Fighting Poverty Profitably Full Report

Cash handling network
The cash handing network enables the flow and transport of cash between distribution
outlets, businesses, and the central bank. This network continuously balances the distribution
of cash in the market, ensuring that it does not pool unused where it is not needed,
nor go missing where it is. Cash handing logistics become increasingly complex as CICO
networks grow.
• Cash in transport (CIT) companies transport cash to and from distribution
outlets and among other points in the cash handling network. CIT is responsible for
ensuring that cash goes to the correct destinations and is not stolen on the way. To
mitigate risk of theft, cash is moved in armored cars, often in custom-designed
containers that will indelibly stain bills when stolen.
Distribution outlets interact with CIT in one of two broad ways. First, for branches,
remote ATMs and some merchants, CIT armored cars drop off fresh cash and pick
up cash that needs to be collected. Pick-ups are least frequent at large branches
that have significant cash in-flow and out-flow that balance each other out. Second,
agents and smaller merchants transport cash themselves to larger CICO distribution
points.
• Cash centers sort and pack cash for branches, ATMs and other cash distribution
outlets, while also withdrawing counterfeit or damaged notes. In some countries,
cash centers may destroy damaged notes, while in others they must direct them to the
central bank for destruction. Collecting, disbursing and counting can be either manual
(e.g., as with most branch transactions), or automated to varying degrees (e.g., as
at ATMs).
• Central banks provide new banknotes to place into circulation and are responsible
for destroying old notes. Furthermore, the central bank will often pay banks or other
financial institutions interest on their cash in the cash center so that they do not lose
money from participating in the full cash supply chain.
Processing platform
For every cash deposit or withdrawal, an account is debited or credited. CICO processing
platforms are the electronic transfer systems that do this. Open platforms coincide with
or resemble card payment networks and function in roughly the same way regardless of
type of CICO outlet used. For closed platforms, transfers occur in roughly the same way
money is transferred between accounts in a bank.
Components of cash-in-cash-out costs
Each component of CICO networks contributes to overall costs, which are of two types.
• Operating costs. These include costs for labor, real estate, overhead, and capital
equipment (e.g., armored vehicles, cash sorting machinery).
• Funding costs. These are the opportunity cost associated with the foregone interest
on cash that sits in branches or ATMs rather than in an interest bearing account.
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