America is facing a currency coin shortage as a result of COVID-19. Learn why and how you can help local businesses.
The shortage of coins is directly related to the shutdowns of businesses, banks and the U.S. Mint due to COVID-19.
While it is currently a problem, experts believe coins will be back in mainstream circulation soon.
Small businesses can improve the situation in several ways.
This story is aimed at small business owners currently concerned about the shortage of national currencies.
In the months that have passed since the pandemic began to disrupt the U.S. economy, many problems have hampered small business’s ability to operate. One unforeseen consequence is the shortage of coins that generally circulate in the country’s currency. As states strive to safely reopen their respective economies, companies must make decisions and change the way they do business to accommodate the growing scarcity of coins.
How did the coin shortage happen?
It goes without saying that the lives of small business owners when COVID-19 began to grow around the world earlier this year. In mid-March, most non-essential businesses in the U.S. were forced to close, but closures also took place at some significant government facilities. One of those facilities that were completed was the United States Mint.
In charge of printing our paper money and forging our coins, USA Mint works to ensure that the money continues to circulate through the economic system. Since it continually helps cycle out old or damaged money with new banknotes and coins, the currency plays an essential role in the financial health of the country. But thanks to COVID-19, government officials admitted late last month that the shutdown “has resulted in the disruption of the supply channels for the currency in circulation.”
At the same time, the slowdown in new pennies, nickels, dimes and quarters drastically reduced the flow of coinage, the Board of Governors of the Federal Reserve System said the closure of businesses and banks had made the problem worse by disrupting more supply. chain and standard circulation patterns for U.S. coins.”
“While there are a sufficient number of coins in the economy, the slowed pace of circulation has reduced available supplies in some parts of the country,” the board said in a recent statement. “The Federal Reserve is working with the U.S. Mint and other industry players on solutions “.
Without regular deposits from so-called “third-party coin processors” and a depressed retail sector, which both account for 83% of the circulation of newly minted coins, officials at the mint have seen an increase in the number of new coin orders coinage.
What does the shortage of coins mean for your company?
Cash is a real promise that your goods and services are valuable. It’s easy to quantify and does not need to restart if a computer system goes haywire. Therefore, it should come as no surprise that cash is the most preferred form of payment in the United States.
For businesses that rely specifically on coins, such as laundromats, the shortage of coins has had a direct impact not only on their bottom line but also on the way customers pay for the service. Rina White, an owner of Laundry South Systems & Repair, said she noticed that some of these changes occurring with her southern U.S. customers.
In fact, a Visa global small business study found that 33% of those polled said they had “accepted less or stopped accepting cash since COVID-19.” About 41% of Gen Y small business owners were “significantly more likely” to have made the switch than Gen Xers (31%) and Baby Boomers (21%).
Key takeaway: While a shortage of national currencies may be a short-term problem, it still affects many small businesses. As a result, some small business owners have switched to card payments or researched other payment methods.
What can you do if your business depends on coins?
If your business relies heavily on coins to conduct your transactions, any shortage of minted currency becomes a problem. Though it may seem like things may get more difficult for you as the circulation starts to get a little back to normal, there are some things you can do to relieve some of the difficulties.
According to the Federal Reserve Board of Governors, companies can solve the problem by asking customers to pay with the exact exchange rate, in addition to “bringing spare change back into circulation.”
Bottom Line: Through some creative methods, like offering change through a loyalty card scheme or giving freebies for coin rolls, small businesses can address the shortage while helping to rebuild the economy.