Bank of England: Why retailers should join Banknote Checking Scheme

This week’s RBTE may brim with new digital payment systems, mobile commerce solutions and examples of how biometrics can be used to transact with retailers, but a consistent feature of the annual expo – now in its eighth year – has been its array of cash management tools.

Once again at this year’s event there’ll be a host of solution providers showcasing their latest methods for helping retailers handle money – and this situation seems only right, considering cash is still the most dominant single form of payment in the UK, despite the rapid rise of plastic, digital and other alternatives.

Against this backdrop, the Bank of England’s (BoE) Stuart Cooper will be offering retailers information about the Banknote Checking Scheme at RBTE. The programme was put in place to increase businesses’ resilience to the challenge of counterfeiting, as well as help build relationships between merchants and the UK’s central bank.

“Counterfeits are worthless, so any counterfeit accepted is a direct loss to a business, even before any associated administrative costs or staff time,” Cooper warned.

“Criminals often repeatedly target retailers where they have successfully passed a counterfeit. There is also a reputational impact from being associated with accepting counterfeit banknotes, even more so if a retailer was to accept a counterfeit and then give it out in change.”

He added that counterfeit banknotes are manufactured by organised criminal gangs and the proceeds are used to fund other serious criminal activities, so there is a wider societal issue that retailers must consider.  

Cooper, who is manager for banknote engagement & communications at the BoE, will use his presentation on Wednesday 2 May at 14:45 to talk in detail about the checking scheme. The session forms part of RBTE’s Payments Conference stream.

He will share details on how to check banknotes correctly at the point of sale, and ways to ensure there is public confidence in the availability, quality and security of currency.

Over the last two years, the Bank has introduced new polymer £5 and £10 banknotes, which it says are more difficult to counterfeit. A £20 note of the same material will enter the system in 2020 featuring the image of English Romantic painter J. M. W. Turner, and Cooper is positive about the polymer introduction to date.

“The current paper £20 is the most counterfeited note and so its replacement should see the biggest benefit to retailers in terms of reducing losses from counterfeits,” he explained.

Offering an update on the impact of the other new notes, he said: “While less than 0.05% of notes in circulation are counterfeit, most counterfeiters distribute their counterfeit banknotes by deceiving an unsuspecting business.

“One of the key reasons for the introduction of polymer notes is that they allow us to include state-of-the-art security features, as well as being cleaner and stronger. [At the time of writing], we have seen very few attempts to counterfeit the new £5 and £10 notes, none of which have been on polymer so should be simple for retail staff to identify.”

Cooper acknowledged some retailers have reported that the polymer banknotes are more difficult to handle, but he argued the “slippery” nature of the new notes fades as they are circulated.

“We monitor the performance of our notes over time and feed both this and business feedback into the design process for future notes,” he noted.

“Bank of England and Scottish polymer notes can feel slightly different because our notes incorporate raised print on the front of the note, while Scottish notes have it on both sides.”

Overall, the introduction of the new notes in the last few years has permitted an increased level of communication between the BoE and merchants. And the Banknote Checking Scheme is an example of this relationship building in action.

“The scheme allows businesses to build and maintain a relationship with us, to ensure that they have the most up-to-date information to educate and empower their staff and that we can learn from their experiences and successes,” Cooper said.

RBTE takes place at London’s Olympia, 2-3 May 2018.

You can register to attend here