Canada is the latest country to stop minting the lowest denomination coin. As from Monday February 4, The Royal Canadian Mint will no longer be producing the one cent piece or penny, although it will remain in circulation and accepted as legal tender for as long as anyone can see at the moment. Cash transactions will be rounded up or down to the nearest nickel so that sometimes you come out a cent or two ahead, sometimes the shop does. However, electronic and card trades will continue to go ahead as normal.
Dave Wilkes, senior vice president of Retail Council of Canada said that shelf prices are unlikely to change and that rounding up or down to the nearest nickel will balance out in the longer term. A Retail Council of Canada survey found that only 22% of transaction are in fact made in cash today and those other 78% of trades will not be affected by rounding.
A Change For The Better
The survey also found that 56.4% of business were planning on following the government’s advice on rounding up or down a cent or two, 19% said that instead of rounding up they would routinely round down in the favour of the customer in a move that would see them lose a few cents on each transaction but they hope will increase their overall turnover as they glean more customers looking for a better than fair deal. In the current economic climate those extra pennies do make a difference. Hussain Lalani, co founder of 99p Stores in the UK stated that in his experience, rather than letting the few pennies in change go into the charity box his company has beside each till, customers are waiting those few extra moments to pick up their change.
But what will rounding down and the loss of the penny mean to charities? If you shop in store and the charity rounds down, how much money will it mean they end up losing?
Giving To Charity Makes Better Cents
In fact, rather than losing money this change could see them making money. While rounding up or down will ultimately level out store revenues, activities such as Penny Drives when the coin is becoming obsolete will mean that people are more willing to hand over their old pennies, or more. Chandra Dass of the Windsor Downtown Mission said that her Pennies For Hope drive, launched behind the federal budget announcement that the coin would be cancelled, raised awareness of their meal program and $8,000. Not all of it in pennies.
The penny is being phased out because each coin costs more than it is worth to mint. A cent costs 1.6c to strike and not producing the coins will save the Royal Canadian Mint $11,000,000 per year.
Canada is far from the first country to cease striking its lowest denomination coins, Australia, New Zealand, Brazil and the Scandinavian nations have all given up on minting their smallest coins as not only is the cost high, but so is the inconvenience. Having a purse or pocket full of low value coins is only ever welcome when you come to a shop which is struggling to make change. Otherwise it’s simply a weighty chore to carry around.