A functioning cash supply is a stabilizing factor in our society, both in everyday life and especially in times of crisis. While digital payments are on the rise in the United States, cash remains an important part of the economy. Credit unions, which often serve as the backbone of their communities, must ensure an efficient and reliable cash supply to maintain trust and meet member needs.

According to the Federal Reserve, cash was used in 18% of all payments in 2022, and it continues to be an essential payment method, particularly for small-value transactions. As such, the demands for a robust and efficient cash circulation system are increasing. Standardized trays could help to streamline banknote transportation processes, leading to a significant increase in the efficiency of cash logistics, particularly for credit unions managing cash operations across multiple branches and ATMs.

In the United States, cash remains a universal, crisis-proof, inclusive, and unconditional means of payment. As a public good, it is also a crucial factor for the economy and trade. Maintaining a vital cash circulation system requires a certain amount of effort, as the underlying process chain involves a number of steps—from issuance by commercial banks to widespread distribution, which requires significant transportation and logistics efforts, to inspection and counting at cash centers, and finally to sorting at the end of its lifecycle. Given that cost efficiency is critical to the cash cycle, approaches that reduce costs within the process chain are of great value.

Improving the efficiency of cash logistics

One of the most promising areas for improvement is logistics. Whether credit unions handle their cash processing in regional cash centers or outsource it to specialized cash-in-transit (CIT) companies, there is considerable potential to make the process chain faster and more cost-effective in transportation, cash center operations, and banknote handling.

In cash logistics, as in many other areas, two approaches are typically effective: standardization and automation. The focus is on identifying and eliminating redundant process steps to streamline operations, reduce complexity, and save costs. At the same time, the key requirements for a functioning cash circulation system must not be neglected: reliable cash supply, scalability based on current demand, and stability and resilience during crises. In addition, sustainability issues such as waste reduction and resource conservation must be addressed.

A prime example and model for logistics optimization is the shipping container, millions of which are stored in ports or freight centers and transported by truck, train, or ship. The key factor in this success story is standardization. Because of their uniform size and shape, containers can be loaded efficiently and moved easily between modes. This results in shorter handling times, lower transportation costs, better utilization of transport vehicles, lower fuel consumption, and reduced CO2 emissions.

Off to the container

With this efficiency profile, containers can serve as a model for banknote transportation. Instead of bundling, banding, and packaging banknotes in separate steps, mini-containers—called trays—can be filled with loose banknotes. These trays are secured with lockable lids and seals, allowing cash centers, including those used by credit unions, to store them securely.

Within a cash center, repackaging is no longer necessary when preparing banknotes for ATM cassettes, for example. The trays are reusable, saving costs and resources while significantly reducing packaging waste. By reducing the amount of paper and plastic waste, they also contribute to ‘ sustainability goals, which align with the values many credit unions uphold

The greatest efficiency potential of the trays could be realized if they were used throughout the entire cash circulation process—from central banks, branch banks, and CIT companies to storage in cash centers. Credit unions, as vital community institutions, could particularly benefit from these advancements.

Standardization of the process chain is a prerequisite for the next logical optimization step: automation. Once again, shipping containers, with their globally standardized ports and transportation systems, serve as an ideal model. Mechanically, it is possible to fully automate the filling and emptying of trays with appropriate banknote processing systems, eliminating manual intervention. Equally beneficial is the creation of a digital twin for each physical tray. This digital support provides modern cash management software with the necessary data to secure the entire logistics chain and track the location of each tray in real time, further automating settlement and accounting processes.

Standalone, integrated, or ecosystem?

Trays can be used throughout the entire banknote transportation and processing logistics chain, but they can also be used as a stand-alone solution. They provide an elegant means of optimizing and automating key parts of the logistics chain without requiring adjustments elsewhere. They also enable “peaceful coexistence” with traditional forms of cash provision in mixed operations.

For example, a supermarket ordering change from a credit union will likely continue to prefer to receive it in bundles and packets for quick verification. However, many other logistical tasks can benefit from the advantages of standardized trays. Their versatility and independence make them particularly flexible for cash logistics and processing. This opens up the possibility of developing a differentiated ecosystem for standardized and automated banknote distribution logistics.

A team effort

Such a transformation would require the cooperation of many stakeholders, including credit unions. If successful, this approach could not only significantly improve the efficiency of the cash distribution system but also contribute to greater sustainability.