Walmart, grappling with coin shortage, says use cards instead - Press-Enterprise

By Jenny Surane, Bloomberg

First it was toilet paper and face masks, then it was meat. The latest shortage caused by the coronavirus pandemic? Pocket change.

Retailers including Walmart and Kroger Co., the parent company of Ralphs and Food 4 Less, are grappling with a nationwide shortfall of coins that’s left them posting signs at some checkout lines alerting customers about the problem and encouraging them to use credit or debit cards — or pay with exact change, if possible.

“The Federal Reserve is experiencing a significant coin shortage across the U.S., resulting from fewer coins being exchanged and spent during the Covid-19 pandemic,” Cincinnati-based supermarket chain Kroger said in an emailed statement. “Like many retailers and businesses, we are adjusting to the temporary shortage in several ways while still accepting cash.”

Fed says it’s temporary

Federal Reserve Chair Jerome Powell took a question Wednesday about something that doesn’t come up very often in congressional hearings about monetary policy: coinage.

Representative John Rose, the Tennessee Republican, asked Powell if he was aware of the shortage of coins caused by the pandemic that he was hearing about from banks in his district.

“With the partial closure of the economy, the flow of coins through the economy has gotten all — it’s kind of stopped,” Powell said, during the hearing before the House Financial Services Committee.

“The places where you go to give your coins, and get credit at the store and get cash — you know, folding money — those have not been working. Stores have been closed. So the whole system has kind of, had come to a stop,” he said. “We’re well aware of this. We’re working with the Mint and we’re working with the reserve banks, and as the economy reopens, we’re seeing coins begin to move around again.”

Powell said he believed the shortage would prove only temporary.

Card companies benefit

The coin shortage could amount to a small win for card companies Visa and Mastercard, which were already benefiting from consumers avoiding cash over virus-transmission fears. While Kroger and Walmart are still accepting cash, promoting card use at the point of sale is unusual for many stores. Retailers have publicly lamented the fees they have to pay when consumers swipe their cards at checkout.

“What we are seeing is a negative sentiment towards cash — fewer people want to touch cash,” Mastercard Chief Financial Officer Sachin Mehra told investors at a conference last month.

Still, Mastercard and Visa have struggled as spending on their cards has slowed with consumers staying home and many businesses remaining shuttered to slow the spread of Covid-19.

Cash is still king

In the U.S., cash has remained a popular way to pay, with paper currency and coins used in 26% of all purchases, according to a 2019 study by the Fed. It’s even more popular for transactions of less than $10, accounting for almost half of such payments.

While paper currency remains easy to come by — ATMs are almost everywhere — coins are a bigger problem, with the closure of stores and bank branches squeezing supplies. While the U.S. Treasury puts the total value of coins in circulation at roughly $47.8 billion — up from a year ago — the slower pace of circulation means change isn’t always showing up where it’s needed.

This month, the Fed planned to convene a U.S. Coin Task Force, with participants including representatives from the Mint, banks, credit unions, retailers and armored carriers, to mitigate the shortage.

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