Shops and banks could face a bill of up to £236 million to ensure they are able to accept and dispense the new polymer bank notes, it has been claimed.
The Bank of England will next year begin rolling out the new notes, which will feature new security measures and be 15% smaller than the current cotton notes.
While the notes will prove more durable and harder to counterfeit, they will also leave the cash industry with a hefty bill according to Brendan Doyle, chief executive of consultants CMS Payments Intelligence.
This is mainly because ATMs, vending machines and self service machines will need to be recalibrated, requiring an engineer call out in each instance. Some of the older ATMs might even need replacing, he claimed.
Mr Doyle also warned there could potentially be cash shortages during the co-circulation period.
"The Bank of England has not adequately acknowledged the potential disruption and costs to the cash supply industry and retail sectors," he said.
"There will be huge operational challenges for all merchants, particularly those who operate ATMs and vending machines.
"Our clients have been asking us why they have not heard anything. They do not know what planning they need to do."
Referring to a Bank of England statement that the more durable notes would reduce its production costs by £100 million, he added: "All that will really occur following the introduction of polymer is a transfer of value from the private sector for a small public sector gain.
"Ultimately it will be consumers who suffer as the net costs will inevitably feed through to merchants before finally hitting consumers in the form of higher prices."
In response to the allegations, the Bank of England issued the following statement to the Press Association: "Polymer banknotes are harder to counterfeit, more durable and cleaner than paper banknotes. We consulted the industry and the public before making our decision in 2013 and we are committed to continuing to work with retailers and others in the cash industry to ensure a smooth transition."
In an earlier speech, Bank of England chief cashier Victoria Cleland said the Bank was working closely with the cash industry throughout the process and that feedback from the industry had been positive.
"A key strand in the successful issuance and distribution of the new banknotes will be action from the cash industry to ensure their businesses are ready. That is why we are supporting a series of five industry-led working groups, representing all parts of the cash supply chain. Feedback on this collaborative approach has been positive, and the industry is confident in how the programme is moving forward.
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