Central banks incorporate various security features in their banknotes to enable the general public, retailers, professional cash handlers and central banks to detect counterfeits. In this study we conducted two field experiments to test the extent to which euro banknotes can be authenticated as a function of exposure time and perceptual modality. In addition we investigated if these effects are moderated by expertise. In both experiments, the counterfeit banknotes were actual counterfeits taken out of circulation.
Experiment 1 showed that the public (i.e., non-experts) is only to a limited extent able to visually distinguish between genuine and counterfeit banknotes. Importantly, while being impacted by expertise, overall performance was not significantly affected by exposure time. Experiment 2 gauged haptic perception in addition to vision, taking into account the fact that in regular cash transactions, people might see only one side of the banknote, but will always feel both sides.
Experiment 2 showed that a combination of sight and touch produced much better performance than touch alone. Unlike Experiment 1, exposure duration resulted in better performance in Experiment 2.
The data of Experiment 1 and 2 indicate that banknote authentication is best when one can employ multiple sensory modalities. Moreover, as such, non-experts exhibit a very decent performance even with a one second exposure duration. Experts do an even better job. When being allowed to use only one perceptual modality, performance was equal for respectively haptic and visual perception when exposure time was long. In the short time condition it was more helpful to see than to feel.
Our results are also inconsistent with the often expressed notion that people can instantly feel whether a banknote is fake or genuine. On the contrary, we found that exposure duration is important when participants could hold a banknote in their hands, with performance improving upon a longer exposure duration. The best performance in banknote authentication is realized by a combination of vision, feel and a few seconds.
The study proposes a dual processing model for banknote authentication. As long as people have trust in the cash system, the situation in which the transaction takes place and the banknote itself, they authenticate quickly, effortless and automatically (Type 1 processing). If not, this mode will be overridden by Type 2 processing, and people will explicitly and deliberately authenticate banknotes. In this study, as they were asked to authenticate, the participants processed according to Type 2. Even though in everyday life people hardly ever deliberately check whether a banknote is counterfeit or not, the findings indicate that they are quite capable of doing this. The current findings suggest that when developing new series central banks should continue to address both senses. The good results for combined look and feel also suggest that in the development and evaluation of security features, future investigations should mimic real-life interactions rather than mere visual presentation on a computer screen. Lastly, the results of the study are consistent with the statement of the Eurosystem that it only takes a few seconds to authenticate a banknote.
Keywords: attention, decision-making, change blindness, gist, sight, touch, authentication, banknotes, counterfeits.
JEL codes: E40, E41, E50, E58.