Yesterday’s news that the new £20 note will be made from polymer means that only the £50 banknote will continue to be made from paper for the foreseeable future. However, according to CMS Payments Intelligence, this shift comes at quite a cost for UK businesses.
The CMSpi, an independent team that advises merchants on how to reduce their payment acceptance costs, estimates the total cost of the migration to polymer to be around £230m, the majority of which will be borne by retailers.
CMSpi estimates that around £10m of the cost of the migration to polymer will be borne by cash processors, a move it says will lead to suppliers being forced to increase the prices of cash processing to fund this cost.
Whilst appearing to not directly affect British retailers, CMSpi points out that 48,000 out of 67,500 ATMs are located not located in bank branches but in locations such as retail outlets and the cost to upgrade/replace them will cost over £40m.
It also says there are also concerns surrounding co-circulation in the transitional months where both polymer and cotton banknotes are prevalent.
Retailers will have a big decision for every site as to when to convert ATMs to polymer and this could lead to short-term shortages if ATMs are self-filled.
CMSpi says these safes, which are capable of reading the notes that are placed inside them and therefore very popular with retailers, will have to be upgraded to read the new note type.
Brendan Doyle, CEO of CMS Payments Intelligence said in Essential Retail that “the costs far exceed the benefits and ultimately, it will be consumers who suffer as the net costs will inevitably feed through to merchants and finally consumers in the form of higher prices”.