Your Financial Life
Navigating the Nationwide Coin Shortage
3 minute read time
Perhaps you have noticed a coin shortage recently when shopping at a grocery or general merchandise store such as Target or Walmart. If you own a laundromat, gas station, restaurant or convenience store, you definitely are aware: coins of all values have recently become extremely scarce nationwide – to the point that some retailers have stopped giving coins as change, sometimes rounding purchases down or providing credit to loyalty cards instead.
What gives? The short answer is the COVID-19 pandemic, but Ken Fellman, SVP, Retail Banking Manager, shares how the full explanation is more complex.
Officials at the Federal Reserve and the United States Mint say the U.S. has an adequate supply of coins, but the pandemic disrupted the supply chain and normal circulation patterns nationwide, causing a shortage.
The mint acknowledged a temporary reduction in employee staffing and coin production early in the pandemic as social distancing and other precautions were put into place. However, the mint has operated at full capacity since mid-June and government officials say the more significant cause of the coin shortage is the dramatic drop in daily retail transactions because of widespread business closures during the pandemic.
Many people have also shifted to paying for products or services with credit or debit cards, putting less cash into circulation. For example, when local restaurants had to shut down in-house dining and switch to takeout or delivery service only, most customers paid with cards rather than cash. Multiply that by thousands of restaurants across the country and the impact on cash circulation becomes evident.
An often-overlooked source of coins is parking meters. Although many drivers in urban areas have switched to mobile apps, they are not universally available, making parking meters a significant element in coin circulation. With many businesses still closed, millions of people working from home, and both business and leisure travel greatly curtailed, feeding the meter has become far more infrequent.
The shortage is likely to continue until coin circulation, driven by the pace of businesses large and small, returns to normal levels. And it’s not limited just to retail outlets – banks and other financial institutions also have been affected by the shortage itself, and by challenges in helping business customers and others who need coins. With many bank lobbies and other financial offices closed to curb the spread of COVID-19, it’s nearly impossible for many business owners or other individuals to purchase or otherwise obtain coins.
Johnson Financial Group is working diligently to help clients and cash providers obtain enough coins to operate their businesses or meet their other financial needs. A team of associates has oversight for daily inventory and distribution of coins to avoid any business disruption.
Although it’s unclear how long the shortage will last, Federal Reserve officials are working with the U.S. Mint to help ensure equitable distribution of coins. The Fed also formed a task force in late June, bringing together big banks and financial associations among others, and is expected to issue a report with recommendations soon.
In the meantime, individuals can help by paying with exact change whenever possible, which will help get coins back into circulation. You can also take coins you have been saving and deposit them at your local bank, exchange them for currency or take them to a coin redemption kiosk.
Outside of cash, you can pay for your day-to-day and larger purchases with a debit card or earn rewards with a credit card. You can also conveniently make purchases using your mobile device and a debit or credit card with Apple Pay, Google Pay, Samsung Pay or Click to Pay. These easy-to-use and secure options can be a great alternative until the shortage ends.