So long, Canadian penny. I won't miss you
Canada has axed the irksome cent, and should do likewise with other coins and banknotes, says Crave writer Tim Hornyak. Do you want to live in a cashless society?
When I was a kid growing up in Montreal, I spent more than a year filling a big brown bottle with pennies. When they reached the top and I poured them out, I was crushed that they totaled less than 20 bucks.
Ever since, I've had little love for the lowly Canadian cent -- it's 2.35 grams, mostly steel, and has been nothing but dead weight in my pockets. The government now feels the same and has announced that the Royal Canadian Mint will stop distributing pennies this fall.
"Pennies take up too much space on our dressers at home," Finance Minister Jim Flaherty said in announcing the federal budget. "They take up far too much time for small businesses trying to grow and create jobs."
Desjardins Group has estimated that the coin costs businesses $150 million a year in counting and transport costs. Meanwhile, it costs a penny and a half to mint every penny, and cutting it will save $11 million annually, according to the Department of Finance.
At least Canada is only losing on its pennies -- the Mint says other Canadian coins cost "well under face value" to produce.
Not so south of the border. It costs the United States Mint 2.41 cents to produce every cent and 11.18 cents for every nickel. In the year to September 30, 2011, that resulted in a loss of $116.7 million, according to Coin Update, a site devoted to coin news.
That's nothing, but in the recent book "The End of Money," author David Wolman cites research estimating that economies could save 1 percent of GDP by going cashless. That's a lot of loot.
At its plant in Winnipeg, the Royal Canadian Mint still churns out more than a billion pennies, nickels, dimes, quarters, half-dollars, dollars, and two-dollar coins annually. It even fashions numismatic oddities like this $100,000 gold coin, a mere 22 pounds in your wallet.
These curiosities may be the only future in coinage. Ottawa has counted 17 countries that have also phased out coins of little value over the past 40 years. Some are going further.
Sweden's cashless buses, church offertories, and other moves toward a cashless society have recently drawn attention, with observers commenting that less cash equals fewer bank robberies and less graft.
That may not necessarily be true, but what is remarkable is that Sweden's cash only makes up 3 percent of the economy, compared with 7 percent in the U.S., according to the Associated Press, quoting Bank for International Settlements data.
In Canada, the billions of pennies estimated to be in circulation -- the government has been churning the coppers out for nearly 150 years -- will be legal tender indefinitely.
Though I love analog technology, preferring a book to an e-reader any day, I don't see why we should retain any form of cash. Yes, coins and bills are convenient in that they're universally accepted, won't fail in a blackout, and are handy for informal transactions like tips and donations.
But they can also be forged, lost, damaged or destroyed, and easily stolen; your credit card can be stolen too, but at least you can freeze it. Besides these hidden costs and the security risk, they're cumbersome. And if the frequency of the above crimes is at all related to the amount of cash floating around, why keep physical money at all?
Part of the inertia is nostalgia. Cash has a cultural dimension, but culture can change. High-tech Japan, for instance, has a mysteriously strong cash culture, with myriad small shops and restaurants still refusing plastic. But e-money functions have been around on Japanese smartphones for years and are getting increasingly popular with commuters and shoppers.
As part of the explodingindustry in the U.S. and Canada, PayPal and Visa have been developing digital wallets that go beyond mere vehicles for (near-field communications) payments. They could store your favorite purchases, access cards for your workplace, and coupons and loyalty cards.
It won't be long before digital wallets are as common as cameras on cell phones. That's a positive trend. Too bad it will probably take years or decades more for all cash to leave our analog wallets permanently. Hang on to your piggy banks.