Megan Brooks
The COVID-19 pandemic caused a coin shortage in the US, with the Federal Reserve reporting a significant decline in coins in circulation. This was due to several factors, including a curtailment in production by the US Mint, consumers' shift to contactless payments, and businesses' closure or refusal to accept cash. Banks were so low on supply that they couldn't fulfill cash-for-coins requests from people and businesses. While banks generally exchange cash for rolled coins, large orders can burden tellers and slow down services. During the pandemic, some banks offered incentives for customers to bring in coins, such as a $5 bonus for every $100 in coins.
| Characteristics | Values |
|---|---|
| Are banks accepting coins during COVID-19? | During the COVID-19 pandemic, banks experienced a coin shortage, with the Federal Reserve reporting a significant decline in coins in circulation. However, banks generally continued to accept coin deposits and exchanges, with some even offering incentives for customers bringing in coins. |
| Reasons for coin shortage | The coin shortage during the pandemic was attributed to several factors, including reduced economic activity, business closures, a shift to contactless and digital payments, and public health concerns about the transmission of the virus through physical currency. |
| Impact on businesses and customers | The coin shortage impacted businesses that rely on physical currency and coins for transactions, and some had to turn away cash transactions or offer incentives for customers paying in coins. Customers also faced challenges in breaking down large bills into coins or exchanging coins for cash. |
| Central bank response | Central banks encouraged the use of contactless and digital payments to reduce the potential spread of the virus through physical cash. Some banks even quarantined or disinfected banknotes. |
| Recommendations for customers | Customers were advised to contact their local bank branches to inquire about coin acceptance policies and exchange services. They were also encouraged to use alternative options like Coinstar kiosks, e-gift cards, or money transfer services to avoid relying solely on physical coins. |
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What You'll Learn
Banks may not accept unrolled coins
During the COVID-19 pandemic, there was a national coin shortage that disrupted the US currency system. This was due to a curtailment in production by the US Mint, as well as a decrease in coin circulation as local economies closed and consumers used cards and digital payments instead of cash. As a result, banks were very low on their coin supply and could not fulfill cash-for-coins requests.
While banks are still accepting coins, they may not accept unrolled coins. This is because banks set their own internal policies regarding whether they accept unrolled coins for currency, and some may refuse. Large orders for coins can also slow down services for other bank customers, and banks cannot make a profit by selling coins to retail customers at face value. As such, it is recommended to call ahead of time for large orders so that the local branch can have the coins ready for pickup.
Some banks, such as Wells Fargo, will exchange rolled coins for customers without a fee and offer free coin wrappers. Certain credit unions and community banks also have coin-counting machines, although some large banks like Bank of America, Chase, and Capital One no longer provide these machines for their customers.
If you are looking to exchange a large number of unrolled coins, it may be worthwhile to call your bank ahead of time to ask about their policies and whether they can accommodate your request.
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Coin shortage during the pandemic
The COVID-19 pandemic caused a coin shortage across the United States, disrupting the basic level of the country's currency system. This was due to a combination of factors, including a curtailment in production by the US Mint, consumers abruptly changing their consumption habits, and businesses closing down. The usual system, in which businesses collect coins from customers and deposit them at banks, which then send the money to the Federal Reserve for redistribution, was severely disrupted.
As local economies shut down to curb the spread of the virus, the use of paper money and coins decreased as consumers increasingly opted for debit and credit cards or digital payments. There was also initial confusion over how easily the virus could be transmitted through cash, with the CDC urging retail employees to wash their hands after handling money. A study published in the New England Journal of Medicine found that the virus was more stable on plastic than copper, a primary material in US coins.
The pandemic also affected the outflow of coins from large retailers. Self-checkout systems, which originally had scoop-shaped coin receivers, were replaced by small coin slots to discourage coin use and speed up transactions. Additionally, coin machines that charged a percentage to cash in coins further reduced coin circulation. Normally, this outflow of coins from large retailers is counterbalanced by small businesses, retail banks, and low-income households that spend coins. However, the pandemic-related closures, reduced operating hours, and loss of income disrupted this balance, resulting in a shortage of coins in circulation.
To address the coin shortage, banks like JPMorgan Chase and community banks in Wisconsin and New York took their own initiatives. These included offering incentives for customers bringing in change, stockpiling coins, and strategically transferring coins between branches. The Federal Reserve also convened a task force with representatives from various sectors to discuss ways to increase coin circulation and restock cash registers.
While the root cause of the coin shortage during the pandemic was the disruption to the usual flow of coins, it is worth noting that the overall use of coins may decrease in the long term as more people adopt contactless and digital payment methods.
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Central banks encourage contactless payments
During the COVID-19 pandemic, many government authorities and central banks encouraged the use of contactless payments to reduce the physical handling of money. There were concerns that coronavirus could be spread by paper money and coins. The Central Bank of Kenya (CBK), for example, announced that cash collected from banks would be quarantined for at least one week, and encouraged the use of cashless transactions such as mobile money and credit cards. The Central Bank of Ireland also took steps to encourage contactless payments by temporarily prohibiting the public from exchanging old or damaged banknotes, and increasing the maximum limit on contactless payments.
Central banks play a critical role in defining the standards for interoperability in the payments marketplace. By operating the core of the infrastructure, central banks control a vital part of the payment chain. In a two-tier system, commercial banks process and communicate with the underlying payment infrastructure provided by the central bank, allowing settlement on its balance sheet. Central banks can also improve the services they supply directly to users by staying at the technological frontier. For instance, central bank digital currencies (CBDCs) can serve as a complementary means of payment and a catalyst for innovation in payments, finance, and commerce.
The promotion of various technological innovations in retail payment markets, such as credit, debit, and prepaid cards, has led to a decline in cash usage in recent years. Contactless payment methods promise efficient and convenient payment services that may reduce transaction costs for consumers. As a result, contactless payments are seen as a more competitive payment alternative to traditional cash payments compared to conventional payment cards. However, it is important to note that consumers' decisions to use contactless payments are endogenous choices, and card-affined individuals may simply replace conventional card payments with contactless card payments.
The shift towards contactless payments has had an impact on the circulation of coins. During the pandemic, there was a national coin shortage in the United States, causing disruptions at the most basic level of the currency system. Banks were so low on supply that they couldn't fulfill cash-for-coins requests from people and businesses. While banks typically exchange cash for rolled coins as a courtesy to their customers, large coin requests can burden tellers and slow down services. As more people adopt contactless payment methods, it is expected that the overall use of coins will decrease.
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Banks offering bonuses for coin exchange
During the COVID-19 pandemic, a national coin shortage hit America. This was due to a curtailment in production by the US Mint, as well as a decrease in coin circulation as people spent less and opted for digital or contactless payments. As a result, some banks began offering incentives for customers to bring in their coins.
One example is Wisconsin's Community State Bank, which launched a Coin Buyback Program offering a $5 bonus for every $100 worth of coins turned in. This program was open to anyone, not just customers of the bank, and the maximum coin bonus was $500. The coins collected through this program were used to supply local businesses affected by the shortage.
Other banks that offered bonuses for coin exchange during the pandemic include JPMorgan Chase and community banks in Wisconsin and New York. These banks took proactive measures to address the coin shortage, including stockpiling coins and strategically moving them among branches.
While the coin shortage during the COVID-19 pandemic highlighted the importance of coins in the economy, it also brought to light the challenges faced by banks and businesses in managing coin circulation. Local branches often have limited coin supplies and may need to make special orders for large coin requests, causing delays in transactions.
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Coin exchange services at banks
During the COVID-19 pandemic, there was a national coin shortage that disrupted the US currency system. Banks were so low on their coin supply that they couldn't fulfill cash-for-coin requests from people and businesses.
Large banks typically require pre-rolled coins, while some smaller institutions and credit unions provide self-service counting machines. Account holders at many banks can exchange coins without charges. Some institutions require rolled coins, while others provide free access to counting machines. Non-account holders may incur fees. Most banks don't list the full details online regarding their coin exchange policies, so it is recommended to call your bank and ask about any specific policies related to converting your coins into cash.
If you don't want to roll coins and take them to your bank, you can use coin-counting machines at grocery stores and other retailers for a fee. Coinstar, for example, operates approximately 20,000 self-service kiosks worldwide and provides immediate counting and exchange services but charges significant fees.
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Frequently asked questions
Banks are generally accepting coins during COVID-19, but it is recommended that you call your local branch ahead of time to confirm their coin acceptance policy and prepare your coins in rolled form.
Banks experienced a coin shortage during COVID-19 due to a decline in coin circulation as people spent less and businesses closed down or stopped accepting cash.
If your bank doesn't accept your coins, you can try exchanging them at a different bank or credit union, or using a Coinstar kiosk to exchange them for cash, e-gift cards, charity donations, or cryptocurrency.
Yes, the World Health Organization (WHO) encouraged the use of contactless payments during COVID-19 to reduce the risk of infection through physical banknotes. Alternatives include debit and credit cards, digital wallets, and cryptocurrencies.
Banks are offering consumers bonuses for bringing in coins, stockpiling coins, and moving coins strategically among their branches. The Federal Reserve is also encouraging banks to make coin depositing easy for customers.
