Retailers react to coin shortage as Mint increases production
- Published: Jul 24, 2020, 10 AM
Business communities nationwide have implemented measures to combat growing coin shortages attributed to COVID-19 safety concerns while a Federal Reserve task force grapples with abatement strategies for the long term.
Until the shortage is resolved, some retailers are requesting payment for transactions in exact change or by credit card or debit card.
In isolated incidents across the country, customers have reported they did not receive change from transaction that they were due.
In response to the shortage, the U.S. Mint has increased production of cents, 5-cent coins, dimes and quarter dollars at both the Denver and Philadelphia Mints.
Kroger, one of the nation’s largest supermarket chains, headquartered in Cincinnati, has implemented a companywide plan to serve customers.
Coin World was provided details of the initiative July 20 by a Kroger spokesperson.
“We remain committed to providing our customers with an uplifting shopping experience and the freedom and flexibility to choose their payment method, including cash, during this unprecedented time,” according to the Kroger spokesperson. “The Federal Reserve is experiencing a significant coin shortage across the U.S., resulting from fewer coins being exchanged and spent during the COVID-19 pandemic.
“Like many retailers and businesses, we are adjusting to the temporary shortage in several ways while still accepting cash.
“Customers can switch their payment type (e.g., use debit or credit vs. cash), and through our upgraded technology, we can now load coin change to their loyalty card [Plus Card] for use during the next shopping trip, provide coin change at a lane with coins available or round up their order to support The Kroger Co. Zero Hunger | Zero Waste Foundation, a public charity committed to creating communities free of hunger and waste.”
The retail giant Walmart has implemented a similar approach.
“Like most retailers, we’re experiencing the affects of the nationwide coin shortage,” Walmart spokesman Avani Dudhia said via email July 20. “We’re asking customers to pay with card or use correct change when possible if they need to pay with cash.
“Cash is welcome at all of our stores. However, we have converted some of our self-checkout registers to card only registers. Customers also have the option to donate their change to charity.”
Kroger and Walmart both receive deliveries of coins directly from armored carriers contracted by the Federal Reserve, like Brink’s, Garda, and Dunbar, among others, instead of securing coins from local banks, credit unions or other financial institutions.
The Federal Reserve is the U.S. Mint’s only customer for circulating coins to distribute into commerce channels. The Fed places orders for new coins per denomination based on economic needs.
The newly struck coins are then shipped to the armored carriers which roll and box the coins for delivery to banks, credit union, and financial institutions. The coins distributed can be from new production, older circulated coins or a mixture of both.
Local banks in some areas are requesting customers to bring in change accumulated in jars, jugs, piggy banks and dresser drawers to help ease the loss of the number of coins reduced under allocation from the Fed.
Federal Reserve action
“The COVID-19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” Federal Reserve officials announced in June.
“In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees.
“Federal Reserve coin orders from depository institutions have begun to increase as regions reopen, resulting in the Federal Reserve’s coin inventory being reduced to below normal levels.”
The Federal Reserve banks and their contracted coin distributors began to allocate available inventory of cents, 5-cent coins, dimes and quarter dollars, on June 15 to depository institutions as an interim measure.
Two weeks later, on June 30, the Federal Reserve launched the U.S. Coin Task Force to address the shortage.
“The primary issue with coin is a dramatic deceleration of coin circulation through the supply chain,” Federal Reserve officials announced.
As of April 2020, the U.S. Treasury estimated that the total value of coin in circulation is $47.8 billion, up from $47.4 billion as of April 2019.
The United States Mint ramped up its circulating coinage production several months ago. according to Mint spokesman Michael White.
“The United States Mint has been operating at full production capacity since mid-June, and minted almost 1.6 billion coins in June, and are on track to produce 1.65 billion coins per month for the remainder of the year,” White told Coin World July 21 via email. “By comparison, in 2019 we produced an average of 1 billion coins per month. We have increased production while still prioritizing the health and well-being of our employees and maintaining a reduced risk of their exposure to COVID-19 in the workplace.
“During this pandemic, the demand for circulating coins has drastically increased, in part, because precautions taken throughout the Nation to slow the spread of the virus have reduced retail sales activity and significantly decreased deposits from third-party coin processors. In fact third-party coin processors and retail activity that account for the remainder of coins put into circulation each year. In 2019, the Mint contributed 17% of circulating coins paid into the supply chain by the Federal Reserve, with the remainder coming from third-party coin processors and retail activity.”
U.S. Coin Task Force
The task force, which convened its first meeting July 10, is comprised of representatives from United States Mint, Federal Reserve, armored carriers, American Bankers Association, Independent Community Bankers Association, National Association of Federal Credit Unions, coin aggregator representatives and the Retail Trade Industry.
According to Federal Reserve officials, “At the end of this first phase, the group will share its progress and evaluate the benefits of continuing the task force. In addition, coin industry partners can encourage the use of social media to promote the circulation of coin using the hashtag #getcoinmoving. The coin circulation issue is national in scale. While the task force will be focused on identifying actionable steps that supply chain partners can take to address the issue, it is clear that it will take all of our collective efforts to get coin moving again.”
The task force was set to meet several more times in July and to release recommendations in early August.
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