SAVANNAH, Ga. (WSAV) — Amid the ongoing coin shortage, larger retailers across the United States are asking customers to keep the change.
With fewer coins in circulation during the COVID-19 pandemic, businesses have begun requesting payments in either exact change or via debit and credit cards.
Georgia Southern University (GSU) economics professor, Dr. Richard McGrath, says the issue is partly due to a drop in person-to-person transactions when businesses and banks closed as a response to the outbreak.
“If we’re not spending the coins, if we’re not putting the coins back into the system, it’s hard for them to get the coins rotating through,” McGrath told WSAV.com NOW.
“What we really need to do is get the coins that are out there back into circulation,” McGrath said. “There are enough coins for the transactions, they just need to be moving through the economy.”
He adds that the long-term cause of the problem stems from retailers having made it less easy for people to shop using coins.
“Under general circumstances, you have a flow of coins through the economy; they go from the businesses to the people and back and forth, and they circulate through the banks,” McGrath said.
He says large retailers normally prefer to receive most of their coins from banks rather than accumulating them a few at a time from customers.
“If you think about it, large retailers don’t make it necessarily that convenient for customers to pay in coins,” McGrath said. “Everyone’s always in a hurry, you want the line to move fast and you always get that kind of social pressure of, you know, ‘just pay with bills and get change, and it’s quicker that way.’”
McGrath notes that while smaller businesses have gotten caught up in the current coin shortage, they haven’t really contributed to it.
“Small businesses deal in small quantities of coins, they get them from customers, they get them from the bank,” he explained, adding that banks also typically shy away from accepting large amounts of coins from customers.
“What they really trade in is the government-rolled coins, they get their coins from the Fed,” McGrath said.
“They want those formal rolls from the Fed so that they know everything’s counted properly, but what this means is that the businesses themselves don’t really facilitate taking in large amounts of coins,” he said, adding, “In fact, they kind of discourage it.”
He shares Walmart as an example.
“Years ago, they had coin trays in their self-checkout aisle that were shaped almost like a scoop that you could drop lots of coins in very quickly,” McGrath said.
“Now, they’ve switched to machines [that let customers] put in one coin at a time, and it makes it very inconvenient to pay with coins,” he said.
Lower-income households, according to McGrath, are more likely to use cash, but these lower-earning families have also taken the biggest financial hit due to the pandemic.
“The people who spend coins the most and use coins the most are also the people who are engaging in far less economic activity right now, so that slowed the movement of coins through the system, and now all those businesses are having a problem,” he said.
Possible coin shortage solutions
In early July, the Federal Reserve formed a U.S. Coin Task Force to help boost coin circulation throughout the economy.
“What they should do for their task force is tell the large retailers, ‘why don’t you start making it easier for people to pay with coins? We’ll have a public service campaign that you can pay for as large retailers that reminds people that you would like them to pay in coins, and then your problem’s solved,’” shared McGrath as a possible solution.
He points out that some retailers have come up with inventive ways of handing the coin shortage issue.
At least two Chick-fil-A locations in Alabama and Virginia have offered free food in exchange for $10 in rolled change.
Parker’s announced via Facebook that the convenience store chain will buy rolled coins and accept rolled coins as a form of payment from customers.
“Some large retailers that have frequent shopper cards are putting credits on your account, on your card balance, as if it’s a coupon,” McGrath said. “Because they have coupon systems, they can simply program their computers to create a coupon instead of your change to give you the money to spend at another time rather than transacting in coins.”
For people who have a stockpile of coins at home that they’d like to get rid of, McGrath suggests putting lots of coins in the slot at the self-checkout line each time you shop.
“Most machines will take multiple forms of payment if you put cash in first,” he said. “Empty your pocket change into the machine then put in your debit or credit card, and over time, this will use up your coins, get them back into circulation and reduce the balance of your credit card.”