Irish Town Loses Its Two Cents

By Chanel Smith EMEA Editor (@PYMNTS_EMEA)

The Irish town of Wexford is testing its luck as more than 240 businesses have decided to cut one- and two-cent coins during a rounding trial.

The initiative is part of Ireland’s National Payments Plan that was released by its Central Bank earlier this year, reported Finextra. The motive behind the plan is to bolster the country’s economic stability by moving away from a cash and check culture, and towards an alternative payments system. The coin experiment will give Central Bank officials a better idea of how the reduction of small change will affect the economy, and whether it will be for the better or worse.

The trial will take place between September 16 and November 17 of this year, and will require all cash transactions at participating shops to be rounded to the closest five cents. However customers in Ireland have the option to refuse participation.

The Central Bank reported that one- and two-cent coins are a burden for merchants and consumers to carry around, and claimed that the production costs exceeded the value of keeping such coins in circulation.

“A one-cent coin costs around 1.7 cents to mint, so it costs more to make than its face value,” Ronnie O’Toole from the Irish Central Bank explained to the BBC. “A two-cent coin costs slightly more than two cents to make, so they’re not cheap.”

The rounding trial in Wexford will give the bank the opportunity to assess how the reduction of coins will affect the market. It will also give them a chance to gauge both consumer reactions and merchant workflow.

Senator Feargal Quinn said to Finextra, “For many, one- and two-cent coins are a nuisance and I have questioned their relevance for some time. However, they are legal currency, so any proposal to change how we use them nationally needs to be well thought through and we must have resolved any practical problems that might arise.”

To read the full story at the BBC or Finextra click here.