Polymer Vs. Paper – An Update

It has been a year since the Bank of England issued the 20 pound note on polymer. And the Bank has now added DeLaRue as a supplier of polymer substrate. Is this the tipping point against paper banknotes, that polymer advocates have been predicting since the 1990s?

History of Paper & Polymer Banknotes

In 1988 Australia introduced a commemorative on a plastic substrate and then followed up a few years later with a polymer $5 AUD. The Reserve Bank of Australia and its JV Securency predicted polymer would displace paper due to its improved durability and longer lifetime. This has yet to happen. For more than 10 years, polymer was relegated to Australia, Oceana, and commemorative notes. Then Nigeria used polymer, and Mexico. Securency even built a plant in Mexico to supply the region. But issues with ink durability problems caused some denominations to return to paper. A turning point happened when Canadian Banknote became approved as a polymer printer and the Bank of Canada started issuing polymer banknotes. Canada might not have a large demand for banknotes, but they are influential in the banknote industry. 

Other Factors In the Evolution of Polymer

Another key factor in the rise of polymer was the decision by DeLaRue to sell its paper business – Portals and begin promoting its own polymer substrate. This decision has three effects:

1. There are now 2 manufacturers of polymer substrates and 5 manufacturing sites, making it easier to chose polymer without being dependent on one company
2. DeLaRue has had financial difficulties and its future depends on the success of its polymer substrate to drive new business (and likely drive down substrate prices)
3. DeLaRue brings a 200-year pedigree and a large number of loyal customers who can be more easily converted from paper to polymer

In the last 10 years, the number of circulating banknotes has increased from 24 to nearly 150. Security features including SPARK and Cinema have been proven on polymer, and some countries with very large banknote demand have made noise that they might convert some denominations to polymer. There are rumors that China Banknote Printing and Minting Company has its own polymer substrate. And Spectra Systems- a supplier of covert banknote systems might even have its own substrate. This might not be the best news for polymer companies. Polymer has been valuable because it was unique and like banknote paper, hard to produce. When a banknote technology becomes too common, it loses its value and utility in banknotes. 

Security Features

Yes, there are many suppliers of banknote paper. However the value is now the ability to integrate unique and different security features into the paper. Does polymer have this benefit? Windows are not special. Many of the applied security features like foils lose their effect after only a few months of circulation. CCL has introduced a micro-optic overt effect into the substrate and have leveraged selective opacity to make interesting visual effects. If successful, this will help make their substrate unique. But what else is there unique to the banknote clear plastic substrate that will enable it to take more share from paper? Unless there are more security features built into polymer substrate like paper has thread, and fibers, and watermarks, and a deeper effect from intaglio printing, polymer might remain a small percent of the overall usage and turn into a commodity substrate.