Here we go again, more about the penny. Earlier this year, the government of Canada announced that they will stop producing the penny- apparently it’s more expensive to make than it’s worth. It costs 1.6 ¢ to create a 1¢ penny. In 2010, the Royal Canadian Mint spent $11 million to distribute $6.9 million worth of pennies. Now comes the question, how does this affect businesses, small and large?
The penny was originally supposed to be taken out of circulation in the fall of this year, but businesses argued that the transition will affect the upcoming holiday season. So the government has extended the deadline for the penny until February 4th, 2013.
Once it is taken out of circulation, all cash transactions will be rounded up to the nearest 5¢ or down to zero ¢. For example, transactions ending in $1.01 or $1.02 will be rounded down to $1.00. Likewise, transactions ending in $1.06 or $1.07 will be rounded down to $1.05. For all other amounts, the transaction will be rounded up. For example, $1.03 or $1.04 will be rounded up to $1.05 and $1.08 or $1.09 will be rounded up to $1.10.
For any transactions using cheques, debit cards, or credit cards, it won’t affect the amounts, as no cash is being physically exchanged.
A thought to ponder on…the government says inflation is the reason for the value of the penny going down, increasing the price to produce it. Does this mean that eventually, the same thing will happen to our other beloved Canadian coins? Could it be possible that all the coins will, over time be taken out of circulation?