Many of us have one: a jar of coins that sits on a bedroom table or a dresser.
But it only holds the odd loonie or toonie and there aren’t even many dimes or quarters. It’s the one- and five-cent pieces that fill the jar.
In fact, the Government of Canada website cites “the increased accumulation of pennies by Canadians” as one of the reasons for ceasing to distribute the coin.
Retailers now round to the nearest five-cents in cash transactions. If customers pay electronically, prices don’t change.
But the Royal Canadian Mint shouldn’t stop scrapping coins after eliminating the copper-plated piece. It should do away with the nickel as well.
The idea’s gaining traction. Winnipeg Centre MP Pat Martin says he plans a private member’s bill to discontinue the country’s new least-valuable coin.
He’s not the only one who supports the idea. The mint should stop producing the nickel in a couple of years, says John Palmer, a retired Western University economics professor who argued for penny’s elimination less than three years ago.
Waiting two years would allow people to get used to the penny’s absence before rounding to the closest 10-cent-mark, he says.
But he says he’s already prepared to get rid of the nickel.
“I find it useless already,” he says. “If you can’t buy much with them, then we shouldn’t have them.”
Many Canadians, too, may already be willing to give up the five-cent piece.
Desjardins, one of the country’s largest financial institutions, conducted a poll six years ago that revealed half of Canadians don’t use the coin. That will rise to two-thirds by 2017, says a report the group released in 2008.
If Canadians don’t buy anything with nickels, they don’t circulate. This forces the mint to produce more of the coins each year.
The mint issued more than 135 million five-cent pieces in 2002, says the Desjardins report. That number rose to almost 228 million in 2011, a 40-per-cent increase, according to the mint’s 2011 annual report.
Though the mint says it costs less than five cents to make a nickel, they aren’t cheap to hand out.
The Crown corporation loses $3.6 million every year distributing five-cent coins to banks, according to a study a Wilfrid Laurier University economics professor published in 2003.
Since the number of nickels the mint ships has increased, it’s likely the amount it loses has, too.
Why would it throw away money to distribute five-cent coins, especially with the rising use of electronic transactions?
More often than not, customers reach into their wallets for debit and credit cards to buy inexpensive items, such as coffee, Centretown businesses say.
“It’s becoming more and more. I’d say about two-thirds of our transactions are put through debit and credit,” says Kate Veinot, director of operations at Auntie Loo’s Treats at 507 Bronson Ave.
Though the bakery largely profits by selling speciality orders and baking for other stores, Veinot says business picked up when she started allowing patrons to pay electronically two years ago.
It doesn’t cost much to buy a couple of cookies or cupcakes, but she says walk-in customers don’t have to worry about carrying enough money with them.
The convenience of debit and credit cards has also resulted in about two-thirds of customers using them at The Daily Grind on Somerset Street West, near Percy Street, says manager Sean Hyatt.
But Hyatt says eliminating the nickel would be unfair to the café’s patrons, as they could risk losing more money in the rounding process.
Like Palmer, Veinot says there has to be an adjustment period for stores and their clients before talk starts about scrapping the nickel.
Palmer also argues that customers, such as ones at The Daily Grind, wouldn’t have to pay more money if the government stopped producing the coin.
New Zealand discontinued one- and two-cent coins in 1990. Its five-cent piece followed in 2006.
The Australian government, which halted production of its one- and two-cent pieces a year after New Zealand, is considering following in its southern neighbour’s footsteps again.
New Zealanders adjusted well to the end of their five-cent coin, Palmer says.
“It’s straightforward rounding to the nearest 10 cents, Sometimes you round up, sometimes you round down. In fact, some retailers made a point to round down during cash transactions.”
Businesses in New Zealand don’t always charge shoppers an extra 10 cents. Though they can easily round up, they avoid it to compete against rival retailers.
Why wouldn’t Canadian businesses do the same?
Not only could the mint save money by halting production of an unpopular coin that’s becoming increasingly obsolete but people may be able to take advantage of stores’ competitive natures to find better deals.
In a few years, it’d be best if the nickel became a mere collector’s item.