Currency

Euro Banknotes Designed to Foil Counterfeiters Also Defeat Vending Machines


The new euro banknotes incorporate enhanced security features.

Courtesy European Central Bank

The new euro banknotes incorporate enhanced security features.

The European Central Bank this month introduced a brand-new version of the €5 banknote, loaded with next-generation security features to deter counterfeiting.

There’s just one problem with the crisp new bills: Vending machines spit them out. The Italian newspaper La Repubblica reported this week on its own tests in machines selling everything from soft drinks and gasoline to transit tickets in 10 cities. Ninety percent of the new notes were refused. “You can try as hard as you want, but the new 5 euro banknote introduced on May 2 will not be accepted by vending machines,” the newspaper said.

Journalists in Belgium, meanwhile, found the bills rejected by parking-garage payment machines and by some ATMs when users attempt to make cash deposits.

Just to be sure, I tested one today in a vending machine at a post office in Paris. No luck there, either.

The new bill, which marks the first update of the euro’s paper currency since its introduction in 2002, features an enhanced watermark and a hologram with a portrait of the Greek goddess Europa. A numeral “5″ in one corner of the bill changes from green to blue when passed in front of a light.

These and other changes are intended to deter counterfeiting of the €5 note, of which approximately 1.6 billion are in circulation at any given time, according to the ECB. New versions of the €10, €20, and other higher-denomination notes are set to be rolled out during the coming months, and they will have similar security features.

The ECB says it alerted European vending-machine manufacturers five years ago that software used in their optical readers would have to be updated for the new bills. Conferences were organized with industry groups, such as the European Vending Association and the Banknote Equipment Manufacturers Association, an ECB spokesman says. The bank also exchanged letters with industry groups during testing of the banknote’s final design.

Apparently, the warnings went largely unheeded. “The national central banks are urging the vendors to calibrate/update their vending machines,” the ECB spokesman says, but central bankers are “not in a position to force vendors to do this update.”

With billions worth of new euro notes coming into circulation, though, the problem will need to be fixed soon.

Matlack is a Paris correspondent for Bloomberg Businessweek.

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