Marc-James Abi-Jaoude saved 2 cents on the purchase of a 99-cent bottle of water by cashing in on the new penny-less era.
The water came to $1.12 with taxes, but under new federal guidelines for phasing out the penny, which came into effect on Monday, retailers are being encouraged to round cash transactions to the nearest nickel. In this case, the water cost Mr. Abi-Jaoude $1.10 in cash rather than the full amount he would have had to shell out if he had paid with a credit or debit card.
"If the rules can work in your favour – why not?" said Mr. Abi-Joaude, 29, a manager at a nuclear safety instrument firm in Toronto. "It's like arbitrage: You know that you can always win."
Welcome to the no-penny world where consumers can game the system to save a few cents, one of the many adjustments that people are making as the copper coin disappears. Pay with cash to have a price rounded down, and pay with plastic to avoid rounding up. While it's only a matter of pennies, they can add up over time, benefiting the consumer and penny-pinching the retailer.
Dan Kelly, president of the Canadian Federation of Independent Business, says consumers are figuring out the best strategy.
"I suspect people are thinking about it right now because of the transition," he said. "I would imagine that's more of a novelty than a trend."
Retail industry watchers, however, predict that some consumers will continue to work the system in their favour.
"It's kind of a sport," said Augustin Manchon, a pricing strategist who advises retailers. "It's the love of the chase."
He said some shoppers will hunt down, partly on social media, ways to win the system, particularly with small transactions such as purchasing small items many times rather than all at once to benefit from the rounding each time.
Even so, retailers such as discount giant Wal-Mart Canada Corp. have said they don't plan to change their prices or eliminate those ending in 99 cents or 97 cents because of the passing of the penny. Psychologically, consumers are drawn to a product which costs $19.99 over one that's priced at $20, industry experts say.
Research has shown that in countries such as Australia and New Zealand which have eliminated single-unit coins, rounding to the nearest denomination tends to even out wins and losses, according to a report of the Senate committee on finance which studied the impact of dropping the penny.
Still, merchants are worried that consumers think that retailers are trying to cheat them out of a few cents, Mr. Kelly said. "Merchants are a little worried about what the consumer reaction will be when they implement the rounding strategy."
Most major retailers are rounding to the nearest nickel, while some – including grocer Loblaw Cos. Ltd. and Home Depot Canada – are rounding down only to the nearest five-cent increment, to the customer's favour.
Retailers are investing hundreds of thousands of dollars in upgrading their cash-register systems to automatically round cash transactions, although most smaller merchants will have cashiers calculate the rounding manually.
Frank Frese, owner of The Deli in downtown Vancouver, took Monday in stride. "In the long run, it will sort itself out," he said. "On the law of averages, there will be just as many rounding ups as downs."
And not everyone will bother gaming the system. Stephen Stone, 24, a student at Dalhousie University in Halifax, said he's more concerned about whether he has any cash at all rather than how he's going to pay for purchases. "Saving two cents is too trivial to be strategic about my payment mode choice."
THE PENNY GAME
If time is money, paying with pennies will set you back.
The Globe and Mail cleaned out drawers in its Calgary office, as well as one of the reporter's junk drawers at home in order to find enough money for snacks. (Hoarders first have to decide which pennies are worth keeping – special editions, birth years, particularly shiny coins – and which can be hauled around.)
The stakes in this game are low: A box of Nature Valley trail mix chewy mixed berry granola bars costs $4.19 at Calgary's Mission General Store. Consumers paying with a five-dollar bill get 80 cents in change, thus losing a penny. Those handing over a piece of plastic – whether debit or credit – pay the exact amount, keeping the extra cent in their bank accounts.
The corner store has a government-issued stack of cards explaining the rounding rules on hand. "For cash payments and change owed, retailers will decide how to adjust the final cash amount," the black and white card says. It provides a chart detailing "example of how rounding may be applied."
A bill totalling $1.01 or $1.02 is rounded down to $1, while a tab costing $1.06 or $1.07 is pushed down to $1.05, the card suggests. A bill costing $1.03 or $1.04 is rounded up to $1.05, while items reaching $1.08 or $1.09 means paying $1.10 cash.
The Safeway in Calgary's Mission area was accommodating on the first day of the penny's demise. The cashier helped count out 238 pennies in order to pay for three bananas ($1.05), a Safeway Select brand lemon iced tea pop (38 cents plus a 10-cent deposit) and a bag of Leiber's Chocolate Coins (79 cents Canadian for two 25-cent (U.S.) pieces and third coin without a denomination), plus tax (6 cents).
A second Safeway employee helped by sweeping the pile of pennies onto a flyer so they could take them away. Asked what she was going to do with the pennies, the cashier said: "Put them in my till." Paying with pennies, she said, was a "good idea."
The Safeway employees may have politely obliged, but paying with pennies brought impatient stares from other customers in the line. The next customers in line also paid cash, but collected the difference out of the automatic change machine.