A currency detector is a device used to verify the legal status and type of money inserted into the detector. Currency detectors are used to help identify counterfeit bills, as well as to help distinguish one type of currency from another. A currency detector may be used on vending or gambling machines, coin-sorting or bill changing devices, and automated teller machines (ATMs).
In terms of counterfeiting, a currency detector can identify real bills from fake ones by testing several different components once bills are inserted. For instance, some currencies use a magnetic ink which resonates at a specific frequency, and can be tested with the use of an embedded magnetic head inside the currency detector. A very basic currency detector device is a pen filled with an iodine solution that will not react with the material used in real bills but will stain fake bills due to a different material composition.
Modern currency detectors aimed at discovering counterfeit bills take advantage of embedded security features intentionally placed in real bills, many of which are extremely difficult to replicate. Many modern machines and devices also use multiple tests to try and outwit crafty fraudsters, such as both embedded security tests and photoelectric sensors that measure the dimensions of bills, in order to ensure that a full, valid bill is inserted.
Currency detectors meant for use with coins are usually somewhat simpler, and rely on the fact that most currencies use very distinct sizes, shapes, and materials for different coins. A coin sorter or vending machine that accepts change will usually detect the currency by its size, shape, or weight. Some more advanced models measure the magnetism or composition of the coin. Since paper bills generally have the same weight, size, and composition, bill sorters often rely on magnetic strips embedded in the fabric of the bill to distinguish one denomination from another.
The evolution of currency detector technology is constant, as counterfeiters come up with more and more elaborate ways to circumvent security systems. Some experts blame the availability of image manipulation software and high-quality printers for vastly increasing the potential of counterfeiting, making the improvement of detection systems a high priority for many countries. Unfortunately, counterfeit money may never be put into contact with a currency detector, and is instead often used for cash transactions with merchants and vendors that do not have the means to use a currency detector.