News
Banks to update ATMs for new currency
Wednesday, June 5, 2019 13:02
By EDWIN OKOTH
Banks will now have to reconfigure their automated teller machines (ATMs), acquire new cash counting machines and upgrade their software to accommodate the new currencies introduced to the market last Saturday.
The new currencies are smaller and have different features, prompting the need for ATM upgrades and new money counting machines found in teller booths to verify cash amounts and capture counterfeits.
The Kenya Bankers Association (KBA) Tuesday said banks were working with the industry regulator, the Central Bank of Kenya (CBK) to ensure the adjustments are done quickly for a smooth transition.
The older versions of smaller denominations will remain in circulation alongside the new ones launched on Madaraka Day, but after October 1, the older Sh1,000 notes will become invalid.
“There is the retuning of the cassettes where notes are held in the ATMs and then there is the software upgrades, especially for more sophisticated machines like the ones that take deposits,” KBA chairman Habil Olaka said yesterday.
“The degree of work each type of machine will require will vary the cost implications, but we are committed to make sure there is minimal disruption of regular services.”
The lenders have over the years concentrated in upgrading the alternative banking channels like ATMs to reduce the flow of people to bank branches in a drive to contain costs.
The recent upgrades include deposit taking ATMs and denomination-sensing money machines, including those that can detect fake currency.
KBA says Kenya has about 1,700 ATMs, but according to CBK, the country had 2,858 machines in 2017, up from 1,971 in 2011.
The drive for alternative channels like smart ATMs gained impetus in 2016 when MPs capped interest rates at four percentage points above the central bank’s benchmark, which currently stands at nine percent. Lawmakers said they were concerned about high interest levels.
But that has led to a private credit squeeze, as banks say the cap forced them to cut back on loans to high-risk groups. In turn, this prompted them to cut costs and go for lean operations.
The CBK redesigned the 1, 5, 10 and 20 shilling coins in December 2018 and has begun releasing the new 50, 100, 200, 500, and 1,000 shilling notes in the second phase of the transition to the new currency.
The introduction of the new currency notes is meant to tackle illicit financial flows, cash counterfeiting and also to arrest tax cheats.
CBK on Monday unveiled the rules that will guide the replacement of the Sh1,000 notes, which accounts for 83 percent of the Sh540 billion in circulation.
The Sh500 notes account for 5.9 percent, Sh200 (4.2 percent), Sh100 (4.8 per cent) and Sh50 (1.9 percent).
Given Kenya’s status as the most advanced economy in the region, the central bank will co-ordinate the move to scrap the banknotes with its counterparts in the region, where the Kenyan currency is widely accepted and used for payments.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]