The cent or "$0.01" in financial terms will continue to be used in all financial transactions no differently than before the government decided to eliminate the one cent coin from circulation. The thing that will change when business transactions are settled is the amount you will pay when using cash.
Retail, wholesale, and all other transactions will be valued no differently than they are now. Businesses will determine pricing the same way, and they will apply Sales Taxes the same way, and you would not pay a different amount if using a non-cash method of payment.
For example, if you bought a jar of peanut butter from the corner store priced at $4.99, plus the sales tax of $0.65 (at 13%) for a total of $5.64. Before and after the elimination of the penny the Cash Register would say that you owe $5.64. If you paid by cheque, gift card or an electronic method of payment, the payment amount would remain at $5.64 no change. $5.64 is still the amount that would come out of your bank account, be charged to your credit card statement or the amount your gift card would be reduced by. The only time the five cent rounding would come into play would be when you decide that you will pay with cash.
For many of us that don't use cash all the time when making purchases, the elimination of the penny will be hardly noticeable at all. If you pay your utility bills, insurance or other bills electronically you will not even notice the penny is gone. What will have changed is that there will no longer be a "physical or tangible" one cent coin that you can hold in your hand, the one that used to fill your pockets, jars or piggy banks. But... the one cent denomination will live on in the digital world as a virtual denomination indefinitely.
Retailers will have absolutely no incentive to use the elimination of the penny as an opportunity to increase prices because all their accounting systems, pricing lists, suppliers prices and other purchases will continue to be to the nearest cent for them as well. The thing that will change is when you pay cash the amount that you pay will just be rounded to the nearest five cents, so you will no longer have to carry pennies around. There will be no winners or losers when rounding as all the transactions will, on the whole average out so your purchases over time will cost the same.
Table 1 below for example shows 11 items run through a Cash Register for illustrative purposes. For the items highlighted in red you would pay one or two cents more when the Cash Register price ends with a 3, 4, 8 or 9, or for the items highlighted in green you would pay one or two cents less when the Cash Register price ends with a 1, 2, 6 or 7. Where the Cash Register price is already at either zero or five, there is no difference. It all averages out. For the 11 items in table 1 below the totals add to the exact same amounts, no difference.
Table 1 - Example
Rounding to Nearest 5 Cents
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Item #
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Cash Register Price
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Cash Tendered
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Difference
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1
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$ 21.10
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$ 21.10
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$ 0.00
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2
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$ 21.11
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$ 21.10
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$(0.01)
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3
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$ 21.12
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$ 21.10
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$(0.02)
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4
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$ 21.13
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$ 21.15
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$ 0.02
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5
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$ 21.14
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$ 21.15
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$ 0.01
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6
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$ 21.15
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$ 21.15
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$ 0.00
|
7
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$ 21.16
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$ 21.15
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$(0.01)
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8
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$ 21.17
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$ 21.15
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$(0.02)
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9
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$ 21.18
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$ 21.20
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$ 0.02
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10
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$ 21.19
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$ 21.20
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$ 0.01
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11
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$ 21.20
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$ 21.20
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$ 0.00
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$232.65
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$232.65
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$ 0.00
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Don't get me wrong, I like collecting coins including one cent coins, but they are no longer economical nor cost effective to use in business transactions. The elimination of the penny is a welcome move for the economy, in addition, we all want to see the government use our tax dollars wisely, if they can save money eliminating the one cent coin, then they are putting our tax dollars to better use. Kudos to the government for doing this, it should have been done 20 years ago. It will only be a matter of time before our US neighbours to the south do the same thing.
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