Penny's days are numbered
The end is nigh for the penny.
The Royal Canadian Mint will cease distribution of pennies to financial institutions on Monday (Feb. 4), after which the supply of the copper coins will begin to diminish.
The federal government first announced the phase-out of the penny during last year’s budget process.
It costs about 1.6 cents to produce a penny and the federal government estimates that eliminating it from Canada’s coinage system will save taxpayers about $11 million per year once the transition is fully implemented.
The Department of Finance estimates short-term costs of phasing out the penny – redeeming pennies returned by consumers and business as well as operational costs – to be about $38.3 million over the next six years.
While businesses are encouraged to stop using pennies on Feb. 4, the penny will remain legal tender and businesses can choose to accept the coin as a means of payment.
The move will not impact cheque payments or electronic transactions, which will still be done to the cent, and cash transactions will be rounded up or down to the nearest five-cent increment – in countries that have phased out low-denomination coins, such as Australia and New Zealand, fair rounding practices have been respected.
Businesses can update their cash registers to automatically calculate rounding for cash transactions and businesses, and consumers can continue to deposit pennies at their financial institutions, although some may require large amounts to be rolled for deposit.
Kiran Parhar, branch manager for TD Canada Trust in Terminal Park, said the bank will continue to accept pennies, but will not give them out after Feb. 4.
“I’m sure we’ll see an influx of pennies into the branches, but other than that, it will be business as usual,” she said.
As the bank receives the pennies, it will send them on to the Bank of Canada to be taken out of circulation, said Parhar.
The bank requires amounts of pennies larger than 50 cents to be rolled and the Terminal Park and Turner Road locations are getting coin counting machines to give customers another option to get rid of their change, she said.
Mark Fenwick, Woodgrove Centre general manager, anticipates that retailers will phase out the penny as stocks deplete and he doesn’t expect problems with the rounding system.
“I believe, on average, it should balance over time – the amount you round up would offset the amount you round down,” he said. “It’s going to be a big change for a lot of customers, it will be a surprise for some.”