In last days of penny, businesses get ready for change
The cost to redeem circulating pennies beginning Feb.4 will cost taxpayers about $7.3 million a year.
Published Tuesday, January 1, 2013 8:40AM EST
Businesses across Canada are ready for change. They just won’t be taking pennies.
With the one-cent coin scheduled to go out of circulation on Feb. 4, 2013, all businesses from retailers to restaurants are preparing for when they’ll have to start rounding their cash transactions.
The federal government in its March budget announced it was doing away with the penny, saying the little coin was not worth the cost of making it. At 1.6 cents for every coin minted, it was dubbed the “currency without currency.”
The Royal Canadian Mint stopped making the coins in May and had planned to begin taking the penny out of circulation in the fall. But business owners protested, saying they wouldn't be ready for the transition.
“We're an industry where there are 18 million transactions a day in restaurants, so this will have a big impact,” said Joyce Reynolds, executive vice president, government affairs of the Canadian Restaurant and Foodservice Association, which was one of the groups that consulted with the government.
The timing had also been poor, according to David Wilkes, senior vice president of the Retail Council of Canada, which represents more than 45,000 storefronts nationwide.
"It’s the busiest shopping time of the year, with the holidays and Christmas, and to get organized for the rounding rules that are coming into place, the training of the seasonal staff and what-not, we just thought there wasn’t enough time to properly inform consumers about the changes and implement the rounding rules at the store level," he said.
Now with the deadline around the corner, retailers, restaurants and small businesses are making sure their workers, as well as customers, are ready.
"Some of the things that are being addressed is working with the point-of-sale equipment to implement the rounding, clarifying with government agencies about how the rules would apply from a tax auditing point of view. Also making sure the store staff are aware of the rounding rules and the policies the individual stores will be using come February," Wilkes said.
Wilkes expects that most businesses will adopt the Finance Department’s guidelines on rounding. Under those guidelines, cash transactions should be rounded to the nearest five-cent increment “in a fair and transparent manner.”
For example, consumers paying cash for an item costing $1.01 or $1.02 -- tax included -- will pay only $1.00. An item costing $1.03 or $1.04 will be rounded up to $1.05.
Electronic transactions, including debit and credit card purchases, will not be affected.
As the elimination would only apply to total bills as opposed to individual items, the change is not expected to lead to inflation.
Furthermore, the penny will retain its value “indefinitely” and can continue to be used in payments, the Finance Department said.
What matters for businesses is that consumers are aware of the change.
“What we've been doing is working very hard to ensure that the government implement a robust consumer campaign,” Reynolds said.
“We want consumers to be aware of this well before that February 4 date.”
Reynolds said the CRFA has been directing its members to download the information from the government website and have it available at cash registers.
As for whether businesses will be accepting pennies, it’s up to each individual organization, although most will probably stop giving out pennies on Feb. 4, Reynolds added.
By scrapping the penny, the feds hope to save taxpayers about $11 million per year.
According to Finance Minister Jim Flaherty, similar initiatives have been implemented in countries like Australia, Brazil, Israel, New Zealand and South Africa "very successfully. The businesses were co-operative and there were no issues."