Visually impaired persons face challenges in running business activities, especially in handling banknotes. Malaysia researchers had proposed some Ringgit banknotes recognition systems to aid visually impaired persons recognize and classify Ringgit banknotes. However, these electronic banknote readers can only recognize Malaysian Banknotes' Ringgit value, they have no counterfeit detection features. The purpose of this study is to develop a banknote reader that not only can help visually impaired persons recognize the banknote value, but also to detect the counterfeit of the banknote, safeguarding their losses. This paper proposed a Malaysian banknote reader using backlight mechanism and image processing techniques to read and detect counterfeit for one Ringgit and five Ringgit Malaysian banknotes. The developed handheld banknote reader used visual type sensor to capture banknote image, passed to raspberry pi controller to perform image processing on banknote value and the extracted watermarks features. The developed image processing algorithm will trace out the region of interests: 1)see-thru windows, 2)Crescent and Star, 3)Perfect see though register and detect the watermarks features accordingly. The processed result will be passed back to the handheld banknote reader and broadcast on an attached mini speaker to aid the visually impaired understand the holding banknote, whether it is a real one Ringgit, real five Ringgit or none of them. The experimental result shown by this approach able to accomplish numerous round of banknote reading attempts with successful outcomes. Confusion matrix is further employed to study the performance of the banknote reader, in terms of true positive, true negative, false positive and false negative. Details analysis had been focused on the critical false positive cases (predicted real banknote and actually is fake banknote) and false negative cases (predicted fake banknote and it is actually real banknote).