Counterfeit money is a big problem for low margin small businesses in Australia, according to a report published by the Reserve Bank of Australia this week.
The Social Costs of Currency Counterfeiting outlines the cost to business of counterfeit money.
The RBA found businesses suffer a direct loss due to bogus money and are forced to undertake costly prevention measures.
While the report found the level of counterfeiting in Australia is relatively low compared with other economies, it revealed businesses incur a greater fraud loss from accepting counterfeits than households.
The RBA’s data demonstrated that businesses detect more counterfeits than the general public in Australia.
The general public detected approximately 10%, businesses detected around 34%, while the RBA, banks and other cash management companies detected another 32%.
The remainder was not specified in the data.
“For low-margin businesses, it is possible that the loss from receiving a counterfeit could exceed daily profits,” the report found.
The data suggests the most common businesses to receive counterfeits in Australia are supermarkets and grocery stores and restaurants, cafes and fast food outlets, which receive almost half of all counterfeits by businesses.
The RBA report found cash-based businesses are particularly susceptible to counterfeiting.
“This could be explained by high-frequency, low transaction value payments in cash being made in these stores, making them potentially more susceptible to the passing of a counterfeit,” the report found.
“In contrast, clothing, hardware and entertainment stores receive less counterfeits, which could be explained by a greater prevalence of electronic payments and less frequent transactions made in cash, as well higher transaction values when purchasing the goods sold.”
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
