First, it was masks and gloves. Then it was toilet paper and hand sanitizer. Now it’s coins.
The pandemic has led to a number of nationwide shortages. Lately, signs are popping up about coin shortages at stores like Wendy’s, Starbucks and Quick Trip. Expect to see more in the coming months.
Typically, businesses request coins from banks, which in turn request them from the Federal Reserve Bank. But in June, the Fed announced temporary limits on banks’ requests for pennies, nickels, dimes and quarters.
“The COVID-19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” the Fed said in a statement.
The nationwide shortage is a result of two trends. First, there’s been a decrease in business transactions and in the use of coin recyclers, like Coinstar, meaning there are fewer coins in circulation. Second, the U.S. Mint reduced the number of employees per shift at its Denver and Philadelphia facilities – which make all the coins for commerce in the U.S. – to enhance social distancing.
From January to April, production fell about 35% at the U.S. Mint, a bureau of the Treasury Department. In May, the bureau worked mandatory Saturday overtime and offered voluntary Sunday overtime to ramp up production, a spokesman for the Mint said.
It produced 904.1 million coins in May, about a 13% increase from the April low, and produced 1.5 billion coins in June. For the rest of 2020, it plans to produce more than 1.35 billion coins a month.
The Fed wants the Mint to maximize coin production and is asking banks to order only the coins they need to meet near-term customer demands. But “these measures alone will not be enough to resolve near-term issues,” according to the Fed.
That’s why it’s also allocating coins based on banks’ past order histories. The Fed expects the shortage to remedy itself as businesses open back up and coin circulation returns to normal.
Bank of TexasBanks are the nation’s biggest recycler of coins and many closed during the pandemic.
Tulsa-based BOK Financial Corp. operates banks in eight states, including the Bank of Texas, and has seen a 60% to 80% drop in its coin supply from the Fed since the June 15 limits, said Tammy Foy, director of treasury services at BOK.
“This coin shortage is a big deal and a big concern,” she said.
BOK didn’t receive word about the limit until the Friday afternoon before the Monday it went into effect, meaning it didn’t have time to adjust its orders, she said. On Monday, the bank started calling clients to reduce their coin orders, starting with their heavy users – convenience stores, grocery stores, restaurants, money service businesses and casinos.
Stores worry if they don’t have coins, customers will go elsewhere, she said. One of its convenience store clients typically depends on the bank for $700,000 in quarters alone each month. “The impact to clients is significant,” she said.
Purchase, New York-based payments company Mastercard said 51% of U.S. consumers say they’re using cash less often or not at all since the start of the pandemic, according to online interviews with 1,000 bank users in mid-April. But Foy said although electronic payments are on the rise, many clients still rely on cash and coins to conduct business.
Quick Trip wants your piggy bankWhen Tulsa-based Quick Trip was tipped off about a possible coin shortage, the convenience store chain took proactive measures, such as asking customers to pay in exact change or with a debit or credit card, spokesman Mike Thornbrugh said.
Now, the chain is asking customers to bring in spare change to their local Quick Trip, where employees will count the coins and redeem them in cash. Thornbrugh said some customers brought in piggy banks or coffee cups filled with coins.
“People are really responding,” he said. “All of us have coins somewhere, whether it’s in our car’s coin console or dresser drawers. We just ask that you don’t come in with a wheelbarrow because I’m not sure we can handle that.”
Thornbrugh said he thinks convenience stores will be hit the hardest by a coin shortage because people only tend to use credit and debit cards for high-ticket purchases, such as a coat, computer or a load of groceries – things not sold at QT.
“People come in and buy a single item like a fountain drink or cup of coffee and are used to buying them with cash and coins,” he said.
Coinstar increases pickupsBellevue, Wash.-based Coinstar recycles billions of coins a year. With 95% of the U.S. population living within five miles of a kiosk, it’s the largest of its kind with over 22,000 kiosks worldwide. Its kiosks, typically seen in grocery stores, take coins in exchange for cash, an eGift card or a charity donation.
Last year, its kiosks counted 37 billion coins worth $2.7 billion. Although its kiosks remained open during the pandemic, volumes dropped as people made fewer trips to grocery stores.
To help with the coin shortage and because volumes are ticking up again, Coinstar is making more pickups at kiosks to help get coins back into circulation.
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