The nation's coin shortage, prompted by less cash circulating as a result of Covid-19 - is getting worse.
And believe it or not, cash is still being used in 49% of payments that are $10 or below, according to a recent study by the Federal Reserve Bank of San Francisco, reported on by Bloomberg.
The irony of the situation lies in the fact that the Fed can print trillions for bonds, but can't come up with a couple of quarters to do its laundry. Despite the Fed's best efforts to keep money circulating, there is still a coin shortage in the U.S. The effects are being felt in places like laundromats, where coins are used to do laundry.
Brian Wallace, president and CEO of the Coin Laundry Association (we swear this is an actual organization), said: “This is just an unexpected wrench in the works that I don’t think any of us could have anticipated, finding ourselves short on quarters.”
Only about 20% of laundromats offer a card option and 27% accept credit cards. In other words, most laundromats still rely on coins to do business.
“The people that show up to the laundromat each weekend are there for a purpose. It’s an essential service. Anything that impedes that progress certainly impacts tens of millions of families that use vended laundry each week,” Wallace continued.
Coinstar, which processed $2.7 billion worth of coins last year, collects an 11.9% fee from customers. The company has said its business has decreased during the lockdown, but it is now starting to see a slight bounce back. And despite operating in Japan, Canada, Italy, and several other European countries, it hasn't seen the same issues outside the U.S.
“There’s something unique about the U.S. that we can’t figure out why this has come to this crisis,” says Jim Gaherity, chief executive officer of Coinstar. “I don’t refer to it as a shortage, I refer to it as ‘We don’t have coin moving.’ It’s there, it’s just not in the right place.”
Jerome Powell said in June that the shortage would be temporary, while at the same time U.S. mints spool up more production.
The Fed has, in the interim, put together a "coin task force" to liaise with companies like Coinstar to help come up with solutions. Organizations like the Coin Laundry Association have suggested the Fed distributing additional coins and prioritizing to “consumer businesses in the essential critical infrastructure workforce.”
Banks and businesses are also offering premiums and deals for turning in your coins. One Wisconsin bank is offering a $5 bonus for every $100 worth of coins that are turned in. Recall, days ago, we wrote that Chick-Fil-A was giving away free food to customers who paid in coins.