Since 1858, the “one-cent piece” better known as “penny”, has played – alongside with 6 other coins – a major role in the Canadian economy. But since mid-2010, the Standing Senate Committee on National Finance began rethinking the cents’ future. On December 14th of the same year the Committee recommended the penny’s withdrawal from circulation. And, in the Economic Action Plan 2012, the Canadian Government finally announced the phase out of the penny from its coinage system.
The transition was well organized, providing the population with ten months from March 2012 to February 2013 to prepare for the new life without the daily used penny. The Crown Corporation responsible for the coinage production in Canada, the Royal Canadian Mint, stopped distributing pennies to banks on February 4th, 2013, and since that day, all businesses across Canada are being encourage to begin rounding all cash transactions.
In order to minimize losses and/or gains on cash transactions, the government of Canada adopted a rounding guideline. The protocol – already successful in other countries – preaches a fair and transparent manner to accommodate both, consumers and businesses. Prices are to be rounded down when the cents are $0,01/0,02/0,06/0,07, and to be rounded up when it reaches $0,03/0,04/0,08/0,09.
It is important to stress that the phasing out of the penny will affect cash transactions only. Other methods of payment, such as electronic payment, credit/debit cards and cheques do not require rounding, due to being settled electronically to the exact amount.
This decision came as a surprise to many Canadians, but on a survey realized in 2007 it was determined that only 37 per cent of the population used pennies. Even though the other 63 per cent did not use it, The Royal Canadian Mint was still forced to produce an average of 816-million pennies per year. This number was this high due to its...