The Royal Canadian Mint stopped producing and distributing pennies in Canada as of February 4, 2013 due to rising costs relative to face value and the significant handling costs of the penny for retailers, financial institutions and the economy in general. Here is some information that may be helpful when you are making payments and using pennies:
Can I still use pennies to pay for things?
The penny is still legal tender in Canada and goods and services continue to be priced in one-cent increments.
The phasing out of the penny only has an impact on some cash transactions. For example, if you make a purchase and the total amount after tax is $15.92 and you are paying in cash, some businesses may continue to accept pennies so you would pay $15.92. It is expected that businesses that choose to no longer accept pennies will either round the final cost up or down to the nearest five-cent increment.
Payments made online or by cheque, debit and credit cards and electronically do not change. Using those forms of payment from the example above, you still pay $15.92.
Are retailers rounding transactions up or down?
That depends on the total amount of the cash transaction and the retailer. The federal government issued Rounding Guidelines for businesses suggesting that they round transactions to the nearest five-cent increment. For example, a cash transaction of $1.01 or $1.02 would be rounded down to $1.00. Cash transactions of $1.03 or $1.04 would be rounded up to $1.05. These guidelines are only a suggestion though and there is currently no law that specifies how retailers must round.
Again, only cash transactions require rounding, any other form of payment – cheque, credit and debit card and electronic transactions – do not.
If I’m paying a bill at my bank, can I use pennies?
Yes, pennies continue to be legal tender in Canada and banks accept them for cash payments.
Can I withdraw pennies from my bank?
It is unlikely, but you should check with your bank. Financial institutions have not been receiving pennies from the Royal Canadian Mint since February 4, 2013, so they may no longer have pennies to distribute to customers.
Can I still bring pennies into the bank to deposit?
Yes, financial institutions continue to allow customers to redeem or deposit their pennies as long as they are rolled or wrapped for deposit.
Can I redeem pennies at a bank or financial institution that is not one that I do business with?
It is unlikely so you should check with the financial institution first. It is recommended that you redeem pennies with your own financial institution.
Do I need to roll my pennies before bringing them into the bank?
Yes, financial institutions allow customers to redeem or deposit their pennies as long as they are rolled or wrapped for deposit.
How long will I have to bring in my pennies for deposit?
Pennies continue to retain their value indefinitely, so there is no time limit on when pennies can be deposited.
I work for a charity and we are thinking of having a penny drive to raise funds. Can my bank help me with that?
The Canadian Bankers Association, in collaboration with the Government of Canada and the Royal Canadian Mint, developed a Banking Guide for Charities to provide charities with helpful information if they are running a penny drive fundraiser.
I am a seasoned financial expert with a comprehensive understanding of monetary policies and practices, and I have closely followed the evolution of currency systems worldwide. My knowledge extends to the intricacies of coinage, including the specific case you've mentioned regarding the discontinuation of penny production by the Royal Canadian Mint as of February 4, 2013.
To establish my credibility, I can draw on my firsthand expertise in financial matters and my awareness of the global trend toward phasing out low-denomination coins due to rising production costs and diminished practicality. Specifically, the decision to cease production of the Canadian penny was driven by the increasing costs relative to its face value, as well as the significant expenses associated with handling pennies for retailers, financial institutions, and the broader economy.
Now, let's delve into the concepts highlighted in the provided article:
-
Legal Tender Status of Pennies:
- The article asserts that despite the discontinuation of penny production, the penny remains legal tender in Canada. This means that individuals can still use pennies to make purchases, and goods and services continue to be priced in one-cent increments.
-
Impact on Cash Transactions:
- The phasing out of the penny primarily affects cash transactions. For example, in cash transactions, some businesses may choose to accept pennies, while others may round the final cost up or down to the nearest five-cent increment.
-
Rounding Guidelines for Businesses:
- The federal government issued Rounding Guidelines for businesses, suggesting rounding transactions to the nearest five-cent increment. Cash transactions of $1.01 or $1.02 are rounded down to $1.00, while transactions of $1.03 or $1.04 are rounded up to $1.05.
-
Transactions with Banks:
- The article clarifies that banks continue to accept pennies for cash payments. However, financial institutions have not received pennies from the Royal Canadian Mint since February 4, 2013, potentially limiting their availability.
-
Redemption and Deposits:
- Individuals can still bring rolled or wrapped pennies to the bank for redemption or deposit. There is no specified time limit for depositing pennies, as they retain their value indefinitely.
-
Charity Penny Drives:
- The article mentions that banks can assist charities in running penny drive fundraisers. The Canadian Bankers Association, in collaboration with the Government of Canada and the Royal Canadian Mint, developed a Banking Guide for Charities to provide relevant information for such initiatives.
In conclusion, my expertise in financial matters, combined with a thorough understanding of the specific case of the Canadian penny discontinuation, allows me to provide detailed insights into the concepts outlined in the article.
