War on cash gets dirty

There are many arguments circulating both in favour of cash, and of the alternatives. In terms of the former, the latest report by the San Francisco Federal Reserve (Cash is King, Long Live Cash ) sums this up; cash is convenient, easy to carry, widely accepted, anonymous and will work in all circumstances (a factor amply demonstrated in the case studies in this issue). It is also a store of value – another factor that is highlighted by the Fed report, and likely to become even more relevant if there are any repeats of the raid on bank deposits and imposition of capital controls such as occurred in Cyprus.
The cashless lobby presents many arguments of its own – also based on convenience, availability, speed, cost. But one of the leading cashless players, Mastercard, is now using another argument to make its case – namely the cleanliness, or lack of it, of banknotes versus cards.

According to a new 'independent' report commissioned by Mastercard, which surveyed 1,000 people in 15 countries, Europeans believe cash to be dirty and riddled with bacteria, with more than half of those taking part thinking that notes and coins are the least hygienic items they come into contact with on a daily basis. This view was held by 57% of respondents across the countries surveyed – who see cash as more bacteria-laden than escalator handrails, ATM terminals and library books.

The survey was based on research by the University of Oxford showing that, on average, European banknotes and coins contain 26,000 bacteria. The dirtiest currency was the Denmark krone with 40,226 bacteria, followed by Sweden's krona with 39,600. UK currency had 18,200 bacteria. The euro was the cleanest, with only 11,600 bacteria. New currency has on average 2,400 bacteria.

Ian Thompson, Professor of Engineering Science at Oxford University, said that 'the banknotes we tested harboured an average of 26,000 bacteria, which, for a number of pathogenic organisms is sufficient for passing on infection...With banknotes passing between so many individuals there is merit in a wider study tracking the spread of resistant strains through the movement of banknotes globally.'

Mastercard claims that people are right to be concerned. According to the company, 'for a significant amount of people it's interesting to see a majority of Europeans prefer paying by card and find it a simpler, more straightforward way of paying. It's now true to say that the majority also find it more hygienic'.
Putting such comments about Europeans preferring to pay by card aside, they clearly didn't see the results of a research project undertaken by the London School of Hygiene and Tropical Medicine last year, which found that one in ten credit and debit cards contained faecal bacteria, with 8% of cards showing 'gross contamination' – meaning that they contained as much bacteria as an un-scrubbed toilet. By comparison, only 6% of cash showed gross contamination. The study had 272 participants, who offered up their hands, cards and money for testing.

In another study last year, this time by the University of London's School of Biological and Chemical Sciences, an analysis of 200 banknotes and 45 credit cards showed that 26% of the former, and 47% of the latter carried high level of bacteria. The survey compared these with the bacteria found on the average toilet seat. The seats examined had 10-20 bacteria colonies forming in every 4 sq cm, while heavily contaminated notes had a similar or slightly higher number. However, heavily contaminated credit cards had more than 60 bacterial colonies forming in the same sized area.

Moreover, the Mastercard report concentrates on bacteria only. Everyday items are also subject to viral contamination - and viruses tend to last longer than bacteria on hard surfaces – eg. keys of a card acceptor at a POS terminal or, of course, plastic cards.

Reports of dirty money are nothing new, with several studies in recent years pointing to bacterial and fungal contamination. This was the reason, for example, that Arjowggins, developed it anti-bacterial and anti-viral substrate BioGuard®, while proponents of polymer substrates have long claimed the cleanliness of their substrate versus paper. This is the first time, however, that a cashless payment provider has attempted to use public concerns over hygiene to bolster its case.

There are a number of lessons to be learnt from this latest attack on cash.

First is that, despite what Mastercard and others of their ilk say, cash continues to play a critical – indeed pivotal - role in payments and in wealth management. The evidence is there in the latest figures from the Federal Reserve. It is also therein the images beamed out from Cyprus of people patiently queuing at ATMs, and petrol stations and the like displaying signs saying 'cash only'.

Second, so-called independent' reports commissioned by organisations with a vested interest in the outcome should be treated with a healthy dose of scepticism – not only within the cash industry, but more further afield.

Third, and following on from this point, such reports need to be countered more aggressively by the cash community. We have long argued in Currency News that the industry should work collectively and proactively to promote the benefits of cash. Mastercard's version of events gained wide traction in the popular media – the newspapers like nothing more than a good story about dirt, especially those with a high 'yuck' factor - but where was the counter-attack from the industry? On industry-specific blogs and websites maybe – but not out there in the public domain where it needs to be.

After all, if the war on cash is going to get dirty (literally and figuratively), then the industry needs to respond in kind.

The next ten years

This month is Currency News’ 10th anniversary. We commented on the major developments of the last decade in the December issue and now, to mark ten years of publication, we are making our predictions on what the next decade may bring.

Early announcements: There is an increasing trend for central banks to announce plans for a new series prior to wide-spread circulation  – partly a consequence of more openness generally, and partly to engage the public’s interest at an early stage in new note planning. This strategy backfired for the US$100 and the new Swiss and euro series. All were announced pre-issue, only to fall victim to production problems with the new security features. CN predicts that central banks will be more cautious about public pronouncements until their selected technologies are proven.
  
Test circulation: Related to this, more innovative features will make their appearance in commemorative circulating notes  before transitioning to circulating notes. Central banks want innovative features, but they also want these features to be proven in a manufacturing and circulation environment. One way of achieving this is to trial such features in circulating commemorative notes. There is nothing new in this; Thailand, for example, frequently uses commemorative notes for this purpose  (for example, the first use of OVI was in 1988 on the commemorative 60 Baht), as does Kazakhstan. But CN foresees more central banks, not accustomed to issuing commemorative notes, following their example - Argentina and Morocco being two recent cases in point.
  
Keeping it simple: The watchword for new security features is now ‘simplicity’, exhibiting clear and unambiguous effects easily explained and understood by the general public. Optically variable effects such as those provided by holograms and colour shift ink or threads led the way, and still have an important role to play. But the past few years have seen two Level 1 overt security features emerge -  Motion and SPARK® – where the simplicity of the visual effects belies the complexity of the underlying technology. We can expect both more of these, and a number of similar technologies, to become commonplace in banknotes in the years to come.

Integration: Another watchword is integration. The high cost of security features is now such that they need to be optimised both for security and for aesthetic reasons. The new European Europa series will display this trend if the new €5, launched in January 2013, is followed by the other denominations in the Euro series II, while the latest display of ‘house notes’ at Banknote 2012 gives an idea of what can be achieved by imaginative use of intricate design coupled with the latest security features.

Coin innovation: It is likely that there will be more innovation in coins, which are now  under threat from two sides. One is the evolution of low denomination durable banknote substrates, and high value coins need to be more secure if they are to maintain  their position at the coin/note boundary.  The other challenge is from cashless alternatives that now threaten to impact micro-transactions. The advent and proliferation of technologies such as NFC and m-payments means that the coin industry will have to make coins more cost-effective, functional and attractive to use.

Public verification:  Variations of the ‘feel/look/tilt’ message will remain key to public recognition of security features. However, the smartphone will start to make a significant impact – not just as an additional means of providing information to users about their notes, but also as a verification tool. The first to address this opportunity are Orell Füssli with StarPerf, and Giesecke & Devrient with MAGnite. Others will follow.

Sector  rationalisation: Global banknote demand exceeds 160 billion notes per year and the total supply in both the private and state-owned sectors is probably 200 billion notes per year.  CN expects that more state-sector suppliers – print works and paper mills – will try to enter the commercial banknote supply market. State sector assets may be subject to  privatisation and closure, and others may enter into cooperative ventures where the costs of investment and market development are shared between the state and commercial sectors.

Self sufficiency: One of the characteristics of the past decade has been moves towards self-sufficiency in production in countries with rapidly-developing economies and demand for cash. India, the Philippines, Chile and Indonesia are all examples of countries following this trend. It is   likely that banknote production will be set up in the Middle East while China, already very largely self-sufficient in paper and print, will continue to power growing demand for currency.

Automation:    Cash circulation processes are still disjointed and manual, despite advances in hardware and software, electronics, robotics, and communications technology, and CN predicts much greater automation – at the branch or retail outlet, cash centre vault.

The key is not only technology (there are already numerous  examples of major advances in, for example, cash recycling – which will become the norm – or central bank vaults that run almost entirely with robots). What is key is that companies work with one another to provide standardised solutions that enable a seamless transition from the moment cash is deposited to its redistribution (or destruction).

All of the above predictions are for incremental changes. The biggest potential game-change is, of course, the impact of alternative methods of payment, such as e-commerce or the next generation of cashless payments driven by NFC and mobile technology. Our prediction as to the impact of this is simple – who knows? No-one does.

There is little the industry can do about e-commerce, but the best way of minimising the impact of the next generation of cashless payment technologies is to ensure that notes and coins become even more efficient and cost-effective, retain public confidence and are easy and attractive for the public to use.

Therein lies the challenge for the next ten years, and CN looks forward to a further decade in covering how the market is meeting this challenge.

A new twist on old technologies

Improvements in security features are occasionally of the ground-breaking variety - the introduction of optically variable features such as holograms and OVI for example. Or polymer substrates with windows, and microlenses and, going back further, threads and fibres in banknotes and Orlof intaglio printing presses. All were 'out of the box' developments that represented a fundamentally new and different way of adding security to our banknotes.

Exciting though such developments may be, they are few and far between. Many of the advances in security in recent years have, instead, been incremental -  ever-wider window threads, different types of  latent image features, colourless or light infra red inks, combining colour shift with movement, electrotypes and pixel highlights in watermarks, paper/polymer hybrids and so on. These are no less significant for being variations on a theme, and the technology behind them can be every bit as complex, even more so, than the so-called 'breakthrough' technologies.

It is with this in mind that we cast a look over some of the recent developments, that fall into this latter category of incremental security enhancements - both existing features that are harnessing new technology for authentication, and new features that make use of existing authentication technology.

One example of the former is the work to show that smartphones can be used as a means of verifying one of the most common and traditional features in banknotes - the intaglio print. No refinement of the intaglio itself is required - simply optimisation of the camera hardware within the phones and development of verification software (although the word 'simple' is used advisedly).

If the developers can pull this off,  it could overcome the problem of all Level 1 features - namely the difficulty the public has in using such features to authenticate their notes, either because they don't know what the features are, or because they fail to differentiate them from counterfeits.

In another example, at Banknote 2011 last year Fabriano introduced SIGMA QR^TM, a watermark in which the image is a two-dimensional barcode (a datamatrix or Quick Response code). QR codes are rapidly gaining ground among manufacturers of consumer and industrial goods as a means of linking the code on the product or its packaging to a website that provides additional product and marketing information, the phone and its image capture capability plus connectivity to a database providing the means to do so.
Fabriano is the first to create the means to apply this concept to banknotes - the watermark image itself providing an overt recognition feature, while the code can be read and decoded by the smart phone, providing not just yes/no authentication but also information such as the note's serial number, which can be matched back to that on the note itself.

Whether or not the public would ever be sufficiently engaged to use their phones in this way, should they be given the opportunity, remains to be seen. But in principal, expecting the public to check their banknotes with special tools is unrealistic. Providing them with the means to do so via tools they already have in their hand is less so.

And then there are existing verification devices for traditional features, enhancements or new versions of which are being developed. An example is UV lights, which - like smartphones - are ubiquitous (among cashiers, retailers and the like, if not the public at large). However, the features they read have limited security value because of the now widespread commercial availability of fluorescent inks. Hence the opportunities provided by the development of bifluorescent or even multifluorescent features, which represent an exciting prospect not only because of the permutation of different design effects that can be achieved,  but also because the devices for checking them are already in widespread use.

Another example can be seen in the development by CTS Electronics of digital magnetic imaging technology for magnetic inks. Magnetic sensors are nothing new, and various types are already widely used in cash processing systems. But they have their limitations - particularly in resolution and/or the amount of data that can be recorded. The CTS solution is a magneto-optical linear sensor that can record in a very short period of time, potentially at high speeds, images with a resolution as high as 1000 dpi. The result is that a whole new series of applications for magnetic ink can be realised - micro text for example, or barcodes and unique magnetic ink digital signatures, all of which can be read by the sensors.

While developers are always in pursuit of the next 'big thing' in banknote security, it is sometimes useful to remind ourselves that many of the answers to enhanced security already exist right under our noses.