From Tuesday September 13th, consumers in England have been able to get their hands on the country’s first polymer banknote. The new £5 note initially began rolling out to ATMs in major cities including London, Manchester and Birmingham, with most bank branches expected to have the note around a week later.
On the surface, the new fiver is the most advanced note ever produced in the UK. It follows a similar polymer note released in Scotland and becomes the first note in nationwide circulation to be made from polymer rather than cotton paper, it promises to be tougher and harder to counterfeit than its predecessors.
Interestingly, some people have suggested it will actually mark the beginning of the end for cash. As more consumer spending switches to options such as contactless, it’s been predicted that the new fiver will have a limited life before cash ultimately becomes a relic, of interest only to collectors.
Cash isn’t going anywhere
The truth, though, is that such a future is still many years away, if it ever arrives at all. While cash may be declining as a proportion of total spending, it’s forecast by PYMNTS.com that there will be €2.2 trillion worth of cash transactions in western Europe by 2020.
In the UK, it’s also clear that cash remains a popular choice for many consumers, and contactless has a very long way to go before it can challenge this. For example, in 2015, some £9.2 billion was spent in contactless transactions. However, over the same period, a staggering £188 billion in cash was withdrawn from the country’s 70,000 ATMs, according to figures from Retail Banking Research. That’s £360,000 a minute, or £6,000 a second. That suggests cash withdrawals outstrips contactless transactions by 20 times the amount.
There any many reasons why cash won’t go any time soon. Some people prefer the feeling of something physical in their hands when they make a payment, as it helps them budget and keep better track of their spending, while others enjoy the security of knowing that cash will be accepted almost anywhere.
Features fit for the future
As for the new note itself, it’s clear that the Bank of England (BoE) considers it to have a long future ahead of it. One of the key benefits of the switch from paper to polymer is that the notes are expected to be highly durable.
While they’re not indestructible, they can withstand much more abuse than paper alternatives, such as being repeatedly scrunched up or put through a washing machine. They’re also much harder to rip, so won’t need to be taken out of circulation due to wear and tear as quickly. Some ATMs also dispense £5 notes and those using vacuum based dispensing technology are well suited to polymer. It’s used by ATMs globally in over 20 countries.
On average, a polymer fiver is expected to last for around five years, compared with just two for the current paper note. This is good for both consumers and banks, as it should reduce the cost of maintaining cash in circulation.
It’s also set to be much harder to counterfeit. In addition to the polymer material which is expected to be harder for criminals to replicate, it contains several holograms throughout the note, micro-lettering that will only be visible under a microscope, and a transparent foil window.
The BoE is clearly investing for the long term with this technology. A newly-designed £10 with similar features is expected to enter circulation in 2017, with a £20 note to follow by 2020.
As for the old fiver, it will remain legal tender until May 5th 2017, by which time the BoE expects most of them to have been removed from circulation.