How do counterfeit money detectors work?

There are two types of counterfeit notes or counterfeit money detectors:

• Human decision detectors rely on exposing the watermark area to white light or UV light. They cost £10 to £50 and rather serve a dissuasion purpose, as unfortunately, such systems can now be fooled by many forgers,
• Automatic counterfeit detectors are more expensive as they cost between £60 to £300 depending on their features: multiple currency support, official document verification, etc. Automatic counterfeit detectors do not rely on human decision, as the equipment checks control points all by itself before signalling to the shopkeeper whether the note is authentic or forged. It’s not an arbitrary decision and the verification is faultless: forgers are for the time being unable to fool these systems.

Also note that several central banks around the world do recommend a simple method to check the authenticity of banknotes: FEEL-LOOK-TILT. It’s all about FEELing the note to make sure it makes a distinct crackling sound, LOOKing through the note in white light to find the watermark, as well as the security thread and hologram, and TILTing the note to see the symbols in the silvery stripe. 

When performed correctly, the Feel-Look-Tilt method is nearly foolproof.