Latest shortage during pandemic: pocket change
First, it was masks and gloves. Then it was toilet paper and hand sanitizer. Now it’s coins.
The pandemic has led to several nationwide shortages. Lately, signs are popping up about coin shortages at places like Wendy’s and Starbucks. 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 COVID19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” the Fed said.
The nationwide shortage is a result of two things. 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 working each shift at its Denver and Philadelphia plants — 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 increase 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 maintain maximum coin production and is asking banks to order only the coins they need to meet immediate customer demands. But “these measures alone will not be enough to
resolve nearterm 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 reopen and coin circulation returns to normal.
Banks are the nation’s biggest recycler of coins and many closed during the pandemic.
Tulsa’s 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 that 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, N.Y., 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 midApril. But Foy said that although electronic payments are on the rise, many clients still rely on cash and coins to conduct business.
When Quick Trip was tipped off about a possible coin shortage, the Tulsa convenience store chain took measures like 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 a 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 highticket 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, of Bellevue, Wash., recycles billions of coins a year. With 95% of the nation’s population living within 5 miles of a kiosk, it’s the largest operation of its kind, with more than 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, Coinstar kiosks counted 37 billion coins worth $2.7 billion. Although its kiosks have 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 starting to rise again, Coinstar is making more pickups at kiosks to help get coins back into circulation.