Bankable – but is it patentable? The RBNZ’s “cash system redesign” report, through a “patent” lens
The Reserve Bank of New Zealand (RBNZ) has released a report on cash (that is to say, banknotes and coins, as opposed to digital / electronic banking protocols), its importance in the economy, and the issues it faces in a modern-day context.
The report is titled “Future of Money – Cash system redesign” and, as the name suggests, it aims to identify ways for mitigating the difficulties faced by cash in the modern economic system.
As we read the report, for us the question was – to what extent are the proposed action points potentially the domain of patentable subject-matter? Our impression is that it’s a mixed bag – some areas may well foster patent-eligible innovations, while others are more in the nature of business methods or contractual / legislative arrangements.
The report points out that cash acts as a “value anchor” – it is the public’s way of knowing the funds they have in the bank have a definable, “real” value. As such, the preservation of cash is in the public interest (other advantages of maintaining cash as a mainstream facet of our economy include financial and social inclusion.)
The report reflects on the challenges posed to cash circulation in the modern-day world; and ultimately the declining use of cash as a result. Some of the problems identified include:
- Preference for digital / electronic transaction protocols – the report points out that innovation in the electronic banking space, and its attendant advantages / convenience, has led to merchants, consumers and banks all generally favouring this mode of transacting. This obviously reduces the popularity of cash-based transacting.
- Access issues – with bank branches shutting down, and fewer ATMs being maintained as banks encourage the adoption of digital transaction protocols, access to cash is becoming more difficult.
- Merchants – merchants are a major source of cash circulation, both via allowing cash payment for goods and via “cash-out” facilities for members of the public wishing to withdraw cash. But the report points out that the cost to merchants of facilitating cash payments and cash-out (e.g. in-store cash register fitout, denominational issues, and end-of-day depositing / processing of surplus cash) may outweigh the benefit to them;
- Resilience / efficiency issues – as there is progressively less cash in use and circulation, the amount of cash required in the system on an “average day” is progressively lesser; but during a “crisis” situation, the demand for cash will be the same as previously (due to the public withdrawing cash out of fear at such times). A system that only caters for “ordinary” circumstances to maximise efficiency will not be resilient during a sudden spike in demand in a “crisis” situation; yet a system that accounts at all times for the possibility of such a spike will be carrying excess baggage and will thus be inefficient.
The report goes on to discuss multiple policy options for improving the plight of cash in the modern-day world, focusing in particular on improving / increasing the availability and acceptance of cash, and on striking the right balance between resilience and efficiency.
Solutions proposed in the report
The report canvasses a range of potential solutions, including:
- Consolidation of various aspects of the cash system (such as the handling / processing of cash), and relatedly reducing duplication of infrastructure required for this;
- Outsourcing of certain functions of the “wholesale cash sector”;
- Prescribing / mandating banks’ practices vis-à-vis cash;
- Mandating cash acceptance by merchants and public entities;
- Protocols for incentivisation of merchants vis-à-vis cash acceptance and quality checking;
- Various public-facing campaigns or financial incentives relating to cash use;
- Implementing of cash machine standards, and “smart” cash-handling machines.
One area of focus in the report is on technological innovation to do with mitigating merchants’ cash-related costs (such as expenses associated with depositing surplus cash) – such as technology that reconciles consumers’ cash withdrawal demands with merchants’ levels of surplus cash. The Singaporean SOCASH phone app is cited as one example of this. Another example is the automated detection of cash withdrawals / deposits in merchants’ safes, with changes being automatically reflected in the merchant’s bank account.
On a broadly similar note, real-time monitoring and updating of cash amounts in merchants’ tills and in ATMs is posited, with the objective of optimising cash pickup and delivery by intermediaries.
Smart “cash-handling machines” (such as ATMs and self-service tills) are also mentioned, having the ability to automatically “quality-check” inputted cash, obviating the need for cash to be removed from the machines, screened by an intermediary, and eventually returned to circulation.
Software-based solutions are also posited, such as cash-demand forecasting programmes.
Another possible area of innovation (though only hinted at) may be to do with improving the design of “self-service coin-dispensing machines”, which the report states need frequent servicing due to the weight and bulk of coins and are thus inefficient.
Another possible area of innovation hinted at is some facility for merchants to effect “reverse cash-out” – that is to say, some mechanism whereby merchants could receive cash from customers and cause the corresponding amount to be deposited into the customer’s bank account.
We scrutinised the report to see to what extent the RBNZ’s “cash system redesign” initiative may entail the development of patent-eligible material – in New Zealand or in other jurisdictions that are likewise reviewing their cash policies such as Australia, the UK, the US, Singapore and the Nordic countries. (For present purposes we have ignored the question of novelty / inventive step, and focused just on patentability).
Obviously, legislative (or policy) based solutions would not qualify for patent protection. Neither would those that amount to a “business method” or a “scheme”, such as consolidation or outsourcing of various functions, or the implementation of consumer-facing rewards schemes.
Others of the proposals have a more “patenty” quality about them, though in the current fickle “patentability” climate few of these would be a shoo-in. In various jurisdictions, the following factors would weigh to various extents on patent-eligibility: whether the invention is directed to software per se; whether what the software is doing is sufficiently “technical” in nature (including being an “improvement in computer technology” or potentially some other field of technology); whether the software is associated with (or is claimed as being associated with) hardware; whether the invention is directed to a machine or apparatus, and if so, whether the apparatus is itself configured or functioning in some innovative manner, or whether it is just a passive “host” for a software programme (or whether the apparatus itself is generic but is caused, by the software, to operate in an improved manner). Different jurisdictions would place different weight on these various considerations.
The above-noted SOCASH-style technologies for incentivising (or facilitating / easing) merchants’ handling of cash are an interesting one to look at. SOCASH have filed PCT applications for at least two of their inventions in this space – WO2021101442 and WO2021095706 (with national applications filed in Singapore and Japan so far). The latter application covers a system for enabling a customer to retrieve cash from a store, with the amount being electronically transferred to the store’s bank account and the system further determining whether or not the store needs a cash top-up based on its “cash balance”.
One can speculate that in Japan, the “hardware” elements may get the invention across the patentability line, while in Singapore the practical advantages of the invention might suffice in establishing the requisite technical effect. One might expect the “technical effect” rationale to yield a positive result in Australia also – there is a sense in which new and advantageous “data flow paths” are being created, and thus there is arguably an improvement in computer functionality (or at least a computer-based improvement to technology more generally). This was the case in Jagwood Pty Ltd  APO 38, successfully argued by PIPERS IP. In New Zealand, the technical effect (of the software) would not be taken into consideration, so we have doubts as to whether the SOCASH system would be patentable here.
It is interesting to contrast the SOCASH-style innovations to other – non-technical – solutions to the same problem that are mentioned in the report. Legislative solutions (such as mandates), business-method style solutions (contractual arrangements between providers), or outright compensation by the Reserve Bank or the taxpayer, are given as examples of other actual or potential solutions to the problem of incentivising merchants to continue dealing in cash. This shows that a given problem can be tackled in either a technical or a non-technical manner.
Turning to automated cash withdrawal / deposit detection (and thus detection of cash reserves) in apparatus such as merchants’ safes, tills, and in ATMs – this highlights some of the quirky characteristics of patentability jurisprudence. If such automated detection were “embedded” in, say, a safe, then under the “washing machine” principle one would imagine it would be considered patentable in New Zealand. One would further imagine that the same would be true of a till – although in that case, the additional question arises of whether the till is “sensing” the ingress / egress of the physical cash, or whether the automated detection is being done electronically as the amounts are punched in by the till operator. Likewise for an ATM – is it the physical cash being detected, or its electronic record?
Till recently, it may have been a safe bet to say that there is patentable subject matter in any event since, after all, the invention fundamentally relates to an apparatus (a safe, a till, an ATM machine). In the wake of the Australian Aristocrat decision, however, one wonders whether the apparatus would be pushed aside and / or rolled up in “the computer” – with the invention being considered to in essence relate to “a computer” doing its ordinary thing, viz. adding and subtracting. Recent US cases prompt a similar question for that jurisdiction – would the tangible elements (safe, till, ATM) be discarded from the eligibility analysis on the grounds of being passive / generic?
However, be this as it may, we believe that in the case of these “smart safes” (or tills, or ATMs) there would still be a strong argument (at least in some jurisdictions) that the functionality of the apparatus as a whole, and of the wider system, is improved thanks to the automated detection of cash reserves – and thus that there is the requisite “technical effect”.
As for “smart cash-handling machines” capable of in situ quality-checking of inputted cash – it seems to us that this would be patentable in most jurisdictions, either due to being inherently “tangible” / “physical” in nature (the inputted cash must be scanned to determine its characteristics, and the machine must be configured appropriately for this) and / or due to having the requisite technical effect and practical advantages. Likewise, any improvements in the design of coin-dispensing machines would, assuming they relate to a more efficient physical configuration, likely be patentable.
Things like software-based forecasting solutions are unlikely to be patentable due to relating to software per se and / or possibly due to not having a sufficient “technical effect”. As for “reverse cash-out” solutions – this would depend on the nature of the solution. Mere incentives (i.e. business schemes) would not be patentable. SOCASH-style solutions may have a better shot, though would be subject to the uncertainties (and jurisdictional differences in patentability jurisprudence) noted above.
On the whole, the RBNZ report makes for interesting reading, not least of all for its convincing defence of a payment method which most of us have probably come to regard as somewhat archaic.
Patentability-wise, the solutions it contemplates are a mixed bag – while some are clearly in the domain of business schemes or policy incentives, others may well have sufficient technicality / tangibility about them to be patent-eligible.
At PIPERS IP, we have expertise in patentability of computer-implemented inventions, including in the field of banking transactions – contact us for specialist advice.
Author: Anna Klepacki
 Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd  FCAFC 202.
 E.g. Yu v. Apple Inc. (Fed. Cir. June 11, 2021); Mad Dogg Athletics v. Peloton Interactive (E.D. Tex. Sept. 15, 2021); Chamberlain Group, Inc. v. Techtronic Industries Co. (Fed. Cir. 2019); ChargePoint, Inc., v. SemaConnect, Inc. (Supreme Court 2019) [Petition]; American Axle & Manufacturing, Inc. v. Neapco Holdings LLC (Fed. Cir. 2019).