Sean Farrell

By: Sean Farrell on January 6th, 2015

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How Does a Cash Recycler Work?

Cash Automation

This blog article was originally posted on our QDS Financial Education blog. To read more articles like this one, subscribe to QDS Financial Education.

How_Does_a_Cash_Recycler_Work

We wanted to write this article to truly explain how a recycler works and how it generates efficiency in the branch environment. A cash recycler is really an amazing wonder of technology even to those of us in the business. I am reminded when I am able to be on-site for installs, when those first few transactions happen, the wow factor that comes over the staff and myself seeing the machine in action is palpable. So, how do these wonderful machines work?

Cash Recycler Basics

At its simplest definition, a cash recycler is a vault that handles cash coming in and cash going out for both teller transactions and vault transactions needed in the teller line or POD environment. The efficiency begins with the fact that money is only counted once by the machine, versus typically 3 times by a teller.  A cash recycler stores money, sorted by denomination typically in 2 ways, either RSM storage (which stands for Roll Storage Module) or cassettes (think like your ATM). Each of those storage configurations has their pros and cons (Article Here). Cash recyclers are capable of taking cash in, authenticating the denominations, checking for suspect bills and then storing the cash for later transaction use. They are also capable of dispensing cash for transactions like cashing checks or account withdrawals in any denomination mix that the customer may desire. Therefore by storing the cash that comes in from commercial or retail accounts and giving that same cash back out, you are “recycling” your own cash instead of shipping and ordering from the FED or your armored car provider.

How Efficiency is Gained

One of the major efficiency gains is dramatically reducing vault transactions.  Traditional environments require tellers to maintain minimum cash levels and not to exceed maximum cash levels to mitigate risk.  So therefore when a teller is low on cash or high on cash, they have to buy or sell from the vault.  This transaction requires “dual-control” in authenticating the cash and usually involves the head teller or teller supervisor.  This type of transaction removes 2 people from being able to serve customers, and puts them off the line for 5-10 minutes in most cases. By having a cash recycler, you are putting the vault between two tellers, with a much higher level of cash management available.  In a normal environment, for those two tellers a recycler can eliminate any need to sell or buy from the vault during the day.  In addition to the two people hooked up to the recycler directly, other tellers who may still operate out of drawer can buy from or sell to the recycler in single control.  The elimination of vault transactions requiring 2 people and happening off the line is a roughly 90% efficiency gain.

Secondly, and what most people buy cash automation equipment for, is speed and accuracy on every single cash transaction. The average time savings on a cash out transaction ranges from 30-45 seconds.  For example, in most environments on average, it takes 45 seconds from the time a teller opens the drawer, until the customer has the money correctly counted back in their hands.  In an automated world, this takes roughly 8 seconds.  Also, since the machine is counting the money instead of a person, mistakes are eliminated and speed is increased.  Likewise on cash in transactions, the process is dramatically sped up because there is no need for sorting and validating of the notes by the teller.  The recycler can handle mixed cash, in any order, process it quickly(on average 5-7 notes per second) and return the validated total to the teller.  In the meantime, the teller can either be processing checks in the deposit or talking with the customer about their needs and trying to cross-sell.  One of the key advantages of automation is the teller can stay focused on the customer and their needs instead of counting to ensure they are in balance. If cross-selling is a major part of your strategy to drive revenue going forward, you need to consider what tools will enable the tellers or universal bankers to do their job and stay client focused.

How to Drive ROI with a Cash Recycler

We have explained a few of the ways that a cash recycler generates efficiency and opportunity for your tellers. If you need further support in this area check out How a cash recycler helps my teller line operate better and 3 reasons FIs need to automate their teller lines. Lastly, how do you drive a competitive ROI to justify investing in cash recyclers?  The general rule of thumb is 2 people working off the device can do the work of 3.  So for busy locations, you can either reallocate staff to more profitable roles, or if you are looking to implement universal staffing models read our article on Universal Tellers. You can take total staff from maybe 7 or 8 between tellers and CSRs to 4-5 universal bankers. Most CSRs are more than willing to jump on a recycler and help for a peak time, than having to go get a drawer out of the vault and balance it at the end of the day. With all of the efficiency gained from vault transactions and well as speed and accuracy improvements, plus start of day and end of day times dropped to 2 minutes on each side of the day, it’s very possible to do more with less. Most clients write the recycler off on either a 5, 7 or 10 year depreciation depending on their tolerance for writing capital equipment off. With a general useful life of 10 years for most recyclers, it’s a very effective way to reduce operating costs with handling cash, and it doesn’t get sick, pregnant or take PTO.

If you’d like to see if recyclers make sense for your branch environment, please click here to fill out our cash automation assessment form and we’ll be in touch with you right away.

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About Sean Farrell

Sean has been in the business since 2003 and always aims to be an expert on whatever solutions QDS is providing. Sean has grown into a thought leader in the space through research and company growth. Sean holds strongly to his Christian faith and uses those principles to guide the business.