How a national coin shortage is impacting Berks County’s economy

(Originally published July 13, 2020 for the Reading Eagle) — As if paying with cash wasn’t already passé, now some retailers are requesting customers use a debit or credit card unless they have exact change.

The culprit, as is so often the case these days, is the coronavirus, but not in the way it was early in the pandemic when merchants were ditching currency in favor of plastic, contactless transactions.

This time, the pandemic is the root of yet another nationwide shortage — and while you may not miss coins as much as you did meat and poultry products, bicycles or toilet paper, it can certainly create a problem for businesses.

“Mine is a change-heavy business,” said Max Hirneisen, owner of Symbiote Collectibles in West Reading, which sells, among other items, loose trading cards for as little as 10 and 15 cents a piece.

“Especially dealing with kids, a lot of times it’s pocket change, so it does matter,” he said.

A peek inside Hirneisen’s register revealed just how dire the situation has grown over the past couple weeks: five quarters, seven dimes, zero nickels and three pennies — less than $2 in coins.

“I could see getting rid of pennies,” said Hirneisen, “but it has been a lot harder to get change from the bank lately.”

The Federal Reserve has been limiting how many coins it distributes to banks since June 15, according to a New York Post report, in part due to the U.S. Mint slowing production to protect workers from COVID-19.

But the reasons for the shortage are multiple, explained Tim Snyder, president and CEO of Fleetwood Bank.

“Our branches were closed form March 18 until June 29,” said Snyder. “That had an impact on both coin and currency moving through our branches, but a larger impact on coin because of the difficulty moving significant amounts at a drive-up window.”

Mass shutdowns of non-essential businesses also contributed to the reduced flow of currency, noted Snyder.

“Our coin shipments to the Fed were reduced by more than half,” said Snyder. “Multiply that by the 4,000 banks in the country and then the number of branches.”

Altogether, it’s created a perfect storm that can be more problematic than one might think.

Who does a coin shortage hurt?

Around Berks County, signs posted at Lowe’s and Wawa locations request customers pay with exact change or use a card, if possible. Giant Food Stores have gone so far as to exclusively accept electronic payments at some of its registers, according to a company spokesperson.

Yet, while perhaps an inconvenience for some customers, this is not as tall an ask for large chains or even small businesses that deal primarily in large transactions.

Cashless transactions are universally accepted and frequently the norm, especially as the cost of the purchase rises. A person buying groceries, home improvement supplies or gasoline is already likely to pay by card — with the pandemic only accelerating the shift away from currency.

“A lot of places are encouraging credit transactions because they’re perceived to be safer, cleaner,” said Snyder.

You will find no such signs at Symbiote Collectibles though, as such a request would often be impractical.

“My credit card reader won’t even let me do transactions under a dollar,” said Hirneisen, not to mention the per-transaction fees he incurs for each electronic payment. “You just kind of take what they give you.”

Hirneisen has taken to rounding in his customers’ favor, he said, not an uncommon practice in an independently run shop when it’s a matter of nickels and pennies.

Do it for every customer who walks through the doors, every day, even when the difference is a matter of quarters and dimes, however, and the losses become substantial.

“If it’s $21.50, I guess it’s $21 now,” said Hirneisen. “Just sales tax alone, it adds up.”

It’s not a problem unique to the collecting world, either. It can be a corner store that might do business for a soda or pack of gum, or almost any cash-only venture, that will feel the consequences of a prolonged coin shortage.

The end is near?

The good news is some of the factors contributing to the shortage may be beginning to ease.

With Fleetwood Bank able to reopen its branches in Pennsylvania, its shipments of coins back to the Fed are normal again, said Snyder. A reopening economy and the free flow of currency through banks again helped, although there’s another piece of the equation here.

There was pent up demand from customers waiting to use coin-cashing machines that count coins and allows them to be exchanged for paper money.

“Every one of our branches has a coin-counting machine for customers or non-customers,” said Snyder. “Those machines were shut down for about 90 days, and I know a lot of my counterparts at community banks did the same thing.”

Due to the volume of coins Fleetwood Bank collects from the machines, it hasn’t had to impose limits on the amount of change it distributes to customers — and actually winds up recirculating a lot of it.

“If I didn’t have that ability, then it would be a different story,” said Snyder. “Some of my counterparts that don’t provide coin-counting machines are seeing limits that they have to put in place.”

Still, with reopenings across the U.S. halted or reversing in some places, and many industries far from operating like normal, it’s unclear how deep the coin shortage can go.

Hirneisen owns some toy vending machines that he could try farming for coins if the shortage becomes protracted, a contingency not every business will have.

More likely though, Symbiote Collectibles will be in the same boat as everybody else, performing rounding errors to ensure, first and foremost, customers have a positive experience.

“At that point, realistically, I think it would be a necessary cost of business,” said Hirneisen. “With everything else going on in the world, that’s not the hardest pill to swallow, I guess.”