Penny pinching is going to get harder starting today.
As of Feb. 4, the Royal Canadian Mint will no longer distribute pennies forcing transactions to be rounded up or down by one or two cents to the nearest five-cent increment — for cash purchases only.
There will be no impact on payments made by cheque, credit or debit cards, gift cards, and pre-paid credit cards.
Phasing out the penny was announced in the Government of Canada’s Economic Action Plan 2012 due to the rising cost of production.
Making each penny was costing 1.6 cents and eliminating the coin will save the country $11 million a year.
Red Deer MP Earl Dreeshen said other countries — Australia, New Zealand, Sweden — have successfully eliminated their pennies.
“There certainly a lot of nostalgia, and I appreciate that. It just seems the right thing to do,” Dreeshen said.
The penny will retain its value indefinitely.
Canadians can redeem their pennies at their bank and consumers can use pennies for cash transactions at businesses that choose to accept them.
Only the final and total amount owing in a cash transaction will be subject to rounding.
“I think from a customer perspective it will be a lot more confusing then it will be from a retailer perspective. There will be some confusion when you get a price and they give you different change back,” said Gayle Langford, Red Deer Chamber of Commerce president.
She said businesses have had lots of time to prepare for the change. Fast food restaurants and corner stores, that likely get more cash transactions, will be where cashiers will be rounding up or down the most.
Langford said since most people don’t count the change they receive in small coins after a purchase so they may not even notice the difference.
Rob Stryker, vice president of retail operations for Servus Credit Union for Southern Alberta, said it will take some time before pennies are out of circulation.
“There will still be businesses accepting pennies and giving out pennies. When they do their commercial deposit with us, there will still be pennies in there,” Stryker said.
But once the bank receives a penny, it won’t be going back out to customers.
“We’ll be taking them in, but we’re not going to be giving them out. Our responsibility is to try to bring them out of circulation.”
Even if a customer comes in to cash a cheque that ends in pennies, pennies won’t be given out, he said.
“For example, if you brought a cheque for $10.33 in, and you just wanted cash for that, either you as a customer could give two cents and then you get $10.35, or you can put it into your account and withdraw the amount in anything but pennies.”
If the customer says just give me $10.30 cash, those three pennies will go into a special penny account Servus has set up that will raise money for the Alberta Food Bank Network Association, he said.
“It’s not the credit union keeping the money,” Stryker said.
Servus Credit Union branches will also be collecting pennies from the public to help local charities. Red Deer branches are collecting for Loaves and Fishes; the Blackfalds branch is collecting for Blackfalds Food Bank; Delburne branch for Delburne Centralized School Breakfast Program; Lacombe branch for Lacombe Community Food Bank; Ponoka branch for Ponoka Food Bank; Rimbey branch for Rimbey Food Bank; and Elnora branch for Elnora & District Museum.
“I hope everyone gets out there and rolls their pennies and drops them off at their favourite charity,” said Jennifer Forrest, resource development director United Way of Central Alberta.
“Collecting change is probably a portion of a lot of non-profits’ fundraising.”