ADVERTISEMENT

Walmart, Kroger Grapple With Coin Shortage, Urge Cards Instead

Walmart, Kroger Grapple With Coin Shortage, Urge Cards Instead

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 Inc. and Kroger Co. 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.”

The coin shortage could amount to a small win for card companies Visa Inc. and Mastercard Inc., 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.

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.

Fed Chairman Jerome Powell told the House Financial Services Committee last month that the central bank is aware of the issue and has been working with the U.S. Mint to get coins moving again. 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.

©2020 Bloomberg L.P.