Retail banking – What challenges will the new generation of polymer banknotes pose for retailers?

By | November 2, 2015

New £5 polymer notes featuring Sir Winston Churchill’s image are due to be launched in the second half of 2016, with new £10 notes – featuring Jane Austen


The transition to polymer banknotes – which are around 15% smaller than existing notes – poses a number of challenges for retailers.

First and foremost is the need to upgrade or replace cash-handling equipment – such as note validators, cash counting equipment, ATMs, vending/self-service machines and smart safes.

Certainly, self-fill ATMs, which are replenished by retailers with daily takings, will pose the biggest headache. ATM cassettes can hold either polymer or paper notes, but not both. So, during the ‘co-circulation’ period when both notes types are prevalent, retailers may not receive the volumes of polymer necessary to replenish their new polymer-dispensing ATMs.

The upgrading of self-filling ATMs poses two issues. Firstly, retailers that don’t have enough polymer notes to fill their ATM will have to purchase extra notes from the bank. Secondly, retailers with (upgraded) machinery will have to bank all paper notes received from customers, as it will not be possible to recycle notes through their ATMs. Both scenarios incur a cost.