Detecting counterfeit currency is serious business for merchants, grocery stores, and casinos that turn over a lot of cash.  Because banks do not reimburse a depositor for counterfeits, these companies need to ensure the validity of the money they accept. Criminals and counterfeiters will quickly identify retailers and other businesses with lax testing processes and can pass thousands of dollars in false bills before anyone notices.

As a result, innovations like the counterfeit banknote detection pen were developed. This device offers a quick and easy means of testing the authenticity of certain types of banknotes like US currency – but is this method reliable, and does it even work anymore?

How Does a Counterfeit Detector Pen Work?

Banknotes today are packed with security features that make them virtually impossible for a casual counterfeiter to replicate. Between microprinting, raised printing technologies and color-shifting ink, counterfeiters can never really get everything right when attempting to create a fake banknote.  So instead, they focus on a good-enough fake that can fool a merchant.

The counterfeit detector pen is a logical response to these amatuer counterfeiters. Since most of these rip-off operations aren’t very sophisticated, they use regular paper instead of the cotton and linen hybrid that comprises American bills today, and that’s where they get caught.
Counterfeit detector pens contain a solution of iodine that reacts with the starch molecules that are naturally present in wood-based paper, leaving a dark stain that exposes the note as fake.

The iodine solution is non-reactive with cotton and linen fibres, as well as the polymer plastic notes used in Canada and the England. As a result, the pens are also effective at detecting counterfeits of these currency types as well.

United States of America |100 Dollar | 2003 | Error Miscut
Source: Banknote World

Criticism of Counterfeit Detector Pens

If you create a new security feature for a bank note, folks will praise it until they realize a way in which it isn’t perfect. Then, they’ll tell you that it’s useless because it doesn’t prevent counterfeiting. That’s human nature, and the same types of criticism have been applied to counterfeit detection pens by collectors and merchants around the world.

The truth is that there are inherent flaws associated with counterfeit detector pens. A flaw in the pen has been cracked in several ways that criminals can now use to avoid their fake notes being discovered. First, Vitamin C solutions that are used to prepare invisible coatings and applied to fake banknotes. When someone uses the pen, the fakers solution can also cause counterfeit bills to pass a pen test.

A second approach used to fake the pen is to use bleached lower denomination banknotes. Crime groups organize illegal workers to bleach $1 bills, removing the ink from printing so that the original cotton/linen material can be used to reprint higher-value notes. Removing all the ink is very difficult, but it is possible to fake the pen test.  This is also why the pen should not be the only test done.  US$1 bills don’t have a thread or watermark, so a fake bleached bill should be obvious that way.

It has also been found that real US banknotes which go through the laundry and are exposed to bleach and other detergents might fail a pen test, despite being authentic.  If this happened too often, you can imagine a merchant will lose faith in the pen test

Are Counterfeit Detector Pens a Reliable Technology?

A banknote contains numerous security features, and a counterfeit detector pen is a tool that tests just one of them – but what about the rest? The truth is that there are ways to work around many counterfeit detection methods.

Still, we shouldn’t throw the baby out with the bathwater when it comes to counterfeit detection. If you’re serious about keeping your collection free of counterfeits, consider incorporating multiple counterfeit detection methods to ensure the authenticity of notes that pass through your hands. A combination of UV light testing, counterfeit detection pen testing, and examination of other built-in security features should produce a reasonable level of confidence that your banknote is either real or fake.


Like any authenticity test, counterfeit detector pens are effective in many scenarios, but flawed in others. There is no silver bullet test when it comes to counterfeit detection. The best approach is to educate yourself on the security features present in the bills you collect, and ensure that you examine notes adequately before purchasing or accepting them. You’ll have to rely on all your senses, but you can learn the skills that will keep your business or collection safe from counterfeiters.


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