Counterfeit detection machines reduce counterfeit losses using ultraviolet and watermark detection, with some machines capable of discriminating between multiple denominations, while detecting illustrations, infrared and magnetic security features.

Ultraviolet Detection: watermarks in Canadian and US currencies are printed using ultraviolet ink.

Magnetic Detection: the pigments used in actual US currency are made from iron oxide.  That means a real dollar is laced with millions of tiny iron particles which can be attracted by a strong magnet.