The U.S. Treasuring Department recently placed its last order for the metal discs used to make pennies, which means that the smallest American coin will cease production early next year. Already a gas station chain near us in Wisconsin has announced that it will no longer accept or require coins less than 5¢ in value.

This shift is part of a movement away from currency in general, and some businesses are already cashless. While this is a plus when it comes to security, it does discriminate against those who do not have an alternate means of paying. This of course includes people who don’t have a credit or debit card with them, but it also impacts those who for economic reasons don’t have access to these cards. For retailers, cashless commerce means paying a credit card processor for every transaction.

Counting out change is also a chance for interpersonal transactions. Even the “give a penny, take a penny” jar at many checkout counters is a humanizing touch that will be lost when we don’t have pennies – or eventually any coins at all.

Like the federal government, shopkeepers need to keep an eye on expenses. It seems a wise move to discontinue pennies, since they cost more than they are worth to produce. But as with all line items, there may be more to the decision than is immediately obvious.  According to Raymond Robertson, director of the Mosbacher Institute for Trade, Economics and Public Policy at the Bush School of Government and Public Service at Texas A&M University, the net result will be more dependence on nickels – which cost almost 14¢ to produce. 

This gives new meaning to the expression penny-wise but pound-foolish, which Merriam-Webster defines as “being careful about small amounts of money but not about large amounts —used especially to describe something that is done to save a small amount of money now but that will cost a large amount of money in the future.” If the economic decision to discontinue the penny inspires you to do your own cost-cutting, make sure your bottom line will actually benefit.

Happy Retailing,
Carol “Orange” Schroeder