OTTAWA ? The penny is about to drop? ? with many businesses unprepared and the federal government having only limited success informing Canadians of the looming change to, well, change.
The one-cent coin?s final days of widespread use are drawing near. The Royal Canadian Mint will stop distributing pennies to financial institutions on Feb. 4 ? the same day businesses are encouraged to begin rounding cash transactions to the nearest five-cent increment in a ?fair and transparent manner.?
For example, a transaction totalling $1.02 would round down to $1, but a purchase of $1.03 would round up to $1.05, while $1.07 would round down to $1.05 and a purchase of $1.08 would round up to $1.10.
Transactions paid with cheques, credit cards and debit cards will continue to be settled to the cent. The GST and HST will be calculated on the pre-tax price, not the rounded price.
Canadians who hoard their pennies will still, however, be able to use pennies indefinitely to pay for purchases.
While the transition date is just days away, many small businesses are clearly not ready for the penny?s phase-out. Managers and business owners at a number of merchants in the national capital offered blank stares when asked about it. Other shop owners simply shrugged their shoulders.
?We?re not prepared in the least,? said Judy Mance, manager of Kameleon PopShop in Ottawa, a store specializing in jewelry and women?s fashion.
Mance said she has heard bits and pieces about the penny being phased out, but was unfamiliar with the Feb. 4 transition date or the specifics of when to round up or down.
She noted the family business ? located a block from Parliament Hill ? hasn?t received any notification from the federal government about the transition.
Nevertheless, she said the business is just as happy to round up or down for customers to avoid having to hand out pennies, something she said the store has regularly done for some time.
?Our small change has been devalued because it doesn?t buy much,? she added. ?I find people don?t even count their change anyway.?
The Conservative government announced in last March?s federal budget it was ending production of the penny because it actually cost 1.6 cents to mint each of the one-cent coins, due to rising metal, labour and other manufacturing costs.
Ottawa says that stamping out the penny for good also will save taxpayers around $11 million a year.
To help retailers, charities and consumers, the federal government has created a web portal on the Finance Canada website, including downloadable signage that can be displayed in-store.
The Mint has also launched a social media campaign on Facebook and Twitter to alert Canadians about the transition date. As well, approximately 225,000 printed flyers were placed in Canada Post outlets across the country explaining the changes.
A series of print, radio, television and online ads have begun to appear across Canada, and will circulate until the end of March.
Canadian Federation of Independent Business (CFIB) president Dan Kelly said a number of his members aren?t prepared for the transition away from the penny.
?Business awareness is low,? Kelly acknowledged, explaining many business owners likely won?t realize the change until they go to the bank and can no longer get rolls of pennies. ?There certainly will be a few transitional hiccups.?
The primary concern for business owners, he said, is consumers unaware of? the rounding off changes may think store employees are trying to cheat them out of a few pennies.
At Canada?s Four Corners, a crafts and souvenir shop in downtown Ottawa, manager Reza Ghaffari said the penny phase-out ?is not a big deal.? He would like to see the government also eliminate the nickel and round cash transactions to the nearest zero.
?I think it should average itself out during the day,? Ghaffari said.
Ian Kimmerly, owner of a stamp shop bearing his name, said Friday his business hasn?t done anything to prepare for the transition, nor is he in a hurry to do so. He said his business will continue to provide pennies, as long as they have them on hand, to customers who want them.
?We have a lot of older customers who remember when a penny was worth something. For those customers, we?ll be happy to give (pennies) to them,? he said.
Many consumers may not even notice the change. A majority of retail and hospitality purchases are paid by credit card (35 per cent) and debit card (27 per cent), according to data from the CFIB, which represents 109,000 small and medium-sized businesses in Canada.
Only 19 per cent of retail and hospitality transactions are paid by cash, with 15 per cent by cheque, says the CFIB.
Karen Proud, a vice-president at the Retail Council of Canada which represents about 45,000 stores,? figures approximately half of the businesses are ready for the change.
It will also take time for consumers to adjust, she said, as shoppers receive less or more change than they were expecting.
?In the short term, there is going to be a bit of confusion,? she said.
Along with the rising costs to stamp the penny coin, the government said ending the penny?s production was necessary because Canadians are indifferent to the coin and that it has retained only one-twentieth of its original purchasing power.
Billions of Canadian pennies remain either in circulation, stashed in piggy banks or lining drawers of homes across the country. It will take years to completely remove the coin from circulation.
?To ensure the transition is as smooth as possible and as smooth as in other countries, we?re undertaking a national public awareness campaign to help inform small businesses, retailers, charities, and consumers about how rounding will work,? Shelly Glover, parliamentary secretary to Finance Minister Jim Flaherty, said Friday in a statement.
jfekete@postmedia.com
Twitter.com/jasonfekete
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Source: http://o.canada.com/2013/01/25/many-businesses-not-ready-for-phase-out-of-canadas-penny/
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