Polymer Notes - The Complete Package Les Coventry Head of Note Issue Department Paper presented at the International Counter Measures Association Conference Washington DC, USA - November 1998

Choice and Opportunity

The theme of this conference is timely. World-wide interest in polymer banknote substrate is continuing to grow rapidly while at the same time attacks on polymer substrate by vested interests continue apace.

It is a mistake to think that the advent of polymer notes is the first occasion when there has been a choice for the substrate and security features that can be used for banknotes. There have always been, and there will always be, different substrates and security features, for example, there have been a number of different types of paper substrate with a range of different security features embedded in them. Different papers have resulted from:

• use of different fibres;
• differing fibre lengths;
• use of coatings;
• different threads;
• different techniques for producing watermarks.

Different substrates are available because:

• security risks differ from one country to another (eg thicker paper for low denomination notes);
• circulation/climatic conditions differ from country to country;
• production techniques vary from supplier to supplier; and
• the importance of cost considerations vary from country to country.

It is not surprising that already different polymer substrates are available or emerging. At the moment, the only polymer substrate to be used in circulation is Guardian® supplied by Securency. Securency already has other polymer substrates in production for other non-banknote security documents. Other polymer substrates are emerging from other suppliers using different plastics and laminates. However, when we talk about polymer notes in this paper we are really talking only about Guardian®.

To have any value and reason for existence, different substrates must involve different characteristics and, what many often want to gloss over, different trade-offs. The fact that there are trade-offs should not be a surprise. Some want to criticise polymer notes because they do not behave exactly like paper, but, if they did they would have all the limitations of paper notes as well.

Suppliers of paper substrates and often printers of paper notes have attempted to denigrate polymer notes and their related security features. The reason why polymer substrates and their associated security features are considered such a threat is because the technology used to produce polymer substrates is completely different to that for paper substrates. Success for polymer substrates in the market place puts at risk major investments in paper mills, print works, and possibly even inks production facilities.

While a choice in substrate and security features poses a threat to traditional suppliers, for issuers of banknotes choice is a major benefit. The fact that there is choice is a reflection of competition and innovation driven by that competition. This can only lead to improved quality of notes for issuers. Importantly, polymer notes are in the early stages of their development cycle whereas paper notes, and paper substrates in particular, are nearing the end of their development cycle.

Interest in and development of polymer note technology in recent years reflect dissatisfaction with tradition paper substrates and associated features. Development of paper substrates, threads and watermarks has been relatively stagnant with improvements only at the margin. However, the success of polymer notes in Australia and the use of polymer notes by other countries is now forcing traditional suppliers to lift their game.

Innovation brings with it an element of risk. This is true for new paper features as well as polymer features. In relation to Guardian® polymer substrate those risks have now been eliminated. The technology has been proven in Australia and is a great success. Other countries interested in using it can now do so with assurance that it will work.

A New Paradigm

Ideally, overt security features, that is, features intended for the person-in-the-street and cash handlers, should be located in the various layers of the note, that is, in:

• the substrate;
• the print; and
• add-ons (eg discrete or stripe OVDs, foil).

What is interesting about one of Europe's most recent and admired series of notes with its vast array of security features is that while it includes security features in all three layers of the note identified above, the security features promoted to the public are all print or add-ons. There is no traditional substrate feature promoted. This is hardly a vote of confidence in paper substrates, threads and watermarks. In fact, we believe the security value of the print and add-on features as well as new features like Microperf® (which can be used with any type of substrate) are all enhanced if they are on polymer substrate rather than paper substrate.

A new paradigm is required and polymer notes provide that. There are various characteristics of polymer substrate that give it advantages over paper substrate in the major areas of security, durability and functionality. For security, it is the ability to control transparency from perfectly clear to opaque, the surface properties of the polymer, and coatings which can be used in a variety of ways including manipulating feel to enhance security. The surface properties are important for print features like optically variable ink (OVI) and add-ons like OVDs. The robust, smooth surface gives much better optical effects than are possible on paper. The ability to include OVDs in clear windows also means that the OVDs are visible from either side of the note. For durability, the benefits of polymer come from the non-porous, non-fibrous nature of the substrate combined with toughness and overcoating. For functionality, it is the cleanliness, toughness and the retention of stiffness (polymer notes don't go limp) that result in significant productivity gains especially in machine processing.

Security

The ability to control the transparency of polymer substrates has resulted in new, yet conceptually simple and effective security features. The most obvious feature is the clear window(s) or half window(s) (the latter allows, for example, a feature embedded under print on one side of the note to be seen from the other side of the note). A window can be used with enhanced features such as blind embossing. A feature can be embossed which switches from being visible to invisible or switches from one image to another as the note is tilted. This is not able to be reproduced by reprographic techniques.

It is also possible to incorporate "self-authenticating" features into polymer notes by converting the clear window into a device for verifying another feature in the note. For example:

• the window can incorporate a filter for a pair of metameric inks printed elsewhere in the note's design;
• the window could contain a screen for identifying features such as the Joh. Enschedé's µ-SAM® feature printed elsewhere in the note's design.

These examples show another significant advantage of polymer. That is, the close integration of substrate features with traditional print or add-on features. Many features are unique to polymer.

These few examples demonstrates the ease and simplicity of verifying a polymer note as genuine.

We are not saying, nor have we ever said, that it is impossible to counterfeit polymer notes. How polymer notes help is by making it more difficult, time consuming, and costly to make counterfeits. Even with the most basic of polymer security features, Australia's counterfeiting rate has declined significantly as illustrated in the graph below.

Graph 1: Counterfeits Pass (number)

Click to view larger

One of Australia's major achievements is that the introduction of polymer notes appears to have stopped the "casual" or "crime of opportunity" counterfeiter totally. However, despite the significant drop in counterfeiting the risks are ever present and polymer note technology has many new security features ready to meet any future threat. The earlier examples of self-authenticating features are just the start.

As noted earlier, Australia uses Guardian® substrate from Securency which is based on a specialised form of Biaxially Orientated Polypropylene (BOPP) made exclusively by UCB Films, the joint venture partner. Even though there are commercial forms of BOPP available (traditionalists need to remember that there are commercially available rag papers), the film produced by UCB when combined with the unique tried and proven coatings and subsequent security features, has many advantages as a security substrate:

Guardian® will not run through a modern colour copier. This forces counterfeiters to use alternative plastics;
alternative plastics are generally not available in the thickness needed and so have to be laminated together;
many plastics do not have the clarity needed or cannot be opacified without loss of clarity of the window;
alternative plastics have distinctly different sound and feel to Guardian®.

Further still, other commercially available BOPP is produced by a different technique to that used for Securency substrate and does not generally come in the same thickness (or usually the same clarity) as the Securency's substrate. All this aids in the detection of counterfeits of polymer notes printed on a plastic substrate.

Functionality

Polymer notes have now been in circulation in Australia for over six years. The simple story is that they work well in all climatic conditions. For manual processing, there are slight handling differences between polymer and paper notes. This may require some flexibility on cash handlers' part but it is not a big deal. We found in Australia that people adjusted very quickly. We now find that when we ask professional cash handlers if they want to go back to paper notes, they overwhelmingly say no.

Recent surveys of users and suppliers of machines that process notes have confirmed that polymer notes are better for machine processing than paper notes. The extent of improvement can also be significant. The types of machines involved in the survey included note counters, note acceptors/validators, and note dispensers (eg ATMs).

Relative to paper notes polymer notes perform better because:

• polymer notes are, on average, of better quality;
• polymer notes deposit less inks and dirt on transport belts and sensors;
• polymer notes create less dust;
• polymer notes feed and count better because polymer notes are stiffer.

The improvements are reflected in a variety of ways, less jams, fewer service call outs, and reduced maintenance staff.

Some indicative comments from those surveyed include:

• "polymer notes don't leave as much ink on the feed rollers"
• "polymer notes stack neatly in validator cash cassettes"
• "the grip on polymer is superior to paper"
• "polymer does not deteriorate as easily as paper"
• "polymer notes are generally in better conditions and easier to bundle and load"
• "polymer notes provide better overall performances in note validators"

Durability

Australia moved to polymer substrate to improve the security of Australia's banknotes. In addition to achieving improved security, polymer notes are proving to be significantly more durable and cost effective than paper notes. In Australia, we have experienced a quadrupling of the average life of our low denomination notes with the move to polymer, more than offsetting the higher costs of production of polymer notes. Our higher denomination polymer notes have not been in circulation long enough to be precise about their longevity, but indications are that we will see similarly impressive performance.

For some countries, cost considerations are more important than security. Even if this is not the case the improved cost effectiveness of polymer notes from added durability can be used to offset the higher costs of advanced security features.

The increased durability of polymer notes is a consequence of various factors, including:

• the non-porous and non- fibrous nature of the substrate and the overcoating of finished notes with a clear varnish mean that the notes do not absorb moisture (oils, sweat, beverages, etc) like paper notes. These same properties also mean that the notes do not stain or accumulate dirt as easily as paper notes do;
• the non-fibrous nature of the polymer substrate also means that the substrate does not physically breakdown with repeated folding, as occurs with paper notes which, in part, causes paper notes to go limp;
• the toughness of the polymer substrate makes it much more difficult to initiate a tear in a polymer note compared to a paper note (although it is true that once a tear is initiated in a polymer note it propagates more easily than in a paper note, the initial toughness appears to be the overriding characteristic).

The results of a survey of public acceptance and performance conducted at the end of the trial of polymer note technology in 1988/89 indicated that:

• 88% of those surveyed perceived a major advantage of polymer notes was their resistance to damage;
• 87% appreciated the notes' cleanliness.

Our experience shows that the cleanliness aspects of polymer notes are much appreciated by the public and cash handlers.

The different characteristics of polymer notes outlined above mean that polymer notes wear differently to paper notes. Consequently, the criteria used in manual or machine processing for deciding if a polymer note is no longer fit for reissue are different to paper notes. When paper notes were used in Australia the primary sorting criteria for paper notes were either soiling (which correlates well with limpness) or mechanical faults (tears, holes, etc). For polymer notes the primary sorting criteria are mechanical faults and ink wear. Polymer notes do not soil like paper notes.

During their long life, polymer notes experience folding and crumpling many times. Eventually, the cumulative effect of abrasion along fold and crumple lines causes ink to wear. Initially, this is very minor and difficult to see as it usually involves ink being worn away in very thin lines. Eventually, after very extended use in circulation, these areas of ink wear widen and deepen and become more noticeable. Because major fold lines tend to be concentrated around the centre of the note, ink wear also tends to be concentrated in this area as well. This wear has thus become an additional important fitness sorting criteria for both manual and machine processing.

Again it is important to remember, however, that the polymer notes which have been in circulation for the longest time in Australia are lasting at least four times longer than their paper equivalents were before ink wear suggests that they could be taken out of circulation.

Environmental

As environmental awareness becomes more important internationally, it is increasingly significant that polymer notes offer advantages over paper notes. In particular:

• polymer substrate is less polluting and more energy efficient in production; and
• polymer notes are recyclable at the end of their useful life.

In Australia, all unfit polymer notes are being recycled. Previously, we burnt or added to land fill our unfit paper notes.

The Complete Package

In our view, polymer notes offer the complete package:

• proven security benefits;
• exciting new security features that further enhance the role of the substrate, and, importantly, integrate substrate with print and/or add-on features;
• a quantum improvement in cleanliness and durability
• improved cost effectiveness;
• a quantum improvement in machine processing;
• a more environmentally friendly product.

All this makes the future for polymer notes look very positive. Guardian® substrate is a proven product. The polymer technology is new, innovative and evolving but can still use the best traditional security features. In our view, there is no doubt that polymer notes are the WAY OF THE FUTURE.