Retail groups to U.S. government: Where are the coins?

The National Grocers Association (NGA) and other retail industry groups have called on the federal government to address a nationwide shortage of coins caused by the coronavirus crisis.

In a letter sent Tuesday to the U.S. Department of the Treasury and the Federal Reserve, NGA said a drop in cash transactions for retail purchases during the COVID-19 pandemic has reduced the supply of coins across the country. As a result, the government must release more coins from federal inventory or boost coin production to meet immediate needs.

The letter, addressed to Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin, was signed by NGA as well as FMI-The Food Industry Association, the National Association of Convenience Stores, the Retail Industry Leaders Association, the International Franchise Association, the National Automatic Merchandising Association and the Society of Independent Gasoline Marketers of America. NGA noted that the organizations represent businesses deemed as part of the “essential critical infrastructure workforce” by the Department of Homeland Security during the pandemic.

“We were alarmed to hear that the system for distributing coins throughout the country is at the breaking point. The Federal Reserve’s announcement on June 11 that it will have to ration the distribution of coins across the country came as a shock,” the letter said. “Some of our member businesses are being told that they cannot get coins from their banks at all. This threatens the functioning of our member businesses and, by extension, the needs of their customers.”

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Retailers and industry observers nationwide report that COVID-19 has curtailed in-store purchases, due to fewer people visiting stores, and pushed more Americans to buy retail goods online. However, the letter pointed out that cash represents over a third of all funds transacted in person by U.S. consumers and nearly half of all funds for transactions of less than $10.

“These industries need to efficiently process large volumes of consumer transactions every day and many of those transactions are paid in cash,” the retail groups said in the letter. “A critical but largely unseen part of these businesses’ operations, then, is obtaining sufficient amounts of coins to be able to handle cash transactions and provide customers with change.”
 
The retail trade organizations said the federal government could remedy the coin shortage in three ways: prompt the Fed distribute more coins from its inventory to ensure economic activity isn’t disrupted; direct the U.S. Mint to step up coin production; and prioritize coin distribution to “essential critical infrastructure” consumer businesses in greatest need of coins to complete cash transactions with individual Americans.
 
“Grocery continues to be an environment where consumers prefer to use cash, with roughly one out of every five transactions being paid with cash. Independent grocery serves many communities throughout the U.S. that are underbanked or unbanked, and without availability of coinage, these customers are going to be hardest hit,” explained Greg Ferrara (left), president and CEO of NGA.

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In the letter, the retail groups also requested guidance from the Fed on potential merchant operational responses, as member companies are being compelled to make quick decisions about customer engagement given the coin shortage.

“This is the time for the Fed to fully use its coin inventory to relieve this problem and for the Mint to redouble its efforts to ensure we replenish reserves at the Fed and at financial institutions,” Ferrara stated. “These are unprecedented times in our country’s history, and yet, despite the disruptions and challenges brought on by the current pandemic, independent grocers continue to overcome obstacle after obstacle to serve their communities.”

In its June 11 announcement, the Fed said the coronavirus outbreak “significantly disrupted” the supply chain and normal circulation patterns for U.S. coinage. Starting on June 15, the Fed and its coin distribution sites began allocating supplies of pennies, nickels, dimes and quarters to depository institutions as a temporary measure to ensure a “fair and equitable distribution” of existing coin inventory.