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IN TH IS ISSUE

Taking Cash Management to the NextLevel ­ Is Now the RIght TIme?

Beyond China ­ QR Code PaymentsTake Off in Southeast Asia

Australia Realises the Importance ofCash

Members' Spotlight ­ Catching Up withTed

Members' Newsboard ­ Latest Storiesfrom ACMA Members

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It seems impossible to open up/log onor switch on any media today without

receiving reports about the demise ofcash. It is well understood by ourindustry that the often reported benefitsof moving from cash to ePayments are asmokescreen for the principle reasons oftransaction transparency to authoritiesand reduced costs for the central andcommercial banks, but the overwhelmingmessage to the public is that cash hashad its day. To a pessimist it would seemthat all business dependent upon cash isin a twilight phase.

Cash­in­Transit and its less physicalcousin Cash Management are, bynature, conservative souls. Theprocesses and tools used to conduct thedaily operations of collecting cash andcounting cash have not really changedmuch in the past couple of decades formany local or even regional businesses.Even the recognisable MNCs can befrustratingly slow at acting on knownsolutions to long­standing constraintsand this might be explained by somecommon reasons:• When it comes to security

management the approach is often “if

it isn’t broke, don’t fix it”. Wherepersonal safety is at risk,conservatism is understandable.However, there is a tendency for asimilar attitude to creep into areas ofoperational management which canstifle innovation.

• Investment in new technology canfeel like a leap of faith. Often boardlevel management finds it difficult toreconcile the value of the necessaryinvestment with the SME Millennial­generation representative who is

Taking Cash Management to theNext Level - Is Now the Right Time?Anthony McAndrew | Astute Outcomes Asia Sdn Bhd

If reports in the media are to be believed,cash may now be riding into its sunsetyears.

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ACMA CURRENCY NOTES2

pitching the idea in front of them. Asthe adage goes, you only buy frompeople you like or trust. Both require adegree of personal empathy, and thiscan be hard to establish if there is nocommon ground between parties.

• Today Cash­in­Transit tends to becommoditised in Asia­Pacific. Thereasons for this are many; the relativepower of the main customers (thecommercial banks), market dominanceby a few giants, and commercialinexperience of company ownersmight be considered three significantones. Consequently, margins are lowand customers do not expectinnovation from providers.

• Fortunately, our industry is blessedwith many people with the foresight tosee opportunities where others seelimitations. From my own personalexperience I can report that thereseems to be more interest indeveloping new business solutions forhandling and processing cash thanever, from parties both within andoutside of the industry, and I expect tosee a number of market entrants intothe Cash Management markets in thecoming months.

How is it that some can seeopportunity in this space, when theprevailing winds appear very much to beblowing against efforts to grow profitablyin this sector? The answer is apparentlyin technology.

You would need to have been living ona remote island in the middle of thePacific Ocean to have missed thedevelopments in communications overthe past decade or two. The universalconnectivity that we all have with oursmartphones, the arrival of “smart­cities”and the establishment of powerful data­mining software may have their origins farfrom our industry, but the possibilities

these developments bring to the CashManagement industry are valuable.

Here are a few developments that areon the drawing board of a number of cashmanagement organisations and that aremade feasible by this communicationsrevolution:1. Smartsafes. The use of Smartsafes

is perhaps not as innovative as somein this list. A number of commercialbanks have used Cash DepositMachines in their bank foyers for anumber of years to try and takephysical deposits away from thetellers. However, the interestingadvancement being pushed now is toconnect the Smartsafe’s data files withthe Cash Management company’ssystems, creating a utility­styledepositing model which provides a lowcost deposit option for SME retailersand the benefit of scale for the cashmanagement company. Key to thisservice is an interactive programmelinking customer to cash managementprovider for instant updates andscheduling.

As an alternative to traditional “walk tobank”, this opens up a bigger sectionof local retail to cash managementservices, enabling a growth in themarket which outstrips present growthrates.

2. Cash Orders/Floats. As thecommercial banks continue to distancethemselves from the tasks of physicalcash handling, retailers are challengedwith how to supply their outlets withlow denominations and change. Arecent study for a central bank in Asia­Pacific highlighted the issue that coincirculation is not functioning. One ofthe stated reasons was that thepopulation “hoard” the coins theyreceive and retailers don’t receive coinas payment, meaning the central bankis forced to pump new coinage into theeconomy to prevent a drought ofchange. Ironically the same countrysees commercial banks activelywithdrawing from the task of supplyingcoin to retailers on demand makingmatters worse. Supplying lowdenomination notes and coin as acash management company is nowpossible with the emergence of app­based dropboxes for the likes ofAmazon and the confidence the publicnow have in electronic security. It mustonly be a matter of time beforeretailers can collect their daily floatfrom a controlled environment and asmart­locker.

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Cash Management companies are in agood position to reinvent the supply ofcoins and low denomination banknotes.

Advances in connectivity, software, andsecurity have resulted in ampleopportunity for the evolution of CashManagement.

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3. Dynamic Planning. Some years ago thesupermarkets started home deliveries andestablished a new generation ofalgorithms to predict, plan and optimisethese deliveries. Now Grab, GoJek andother sharing­economy giants have furtherevolved these programmes to establishhighly flexible logistics models thatoptimise demand through chargingflexibility and minimise waiting times. Itwould be fair to say that nearly all of theCIT industry is still to catch up with thesedevelopments, in Asia­Pacific certainly. InNetherlands one CIT company haslaunched a collection model borrowing

from the planning developmentsmentioned above, although they do stilluse their own staff to collect (!)

The successful adoption of these or othertechnologies into the Cash Managementproposition has a double benefit. Not onlycan they improve top line, middle line orbottom line results for your business, butinvariably they add value to the customerexperience. With that comes an enhancedrelationship and a move away from thecommoditisation of your service.

Now may be the best time for your CITbusiness to push forward with new,connectivity­based solutions.

I NVAR IABLY THEY( TECHNOLOGY) ADD

VALUE TO THECUSTOMEREXPER I ENCE .

WITH THAT COMESAN ENHANCED

RELATIONSH IP ANDA MOVE AWAY FROM

THECOMMOD IT I SATIONOF YOUR SERVICE .

“

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The popularity of services likeWeChat Pay and Alipay have madeQR code payments very muchmainstream in China.

The widespread popularity of QR codes isspreading from China and taking hold

throughout Southeast Asia. China’s popularmobile apps WeChat Pay and Alipay havemainstreamed the use of Quick Response(QR) codes for payments, with daily usersnumbering in the hundreds of millions.Central banks and regulators throughoutSoutheast Asia are now following suit in aneffort to make digital payments affordableand accessible to the masses.

QR codes are immensely popular inChina, but will they experience the sameuptake in other regions? It depends! First itmust be mentioned that QR codes are aninexpensive and intuitive solution that allowthe physical and digital worlds to intersect.However, when looking to China twoadditional factors have supporteddeployment. It is well known that China’scash cycle is costly and fragmented; CITservices are carried out by semi­public or

public companies, with limited competitionand notoriously restrictive and local. CIToperations are overseen by the Ministry ofPublic Security and limited to the district inwhich they are controlled. In China (andbeyond) the rationale for swift uptake of QRcodes over cash is clear – for merchants, thecodes drive down costs incurred by cashhandling. Looking to other jurisdictions, it isto be expected that QR code adoption willtake off in countries where cash handling isexpensive. Furthermore, many Governmentsacross Asia are now pushing for digitalpayments. In a country like China, this verymuch fosters demand.

Relative to other payment methods, QRcodes are cost effective and easy toimplement and adopt, and thereforeattractive to cash­intensive countries strivingto go digital. With Southeast Asia’s recentboom in smartphone penetration, QR codes

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Beyond CHina - QR COde PaymentsTake Off in Southeast Asia

Brianna Erban | Currency Research

4 ACMA CURRENCY NOTES

are helping the region’s consumers leapfrogfrom cash directly over to mobile payments.

As part of its cashless push, BankIndonesia (BI) is making significant inroadson standardising and regulating the country’sQR code payments. BI wrapped up the tech­focused first phase of its pilot test thissummer, which tested QR codeinteroperability between banks, telecos, andfintech firms. The second phase launched inearly September, comprising a workinggroup of payments industry stakeholderswho are trialing the business applications ofQR code standardisation. The feedback willinform regulation surrounding thestandardised code, soon to be introduced aspart of BI’s interconnected paymentsecosystem, Gerbang Pembayaran Nasional(GPN).

Bank Negara Malaysia (BNM) has beenactive in accelerating Malaysia’s shift todigital payments, most recently with theInteroperable Credit Transfer Framework(ICTF). The framework promotes thedevelopment of an interoperable QR schemeand a common QR code established underthe national Real­Time Retail PaymentPlatform (RPP). Commercial banks andeligible non­bank e­money issuers willconnect on a common platform, known asthe “interoperable QR payment scheme,” toenable seamless payments for consumers.However, to encourage market dynamicsBNM will allow merchants to choose betweenthe common QR code standard or aproprietary standard, depending on theirunique business needs. Given the highpenetration of mobile phones in Malaysia,BNM expects the use of common QR codepayments will help drive cashlesstransactions. The RPP is anticipated to golive by the end of 2018.

The National Bank of Cambodia (NBC)and the Bank of Thailand (BOT) haveunveiled plans to collaborate on a cross­

border QR code payment system, to beintroduced in 2019. The move is intended tobypass costly currency exchanges fortourists who travel frequently between theneighbouring countries. The new system willadditionally drive down remittance costs formigrant workers in Thailand. According to theBangkok Post, BOT has also recentlyannounced a QR­based cross­border fundtransfer initiative with Cambodia, Laos,Myanmar, and Vietnam (CLMV). As with theNBC­BOT partnership, the service will notonly facilitate payments integration in theregion, but also result in lower remittancecosts for CLMV migrant workers based inThailand.

In a much anticipated move, the MonetaryAuthority of Singapore (MAS) launched theSingapore Quick Response (SGQR) code on17 September. SGQR is, according to MAS,the “world’s first unified QR code forpayments” and combines multiple e­paymentsolutions into one, thereby reducingfragmentation and simplifying mobilepayments for merchants and consumersalike. The network will be compatible with 27payments providers and will be rolled outover the next six months.

In nearby Sri Lanka and Hong Kong, QRcodes are also gaining a foothold throughformal government initiatives. On 17September, alongside the launch of its FasterPayment System, the Hong Kong MonetaryAuthority (HKMA) announced the CommonQR Code Standard for Retail Payments inHong Kong. A free mobile application tool –the Hong Kong Common QR Code (HKQR)app – allows merchants to convert QR codesfrom different payment service providers intoa single, combined QR code. Small andmedium enterprises, especially, are set tobenefit from the single QR code as they canefficiently accept different payment schemes,rather than displaying multiple QR codes totheir customers.

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WIth Southeast Asia's recent boom insmartphone penetration, QR codespayments could prove cost effective &easy to implement, as they were inChina.

THE MONETARYAUTHOR ITY OFSINGAPORE

LAUNCHED THES INGAPORE QU ICKRESPONSE (SGQR)

CODE- -

- -THE WORLD 'SFIRST UN I FI ED QR

CODE FORPAYMENTS . . .

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More recently, on 10 October, thePayments & Settlement Department ofthe Central Bank of Sri Lanka launched astandardised national QR code calledLANKAQR. At an industry event in lateSeptember, Governor Dr. IndrajitCoomaraswamy said that LANKAQR“would allow any small merchant, be it astreet­side vendor or a taxi driver, toaccept electronic payments just by havinga printed QR code and basic mobilephone.”

The QR code has come a long waysince it was developed for Japan’sautomotive industry in 1994. WhileSoutheast Asia may not see Chineselevels of ubiquity any time soon, thescannable codes are paving the future ofdigital payments throughout the regionand beyond.

Republished and amended withpermission from the October 2018 issueof Central Bank Payments News:www.cbpaymentsnews.com

Originally developed for Japan's automotiveindustry in 1994, QR codes could now representthe future of digital payments in Asia.

RecentACMA Events

The ACMA Workshop at Tentrem Hotel, Yogyakarta

Discussions at the 2018 ACMA Annual General Meeting.

ACMA WORKSHOPHELD AT TENTREMHOTEL, YOGYAKARTA ON4 SEP 2018

On "The Future of Cash" and"Attacks and Risk Mitigation"

ACMA ANNUALGENERAL MEETINGHELD AT TENTREMHOTEL, YOGYAKARTA ON4 SEP 2018

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6 ACMA CURRENCY NOTES

Without cash to fall back on,Australians would not have beenable to pay for various services,including taxis and parking

On Friday 2nd 2018, Australia’s largesttelco Telstra, experienced a major

communications outage across the countrywhich was not resolved for over 24 hours.

Within this timeframe 95% of EFTPOSterminals and some ATM’s were offline. Thismeant that customers could not pay for theirgroceries, food, coffee, parking, taxi’s andother daily necessities by using their cards.Businesses reported losing significantamounts of revenue and, at one stage,Telstra was promoting their customers to usecash due to the outage.

Telstra confirmed the problem wasaffecting its machine­to­machine (M2M) dataservices and also devices that employcellular connections. “We are currentlyexperiencing an issue with some enterprisecustomer machine to machine (M2M) dataservices, which is impacting servicesincluding EFTPOS devices and ATMs,” thetelco giant said in a statement.

This outage has not only illustrated the

importance of cash in our society, but, asimportantly, promoted Australians to carryphysical cash on them at all times to negatethe effects of similar scenarios in future.Despite segments of the communitypontificating cash as a diminishingcommodity, Australians have experienced theeffect of losing an essential service first­handand the implications it can cause in our dailylives.

AUSTRALI ANS HAVEEXPER I ENCEDTHE EFFECT OFLOS ING AN

ESSENTIAL SERVICEFI RST-HAND

AND THEIMPLICATIONS I TCAN CAUSE IN OUR

DAI LY LI VES .

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Australians Realise theImportance of Cash

Huseyin Memis | Streamcorp Armoured

MEMBERS' SPOTLIGHT - CATCHING UP WITHTED

Question 1: What do you want otherACMA members to know about yourcompany?

The Spearpoint Security Group wasformed in Singapore in 2012 to hold securityrelated assets in Asia. We have offices andbusinesses in Singapore, Thailand, Hong

Kong, Malaysia, Indonesia and ThePhilippines. A key service we provide isconsultancy, aimed at the Security of theCash Cycle, and we recently completed ajob for a major Indonesian Bank.

The year 2018 marks 7 years since the formation of ACMA was first envisioned. In this issueof ACMA Currency Notes, we catch up with one of ACMA's founding members, executive

director Ted Devereux, to get his thoughts on ACMA today and how he sees the continuingevolution of the cash management industry.

Telstra's communications outage impactedmany business ­ who were blameless inthe affair ­ as well as countless customers.

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MEMBERS' NEWSBOARD - LATEST STORIES FROM ACMA MEMBERS

Cryptocurrency ­ Secure Vault Storage in the Wild WestTim Malone | G4S

With the rise in the popularity andvalue of cryptocurrencies around

the world in recent years, G4S hasdeveloped an innovative new serviceoffering high­security offline storage thathelps to protect assets from criminals andhackers.

Once a niche dream for idealisticcomputer scientists, the popularity ofcrypto­assets has become more andmore mainstream. With that growth, thevalue of cryptocurrencies like Bitcoin,

Ethereum, XRP and Litecoin hasincreased at an unprecedented rate. Inthe space of a few years the value of asingle Bitcoin has risen from $800 to over$6000. For people and companiesaround the world the opportunitiescreated by this are broad, but, inevitably,so is the appeal to criminals.

Cryptocurrency trading operates likemany financial markets, with buyers andsellers mediated by an exchange in themiddle. The key difference is that in the

absence of a central bank, the exchangecan become the main repository for thedigital asset, making it a potentialvulnerability. Cryptocurrency exchangesare a fast­growing industry, with thelargest exchanges estimated toaccommodate up to $1.7 billion in tradingvolumes per day.

The combination of the uniquerequirements of exchanges and theimmaturity of the sector has made them a

Question 2: What drew your companyto become a member of ACMA?

Whilst attending ICCOS Asia in HongKong the idea to form ACMA was floatedby Currency Research. As there was noother Association representing the CashManagement Industry across countryborders in Asia, we felt ACMA could fillthis role and help to promote our industryto the relevant stakeholders. We becamea founder member and I was asked tobecome the first Executive Director.

Question 3: What are the benefits youhave experienced since becoming amember of ACMA?

Networking with other like­mindedpeople and learning from their collectiveexperiences. Especially through theACMA interactive workshops held eachyear at ICCOS Asia.

Question 4: What are some of theexciting developments you are seeingin the industry?

What I see is that Cash Management

Companies are investing and becoming amore integral part of the cash cycle asCentral Banks reduce their branchnetwork and more Commercial Banksoutsource cash services.

Question 5: What change, technologyor otherwise, do you expect to see inthe industry over the next few years?

I expect to see Cash ManagementCompanies embrace the change that ishappening by investing in technology to

improve efficiency and to provide a widerrange of services. For example, providingSmart Safes, operating ATM Networks,and Providing Single Line ATMMaintenance. To further speed up thecash cycle, I expect to see CentralBank’s outsource the holding of extendedinventory to Cash ManagementCompanies. This is already the case inthe UK.

Question 6: What makes ACMAdifferent from other Associations orOrganizations you are involved with /members of in the cash managementspace?

All the other Associations I am amember of are country based. ACMAcrosses borders and has 38 memberscovering 17 countries. This gives us farbetter insight into the cash industry andas we grow further in strength it will giveus a firm base upon which we canengage Central Banks around the bestways to efficiently and cost effectivelyrecycle cash to ensure it remainsrelevant.

ACMA Executive Director Ted Devereux.

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ACMA CURRENCY NOTES8

Why Software is the Conductor of Cash ProcessingVictoria Lant | G+D CurrencyTechnology

When it comes to cash processing,people often focus on the

machines ­ the hardware components,that scan, count, sort and stack the bills.A recent article by G+D CurrencyTechnology, discusses why software is soimportant in today’s modern currencycycle.

Software is the intelligent controlcenter and without it, hardware is lifelessand silent, like an orchestra without aconductor. Cash processing equipmentneeds precise instructions to functionefficiently and like musicians andinstruments in an orchestra, even thebest hardware is useless without greatsoftware and excellent service. Thecompany offers Compass® VMSsoftware as an example of a solution that

can bring together all the elements of acash center and adapt to many customer­specific processes and requirements.

G+D Currency Technology’s futurefocus is closely tied to data intelligence.According to Kesavamani Narayanan,Regional Sales Director (Malaysia,Singapore, Brunei and Philippines) G+DCurrency Technology, “Software is thecatalyst that enhances your traditionalproducts and evolving it into a digitalenvironment required in the fast movingworld we live in.

It empowers people to make decisionscorrectly and efficiently with a mere clickof a button.”

prime target for hackers and othercriminals. According to one estimate,cryptocurrency worth over $1.2 billion hasbeen stolen since the beginning of 2017,including more than $500 million in onetheft in January this year from Coincheck,one of the largest exchanges in Japan. Itis therefore not surprising that there issome trepidation among major financialinstitutions about whether to enter thefray.

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For the full story, view the complete article

here.

For the full story, view the complete article

here.

The rise in value of Bitcoin and other cryptocurrencies has presented opportunities forlegitimate businesses and criminals alike.

Much like the conductor in an orchestra,well­designed software is essential toensure that equipment runs satisfactorily.

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About ACMA

MissionTo provide a platform for Cash Management Companies(CMCs) in Asia, Africa and Australia & Oceania to raisetheir professional reputation and standing in the CashHandling and Cash Management Industry, and to act as arepresentative with the appropriate authorities on issuesof common interest.

Founding MembersAB Securitas Phiroze Kevin PestonjeeCurrency Research Richard HaycockLinfox Armaguard Scott ForsterSpearpoint Group Ted Devereux

Office BearersChairman Óscar Esteban, ProsegurExecutive Director Ted Devereux, Spearpoint

GroupSecretary Tan Chee Meng, Currency

Research

Committee MembersSuneel Aiyer, Writer Safeguard Pvt LtdSteven Cole, Marsh LtdScott Forster, Linfox ArmaguardHuseyin Memis, Streamcorp ArmouredAnthony McAndrew, SpinnakerBaskaran Narayanan, Brink'sIman Sujudi, PT Nawakara Arta KencanaAbdul Malek Sutan, MEPS Currency ManagementCharles Wink, G4S

www.acma­asia.org

To become a member, write to Tan Chee Meng at:tancmsia@gmail.com

share your insightS

If you would like to havean article published inthe ACMA CurrencyNotes, please write to TanChee Meng at:tancmsia@gmail.com

Contributors to this issue:

Anthony McAndrewBrianna ErbanHuseyin MemisTed DevereuxTim MaloneVictoria Lant

ACMA CURRENCY NOTES is a quarterly industrynewsletter read by over 4000 professionals in the cashhandling industry globally.Advertise with us to increase your presence across Asia, Africa,and Australia & Oceania.

Members pay$400 for a full­page advertisement;$200 for a half page; and$100 for a quarter page.

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