The World Leader in ATM, Banking & Armored Carrier Software

Morphis, Inc. Understands the Currency Supply Chain

...and Provides the Only End-To-End Solution In the ATM, Banking, and Armored Carrier Industies

Today, sovereign nations, seeking to establish a uniform medium of economic exchange within their country

will issue CURRENCY (Dollars, Pounds, Euros, Yen, and Yuan etc). Typically, CURRENCY takes physical form as paper notes and metal coins (collectively referred to here as CASH).

CASH is manufactured in a variety of “face values” known as denominations. In every country the currency of the land “circulates” up and down a supply chain that connects the government to the central bank to commercial banks and then to businesses and citizens.  Upon manufacture, CASH is delivered by truck to one or more central bank branches for downstream distribution into the currency supply chain.

The currency supply chain is comprised of Central Banks, Depository Institutions (BANKS) and the BANK’S customers - commercial businesses (RETAILERS) and the general public (CONSUMERS). The movement of CASH between these supply chain participants is linked together by Cash-In-Transit vendors.

NOTE: Absent CONSUMERS there would be no reason for sovereign nations, currency, banks or retailers. CONSUMER demand drives everything.

The “banking system” plays a number of vital roles in the development of a country’s

 economy. Principle among these is to provide for the orderly exchange of value, represented by deposit accounts, between CONSUMERS, RETAILERS and other BANKS.

BANKS hold customer deposits in the form of electronic ledger balances. Therefore the BANK must stand ready at anytime to convert this ledger balance into a payment transaction for the benefit of a third party. Even in the most developed of nations, such as the US and UK, over 50% of these individual payment transactions are settled in CASH.

Paradoxically, despite the fact that over 50% of “all transactions” are “CASH TRANSACTIONS”, the VALUE of CASH TRANSACTIONS have diminished from, arguably nearly 100% of total transaction value at the beginning of the 18th century (checks came into prominence in the mid 1700’s), to less than 1

4% of total transaction value at the beginning of the 21st century. 20th century advances in payment systems technologies daily enable billions of financial transactions to be completed without the physical exchange of cash. This ELECTRONIC PAYMENT SUPPLY CHAIN has driven most of the developed countries of the world into a “CASH DIMINISHED” economy. Yet the “CASHLESS” society is still futuristic apparition1.

So, what of the CURRENCY SUPPLY CHAIN? As governments “print and mint” new currency each individual item must be handled by human beings. Advances in electro-mechanical technology have automated the tedium and eliminated the inherent errors of counting cash by hand. Yet count we must.

As the TOTAL VALUE of CASH TRANSACTIONS continues to diminish, the INCREMENTAL COST of CASH TRANSACTIONS continues to rise due primarily to the unavoidable cost; not just of counting (handling) but also transportation, shrinkage (loss – whether by theft or miscounting), insurance (for the major losses due to theft and fire) and the most obvious cost of all: Time Value of Money as represented by interest and inflation. 

But “unavoidable costs” doesn’t mean “unmanageable costs.” So what does “manage the costs” really mean? The answer to that question depends on whom you ask.

If your business works with any of the challenges presented by the currency supply chain, Morphis Inc. can help.  Contact a Morphis partner today to learn more about how Morphis software can give your organization the edge to succeed.

 

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