As the saying goes, “We won’t be pinching pennies anymore”— we will be nickelling or diming it.
Yes, today ends an era. We Canadians are penniless. Today, consumers, businesses, charities and financial institution will start rounding off cash transactions only. This doesn’t affect a cheque, debit, mobile payments or credit card type electronically transaction. Only cash transaction.
The sense behind phasing out the cent was rising production costs (it cost 1.6 cents for every penny minted). They estimate the move will save us Canadian taxpayers an estimated $11 million a year. Will these savings come back to us taxpayers? I’ll leave that question to your imagination.
So here is the transaction break down: The change from your cash transaction will be rounded off either up or down depending on your purchase. For example, when I walk into a coffee shop or other business and my cash transaction totals $1.01 or $1.02, I will be asked for $1 (yahoo!) If it is $1.06 or $1.07, it works out to $1.05 (yahoo for me again!). As you can see, we’re doing OK here. But if my cash transaction comes to $1.03 or $1.04, I will be asked for $1.05 and if it is $1.08 or $1.09, I will be asked for $1.10. Now what about cashing cheques at a bank?
Think about all the cheques that are issued to Canadians and will be cashed at a bank that will be rounded down for us? This could be huge earnings for a bank! So if you are cashing a cheque at the bank and it is $1.01, $1.02, you will only get back $1.00 or if the cheque is $1.06 or #1.07 you will only get $1.05. This is certainly to their advantage. Hopefully the other side of this transaction will balance everything out. However, there could be a gain if all rounds up for the consumer in cashing their cheques.
How many businesses will be stacking transactions to benefit from the same results? Good question, do I have your brain thinking?
I know when I had my local businesses, the amount of “penny errors” that my bank used to make on micro encoding mistakes were just phenomenal. I’m sure they made their millions national wide on these types of errors. For example, if a check I wrote was say $134.78 and the micro ending (manually entered) was $134.79, the $134.79 was processed as a debit from my bank account. I always asked for my money back! Better in my company’s pocket than the banks. It amazes me that so many people where unaware of these types of errors or perhaps they did but just ignored them. I would send the bank a fax asking them to adjust and credit me back the “penny errors”. This took a lot of time to do and having a bank statement with over 35 pages of bank transactions made a big difference to our company’s trust account every month so it was important for me to get that many back. Many accountants, bookkeepers and entrepreneurs did not catch these type of errors. It seemed too tedious for them.
Rounding up a transaction, over time, can have a nice little nestle egg for some businesses. So again, I state, “This type of transaction, rounding up, can add some revenue to a business. Will this eventually be taxed? Mmmm, I wonder.
Interestingly, the Ministry of Finance website states that even though everyone is encouraged to phase out the penny and start rounding off cash transactions, pennies can still be used in cash transactions “indefinitely with businesses that choose to accept them.”
Will many of the favourite idioms be stopped? Like “a penny saved is a penny earned,” “a penny for your thoughts,” and “I’ll put in my two cents.” Could penny loafers evolve into loonie loafers? What will future generations of our children know about the penny? Will it be something they will read about in school books just like the dinosaur?
Well that’s my two cents worth! A penny for your thoughts?
— Cheryl Lynn – founder of Cheryl Lynn International – Mobile and Local Internet Marketing expert for local business.