Local businesses are preparing for a change in the way they handle cash transactions, as the end of the penny nears.
The federal government will stop circulation of the penny on Feb. 4, a move that is expected to save taxpayers $11 million a year.
As a result, businesses will be expected to round cash transactions, either up or down, to the nearest five-cent increment, when pennies aren’t available.
For example, if the price of an item is $5.02, businesses would round down to $5. If the price was $5.03, business would round up to $5.05.
Click here to see the Royal Canadian Mint's rounding guideline.
Richard Truscott, Alberta director for the Canadian Federation of Independent Business, says there may be some confusion over the next few months.
“There’s bound to be some transition issues,” Truscott said.
“When consumers are using cash there will be an issue of merchants rounding up and down and consumers need to be educated about that so they’re not worried and wondering why they aren’t getting exact change back right to the penny.”
Depending on the purchase, rounding means that a company or the consumer, may lose some money in the cash transaction.
Candy Bouquet store owner Kathie Fisher says she’s not too concerned about that and adds she typically rounds for cash transactions anyway.
“If I’m supposed to give back nine cents back in change I usually give them a dime. It’s just easier for them and easier for us,” she said.
Kimberly Wagil, who owns Best Buds Flowers Co., says in the six years that she’s been in business, she’s seen a decline in people purchasing with cash and says the phase out of the penny likely won’t impact the company or its clients.
“They might initially have a little bit of a reaction to it but I think for the most part people will just accept it,” Wagil said.
“Most of the time people come in using credit cards or debit cards… For us in terms of using the cash, it’s not as frequent.”
Both Fisher and Wagil also say their cash registers have the function of automatically rounding transactions – and will likely put that function to use come Monday.
Meanwhile Truscott says in phasing out the penny, the country is following the lead of several other countries around the world, and in the end, Canadians will benefit.
“It does cost about $11 million to supply the economy with pennies per year and for every penny that is created, it actually costs 1.6 cents to create it (and) to distribute it,” he said.
“The experience in other countries has shown that things work out to be pretty balanced and fair between consumers and merchants.”
Donating pennies to charity
The government is encouraging consumers to donate their pennies to charity, an idea that one local business is pushing.
Earth’s General Store has launched a penny drive in support of the Edmonton Food Bank.
They estimate it will take about 30,000 pennies to fill their 20-litre pail, set up in the shop.
Shop owner Michael Kalmanovitch says he’s happy to help Edmontonians get rid of their coins.
“I think they are kind of useless for what we need nowadays,” Kalmanovitch said.
“Being a store owner, we see a lot of people going into their purses looking for that extra penny, we just say forget it.”
When it’s full, the pail is expected to weigh about 75 kilograms and donate up to $300 to the food bank.
35 billion pennies have been minted since 1908.
The penny will still be considered legal tender after Monday.
