FMI -- The Food Industry Association and the National Grocers Association (NGA) were among the retail trade associations to send a letter to the U.S. Department of the Treasury and the Federal Reserve, asking the federal policymakers to take swift action in response to a nationwide coin shortage caused by a decline in cash transactions for retail purchases amid the coronavirus pandemic.
The trade groups, which also included the International Franchise Association, the National Association of Convenience Stores, the National Automatic Merchandising Association, the Retail Industry Leaders Association and the Society of Independent Gasoline Marketers of America, called on Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin to release more coins from federal inventory or boost coin production to meet immediate needs.
The businesses that these organizations represent have been designated part of the essential critical infrastructure workforce by the Department of Homeland Security during the pandemic.
“These industries need to efficiently process large volumes of consumer transactions every day and many of those transactions are paid in cash,” noted the June 23 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 letter lays out three main ways to resolve the coin shortage: 1) the Federal Reserve could distribute more coins from its inventory to ensure that economic activity isn’t disrupted; 2) the U.S. Mint could increase coin production to meet these needs; and 3) distribution of coins could be prioritized for essential consumer businesses.
“According to "The Food Retailing Industry Speaks 2019" report, nearly a quarter of supermarket customers continue to utilize cash to pay for groceries annually," observed Hannah Walker, VP of political affairs at Arlington, Va.-based FMI. "However, because of the COVID-19 pandemic, customers are less likely to 'cash in' coins stored at home, and unforeseen shutdowns also decreased production of new coins at the U.S. Mint. FMI has been in close contact with the Federal Reserve and Congress to encourage increased production of coins [and] reallocation of coins when possible, and we ask consumers to recirculate coins that may be tucked away as spare change in their homes. Many supermarkets have loose-change kiosks to allow customers to either get needed cash in return or make charitable donations, while recirculating coins to help alleviate the coin shortage.”
“Grocery continues to be an environment where consumers prefer to use cash, with roughly one out of every five transactions being paid with cash,” said Greg Ferrara, president and CEO of Arlington-based NGA, which represents the independent grocery sector. “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. 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. 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.”
The letter additionally requests guidance from the Fed on possible merchant operational responses as member companies must make quick decisions on customer engagement while dealing with the shortage.