying to solve a problem that doesn’t exist.”
A “whimsical decision”
Doyle concluded by saying, “It is absurd that the BoE would commission a project that costs the economy £236 million upfront, to save just £10 million a year and then offer no compensation to thousands of small businesses that will lose out from this whimsical decision. I am calling on the BoE to compensate banks and retailers left out of pocket by the migration to polymer.”