This is the new design of the U.S. penny being minted now. The kicker? According to this March 2008 ABC News article, “It costs almost 1.7 cents to make a penny,” according to U.S. Mint director Ed Moy. Each year, the U.S. Mint makes 8 billion pennies, at a cost of $130 million. American taxpayers lose nearly $50 million in the process. The penny’s not alone. It costs nearly 10 cents to make a nickel.
Why not just ditch the penny? “One reason there is a lasting attachment to those coins is because they are a part of our country’s history,” Moy said in that article. I’ll accept that or some of the other things I’ve read that it will kickstart inflation. Why? Because sellers will “round up” and not “round down” with prices so there will be an immediate jump in costs for everything from toothpaste to TVs.
How could technology make our paying with pennies more efficient? With more and more of us walking around with smartphones, micropayments may be one answer. This would be a method where each of us would have an account that incremental sums (i.e., amounts in pennies) would be sent to or subtracted from during a transaction. I shudder, however, when I think about all the systemic and behavioral changes something like that would require.
Funny (and admittedly tangential) story about pennies happened when I was 16 years old. There was a guy who owned a gas station near our house and he was a complete jerk and especially so to young people. My friend Jeff and I were in his Mom’s car and stopped for gas. The guy inadvertently put in $10 worth in the tank and we had $5 with us and Jeff had told him he wanted $5 worth…but the guy then blew his stack and threatened to call the police on us until we agreed to go get the $5 and come back (he also wrote down Jeff’s license number).
We came back an hour later and Jeff handed him a jar with 500 pennies. “Goddammit!” the owner screamed. “I don’t have to accept these pennies!” but Jeff put it on the counter and we turned around and left. The owner never did anything and, in fact, was out of business two years later (I assume for being a jerk and driving customers away).
When I think about micropayments, I’d actually like having an online slush fund for paying a penny, nickel or dime to read an article online. This would be trivial to do and might help fund an otherwise declining media base. But another thing to consider with payments becoming virtual are the privacy, free speech and other concerns. For a complete and exhaustive paper on the subject, read The Digital Imprimatur by Autodesk founder John Walker from 2003.