Let’s face it: We’ve all probably walked into a store or gone through a fast-food restaurant’s drive-thru and uttered a collective “uh … what?” at the latest announcement.
Whether it’s a Taco Bell employee notifying customers of the current requirement or a sign posted before the self-checkout lane at Walmart, the notice that people need to either pay with exact change or use a card is one switch that has taken many by surprise.
But, overall, it hasn’t caused consumers to go without those supplies, groceries, or a McDonald’s beverage. It has caused some to change how they would pay, though. For Connie Kiesling, 73, of Logansport, it depends on where she goes. At the drive-thru, Kiesling said she prefers to use cash. “For big stores like Walmart, I like to use my card,” she said.
And it’s the continuous usage of debit and credit cards coupled with the mandated stay-at-home order issued at the early stages of the pandemic that have triggered a nationwide shortage of coins.
“When banks closed, customers couldn’t bring in their coins, so we couldn’t send them to the Federal Reserve,” explained Tammy Helvie, assistant vice president for branch operations with Security Federal Savings Bank, which has branches in Kokomo, Logansport and other locations. That, in turn, meant the Federal Reserve did not have the coins to wrap and send back to financial institutions.
Typically, a bank will order a certain amount of bills and coins on a weekly basis from the Federal Reserve. That money will then be used when customers cash a check at their local bank or exchange one form of currency for another. It also is provided to local companies for their everyday operations.
At the end of that week, the money collected at a bank will be counted and sent to the Fed. Then, the process of ordering cash and coins begins again.
“When all of this happened, and everything was shut down, banks stocked up on currency,” said Helvie. “We didn’t think that there would be a coin shortage. [But] we ran out of coins. We ran out of everything.”
In fact, she said, the Federal Reserve regulated how much a financial institution could order. The limit continues.
According to the Fed, a temporary cap was imposed on all orders to ensure a fair distribution throughout the country. As businesses reopen, more coins will flow back into the economy, which will allow for a rebuilding of coin inventories.
“Never before have we had a limit as to what we could order,” Helvie said, adding that the bank has had problems keeping enough quarters and pennies. “We’ve made it week by week … and we’re almost back up to what we had been ordering on an average week.”
However, it’s not just enough that a particular bank may get back to its normal operating procedures. Local businesses and eateries need to have similar experiences. Because it’s a trickle-down effect – banks order money, money arrives at banks, banks issue currency to local entities – consumers may not be able to see the results. Banks have to disburse monies evenly, or as close to evenly, as possible among their industry customers.
Therefore, if one store needs $100,000 in a given week while another needs $50,000, a bank that services both stores may only be able to provide $75,000 to the first store and $40,000 to the second.
That means there are fewer coins to give customers if they pay in cash when making purchases. Hence, stores and restaurants require exact change or cards. And Helvie said it’s a process that is fully understandable once all the pieces are explained. “What we shipped out on a weekly basis … I can understand why there [has been] a coin shortage.”
Logansport Savings Bank President Arden Cramer shared her opinion: “You don’t get what you ask for, but it hasn’t made it difficult for us. We’ve not had any issues getting coins we need … but we’re a community bank, we’re not a large bank.”
Yet when considering the grand scheme of society, Cramer thinks this situation is logical. After all, he said, for years people have opted to use cards instead of cash. “It has had a bit of an impact on how people pay for things, especially since we’re contactless now, and with cash … you don’t know where it’s been. But people are used to using cards and not carrying cash.”
That’s precisely what 25-year-old Logansport resident Willem Cripe has been doing for years. He seldom carries cash. In fact, “I’d be fine in a cashless society.”
Helvie doesn’t believe society will reach that point. Cash and coin are still used frequently, she said.
Nevertheless, credit card companies and establishments might try to monopolize the situation. For years, credit card companies have charged establishments a small fee when customers use their cards for payment, said Luz Flores of Horizon Bank. It’s a fee that the customer will never see on their bill.
However, some stores and restaurants have begun charging their own fee when a customer pays with a card. When this happens, Flores said the establishment should notify the customer before he or she makes a payment that there would be an upcharge for using a card instead of paying in cash. It is usually a small fee, but still a fee, she said.
This means, of course, that an unwanted fee may be unavoidable. After all, if an entity won’t accept any form of cash unless it’s “exact change,” then a person’s options are limited, according to Krystal Little, 28, of Logansport, who said she has not been impacted much by the current situation. She prefers using her debit or credit cards.
Her children, though, might be, she said. Her kids – Ryleigh, 9, and Ryder, 5 – earn money for chores. They use that money to buy small items like trinkets or candy. If they can’t pay in change, they won’t be able to spend their hard-earned money, and that concerns Little.
Logansport resident Danny Cole Sr., 69, doesn’t share a similar concern. Other than not getting back enough change when he pays in cash – he’ll get shorted a quarter, for example – he said, “I think it’s all political; it’s somewhat of a hoax.”
Cramer disagrees. “We know from our banking associations that this is real.”
Helvie agrees with Cramer. “We got a delivery the other day and the Brinks delivery guy said that they’re not getting what they used to get. Larger city banks are still unable to get enough coins.”