Recently, the Canadian mint decided to stop making pennies. More specifically, for cash transactions, Canadians now round up or down to the nearest nickel.
This is stupid.
It’s not stupid to phase out the penny. That makes perfect sense, given inflation and the rising cost of natural resources, and even the growth of credit and near-field payment systems. No, what’s stupid is to stop there.
Canada should have killed the nickel, too.
This has been bugging me since I heard of it. So I’m sorry if this seems like a rant, but it is. Here’s why.
Rounding nickels is bad. We’re a metric country. We like orders of magnitude, and the decimal place. We know how to round up or down from an even number—it’s something we’be all been taught in math class. Rounding to a nickel is counterintuitive. There are even signs on cash registers explaining how to do it now.
The nickel is big and expensive. I don’t have the Canadian costs, but in the US it’s $0.05 to make a penny and $0.10 to make a nickel. A dime is around $0.057 to make—the only one of the three that’s cheaper to produce than it’s worth, also known as seignorage. Of the three, only the nickel generates government revenue when introduced into circulation. The other two “cost” money.
Decimals are useful for data. Consider spreadsheets. If you only had to express a dollar as $0.0, you’d save a character per column. There’s even a button right in Excel that does it for you.
So what’s the downside? Well, at most, about $0.05 per retailer. Once. Because on average, things will even out. I mean, sure, you can game the system a bit by buying jellybeans at $0.14 over and over. But there are ways to address that—such as selling a $0.20 bag.
The reason this grates on me so much is it’s a classic example of incrementalism, and not looking at the big picture. We’ll inevitably eliminate the nickel one day, and doing both at once costs far less. Sadly, we don’t think holistically about such things.
Anyway, end of rant.