Op Ed
"Effects of Price Rounding on the Economy" ....
in response to the arguement on "Americans for Common Cents"
... "Money Penny", "The Penny's Economic Importance" .. "Effects of Price Rounding"

(See Article)

Quote.. "Merchants would have an incentive to set prices that ensure rounding up on single item cash purchases. Consumer inflation hits low income and fixed income groups the hardest."
The fallacy with this statement is that, as of 2024, somewhere between 60% and 80% of all merchant transactions are handled via computerized point of sale (POS) terminals. All POS software currently round (up or down) all transactions (after sales tax) to the nearest penny. If we were to stop using pennies, all that would happen would be that merchants would simply configure their POS systems to round to the nearest nickel instead of a penny. Mathematically, if roughly half of all odd cent transactions are rounded up and the other half rounded down, this would make the net annual economic effect just about zero.

Also, for argument sake, if the average of all 800 million weekly merchant sales transactions across the country is $45.38 and we were to only round up the $.02 cents to the nearest nickel, the average transaction would be increased by 0.044% (4 hundreths of a percent). Heck, normal inflation is 1% or more, so normal inflation is 23 times greater than if we only rounded up. But POS software rounds up and down, so the net effect would be effectively 0 on the average annual cost-of-living.

Also, whoever made this statement apparently was never a merchant. Merchants set prices all the time to maximize their profits. Many have some very sophisticated pricing models based on time of day, time of year, sales, coupons and more. Wal-Mart does its pricing based on super low prices and high volume. I would be willing to bet you that the tiny profit from rounding up would virtually never enter into the equation. Rounding has already been going on for years. I know many taverns and bars have been rounding to a quarter for years. You virtually never see them digging in their cash draw for nickels and dimes for change. One merchant I know rounds all transactions to a dollar. Their rounding has less to do with making a little more money and more to do with saving time and making merchandise pricing easier.
Quote..The effect in dollar terms on the government and private sector could be significant, perhaps totalling over $2 billion after five years. (This is the most conservative estimate possible based on purchases by adults 18 years of age and older. It does not include transactions by the population below 18 -- a group that makes even a larger proportion of expenditures in cash.)"
Zero (0) is still zero.
Quote.."Although rounding might only have a minimal effect on the Consumer Price Index (CPI), in dollar terms even a seemingly small effect could mount over time to a considerable sum given that virtually all government outlays (i.e., social security and welfare benefits) and many private sector costs (i.e., wages) are indexed to the CPI."
Zero (0) is still zero. All payments (private and government) should be rounded to the nearest nickel also.
Quote.."Increased prices due to rounding ultimately would fall disproportionately on those least able to afford it, the poor and the elderly, because they make more small cash purchases."
Zero (0) is still zero.
Quote.."Rounding will have a large economic toll requiring public education programs, retraining of employees, and reprogramming computer cash registers and other automated equipment."
Our members report that it took about 5 seconds of retraining per employee. "Do nickels, not pennies.." training done. Several POS software vendors already support this option in their existing systems and other POS software vendors would take about an hour to add it to their products.
We would like to hear from you if you feel strongly about ending the use of the penny. Just EMAIL US your OpEd piece that can appear here on this page.
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