The Economic Plan 2012
Last March, the Canadian Government announced, as part of its Economic Plan 2012, that it will eliminate the penny from Canada’s coinage system since the cost to produce it has significantly surpassed its value as a mean of payment.
The Royal Canadian Mint will cease distribution of pennies to financial institutions as of this fall. Businesses will be asked to return pennies through their financial institutions for melting and recycling of the metal content.
Here is a summary of key facts that Canadian retailers should know about this Plan:
- Consumers can continue to use pennies for cash transactions indefinitely when buying goods and services.
- Businesses should not round the prices for individual items. Only the final total price should be rounded.
- Electronic payments (debit and credit card transactions) as well as cheque payments will not be rounded and should be done at the nearest cent.
- Businesses should not automatically round the final total price if consumers have the exact change.
- Businesses do not need to update cash registers for rounding.
- Sales taxes will not be rounded. Only the final total should be rounded.
- The penny will retain its value indefinitely and continue to be legal tender. Businesses are encouraged to continue to accept the coin as a means of payment.
Impact To Retail Operations
According to the government, there aren’t any! It states that you don’t need to update your cash registers for rounding. Well, there are two sides to every coin.
Doing nothing is one side, which means relying on your sales associates or cashiers to do the math every time a customer pays with cash. That opens the door to human errors or irregularities and a possible slowdown at the register. If you only have one register or very little line-ups at the register even during the Christmas rush, that may be the way to go. This may also be the case if you feel the human errors will be immaterial and the slowdown insignificant.
IOn the other hand, should you have regular line-ups at the register and a fair share of cash transactions, it may be appropriate to facilitate the rounding process, especially for retailers employing many part-time cashier or sales associates.
Like any other IT projects, when considering a solution to a problem (such as simplifying the rounding process), retailers must consider the costs and benefits. In this case, it’s mostly productivity versus the cost of such a solution. The odds of constantly getting rounding errors on many or all transactions across all stores are small, which means the financial impact of such errors may be immaterial. However, regular slowdowns at the registers will impact your customers’ patience and can lead to lost sales.
No change, additional automation or controls added to the cash register. Only provide a plasticized rounding table quick reference sheet to cashiers.
X.10 = X.10 Ex: 4.80$ = 4.80$
X.11 = X.10 Ex: 4.81$ = 4.80$
X.12 = X.10 Ex: 4.82$ = 4.80$
X.13 = X.15 Ex: 4.83$ = 4.85$
X.14 = X.15 Ex: 4.84$ = 4.85$
X.15 = X.15 Ex: 4.85$ = 4.85$
X.16 = X.15 Ex: 4.86$ = 4.85$
X.17 = X.15 Ex: 4.87$ = 4.85$
X.18 = X 20 Ex: 4.88$ = 4.90$
X.19 = X.20 Ex: 4.89$ = 4.90$
Modify the register to display both rounded and exact cash total and to track rounding adjustments of cash transactions when customers don’t have the exact change, thus avoiding the mental arithmetic. This added feature should come with the option to be turned on or off.
For all types of customer transactions (Regular Sale, Regular Return, Employee Sale, Employee Return, Layaway Payment and Layaway Completion), once all items have been scanned, if the customer opts to pay in cash, the cashier needs to validate if the customer has the exact change. If he does not, the cashier would enter the cash tender that should be automatically rounded to the nearest nickel as per the rounding table quick reference sheet in Option 1. However, if the customer is paying in cash and has the exact change or if the payment type is credit, debit or cheque, the final total should be settled to the cent (exact amount).
A new configuration module is needed to specify the rounding rules in the register’s back-office. Generic rounding rules should be specified as follows:
The rounding adjustment should be added to the transaction as a new transaction code, thus providing an audit trail.
The customer receipt will automatically include a line above the sub-total to state the penny adjustment and optionally the reason code.
The system should not prevent entering amounts that are not a multiple of 5 cents in the following areas:
- Pay In;
- Pay Out;
- Cash Pickup.
If the cashier makes a mistake and enters penny values, he/she will need to do either a Pay In or Pay Out to remove/add the difference.
Deposit type transactions’ interim values should not be affected by the rounding mechanism unless cash is used. Such values include:
- Minimum deposit required;
- Installment payment amounts;
- Actual deposit amount specified by cashier;
- Service fee
By creating a new transaction code, this detail will be visible in Sales Audit.