EPC looks to cut cash costs through ATM standardisation

EPC looks to cut cash costs through ATM standardisation

The European Payments Council (EPC) wants the continent's 400,000 ATMs to all use the same size cash cassettes, claiming standardisation will bring massive cost savings.

The EPC is heavily committed to shifting Europe away from cash towards electronic payments, notably through Sepa but concedes paper money is likely to dominate for the next few years.

However, cash is expensive - in 2008 the total cost of accepting, distributing, managing, handling, processing and recycling it was EUR84 billion euros; equivalent to 0.6 per cent of Europe's gross domestic product or EUR130 per person.

To help bring down these costs, the EPC wants to standardise the size of ATM cassettes to make storage in transit and at centres more efficient, reducing the number of trips cash in transit firms have to make.

The move would also make it easier to attach Intelligent Banknote Neutralisation Systems (IBNS's) which stain notes in the event of robberies. Currently, the variety in cassette size results in a lack of interoperability among these systems and requires extra training for staff, says the EPC.

Preliminary discussions on the plan have already been held with ATM manufacturers, IBNS developers and cash in transit firms and the EPC says it now intends to come up with specific proposals.

Separately, the EPC has taken another pot shot at the European Commission over Sepa, arguing that inconsistencies between the EC's policies on market integration on one hand and competition on the other are harming progress on cards and online payments.

Comments: (1)

A Finextra member
A Finextra member 14 July, 2011, 09:462 likes 2 likes

I worked in ATM environments for UK banking for a long while and this for me raises some concerns.

Initially, if we're talking about Euros, the idea makes sense as its usually security companies who manage replenishment of ATMs - particularly out of hours - so carrying a standard cassette would simplify and therefore reduce costs.

However, there is one caveat. The overall money capacity for each ATM is based more on the overall risk status of the bank or off-site branch where the ATM is installed rather than its physical capacity limit. For example, an ATM in a gas station in a high-crime area would carry less money than a well protected bank branch in a pedestrialised and policed high street or mall.

There's a desire to go back to small notes to improve cash circulation around the retail economy. An ATM needs to be replenished more regularly when filled with small notes - that increases the risk profile as the ATM is opened more often and the cash exposed more.

Additionally, lower denomination notes means more cycles per operation. Dispensing 5 x 10 notes takes more cycles than 1 x 50 - places higher stresses on the ATM and its more likely to fail or wear.

If smaller denominations are introduced to allow standardisation, then costs would rise as the replenishment is repeated more - particularly during public holidays when demands on ATMs are higher.

Because we can't illiminate all these variables, the idea may not ultimately deliver the savings first thought.

As usual, a high level strategy that may not have been thought through properly!