7.21.2020

How Small Businesses Can Manage the Coin Shortage

Written by Austin Chegini

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An unforeseen consequence of the coronavirus pandemic is wreaking havoc on businesses across the nation: the national coin shortage. Take a trip to any grocery store, and youโ€™re likely to see a sign asking you to pay in exact change, or pay by card.

Many American shoppers never think about using coins for daily purchases, but now they are proving to be crucial to our economy. From small shops to big-box retailers, businesses are struggling to balance their cash inventory because of the coin crunch.

What caused the coin shortage?

According to Federal Reserve Chairman Jerome Powell, the pandemic interrupted supply chains between stores, banks, and other industries that use substantial amounts of cash. The exchange of coins has stopped because stores have been closed, and that means that fewer coins are going from consumers back to banks.

Since fewer coins are reaching banks, that means fewer stores can then receive coins from the banks to make change for their customers. These stores cannot provide exact change, which causes problems for consumers without credit cards or other non-cash payments.

How can small businesses respond to the coin shortage?

As more and more businesses reopen, the demand for coins may increase. While the government is working on a solution, it is best to plan for some hiccups along the way. Here are some steps small businesses should take to manage the coin shortage.

Create a Pay with Coins Promotion

The Community State Bank in Wisconsin started a coin buyback program to increase its supply. Customers receive an extra $5 for every $100 of coins they swap at the bank. The program gained national recognition, especially since the Federal Reserve has limited the amount of coins banks can order.

Following the model from the bank, you can incentivize your customers to use coins. This promotion can benefit all parties if structured well since it will give a discount to customers and allow you to keep your registers stocked with quarters.

If you run a retail store or restaurant, you can offer a 5% discount on any purchases made with coins. Depending on your situation, you will need to specify how many coins and what denominations are most needed. An example might be 5% off purchases worth $10 or more that use at least $1 worth of coins.

Network with coin-heavy businesses

The Soapbox Laundromat in Hoover, Alabama is acting as a coin bank for a local grocery store. Typically, a laundromat collects coins from its machines and deposits them at a bank. Instead, the owner of the laundromat collected $1,300 worth of coins from laundry customers and gave it to a grocery chain in exchange for paper money.

Think about what businesses near you may have an ample supply of coins. Contact each location and negotiate an exchange system to keep your cash drawers full.

Here are a few coin-based businesses to consider:

- Laundromats
- Car washes
- Arcades
- Vending services
- Photo booth companies

Upgrade to Digital Payment Processing

Consumers use credit or debit cards in 51% of purchases, and the amount of cash purchases is decreasing a few percent year over year. Installing credit card hardware and paying the processing fees may come at a cost, but most businesses cannot afford to ignore this consumer trend.

If you are only taking cash payments, then you likely have a traditional point of sale system. Integrating a credit card reader with a conventional cash register is not possible, so you need to think about installing new hardware and software while youโ€™re at it.

An electronic point of sale system can process these plastic transactions and simplify accounting in the process. The system records all purchases and can quickly calculate revenue, expenses, and taxes. Your digital register will still include a cash drawer, giving you the flexibility you need to serve your customers.

Be prepared for the next market disruption

Small to medium businesses are what keep the American economy going. However, competing with chain stores and restaurants is difficult, especially when it comes to reacting to national shifts in the market.

Embracing the latest technologies will help you react quickly to the next economic crisis.

Epos Now builds cutting-edge hardware and software that keeps up with the latest industry trends. Our machines are secure, fast, and integrate with 3rd-party apps like Quickbooks and Shopify. We provide businesses with the tools they need to weather any storm.

Contact us today and speak with a consultant to learn about upgrading your payment systems.