Lack of coins causing companies to alter business models.
COVID-19 has upended many aspects of our daily lives. One unanticipated consequence is a shortage in US coins. Due in part to lowered production levels by the U.S. Mint and the reduced currency circulation caused by the national stay-at-home orders, our country is in the midst of a change shortage - a consequence of the pandemic.
TokensDirect and Van Brook, both divisions of Osborne Coinage Company that together make up the nation’s largest suppliers of tokens, exclaim that now is the time to make the switch to tokens. They say businesses that require coins for their livelihood are reconsidering their dependency, including arcade bars, FECs, vending businesses, car washes and more.
Large grocery chains are requesting patrons use contactless payment, while smaller shops are requesting exact change for purchases. Banks are being forced to ration their coin allotment and some banks are actually calling customers requesting they bring their coins in for deposit. During the lockdown, many businesses and banks that offered coin sorting kiosks, like Coinstar, were closed. As a result, loose change has stayed piled up on the dresser or collected in the change jar.
“What’s happened is that with the partial closure of the economy, the flow of coins through the economy, it has gotten all – it’s kind of stopped,” stated Jerome H. Powell, Chairman of the Federal Reserve while testifying in front of lawmakers on Capital Hill. The Fed has initiated strategic allocations of coin inventories and is working with the US Mint to increase production levels.
In the meantime, TokensDirect says it's been monitoring the situation, noting that requests for information about changing the vending model from coins to tokens has increased immensely. Companies like car washes and laundromats are particularly, though amusement focused businesses - especially Mom and Pop arcades - are impacted, too. “Companies that were considering a move to a token-based model are activating their plans and businesses," said Ted Schuh, national sales manager for TokensDirect and Van Brook of Lexington. "Those that are for the first time being hurt with the shortage of coins, are expressing interest now, too.”
The company laid out the numerous benefits to using tokens instead of actual coins - effectively insulating a company from the lack of US currency relating to this shortage or future coin shortages.
Some of the benefits they detailed included:
- Decreased theft and vandalism
Theft can occur at multiple points during the vending cycle. It could be as simple as an employee skimming quarters from the till or more problematic damage to the faceplate and cash box of a machine. As one laundromat owner expressed “Coin operated equipment only makes money when it is working.” Since tokens are not usable legal tender, the spoils of the theft are diminished, if not eliminated, by switching to tokens.
Like quarters, you can use tokens over and over, so it's all the benefits of coins without the headaches caused by the shortage.
If the token system is set up where a patron receives five one-dollar value tokens for their five dollar bill and only uses four tokens, they take the extra token home. Those walkaways are pure profit. On average a token may cost 30 cents for you to purchase. If it is sold at one dollar, the walkaway token netted you 70 cents of pure profit, as you have not used any of your machine costs, electricity or water. Mark Jolin, owner of Big Bunny’s Dunk ‘N Foam Car Wash in Southbridge, Massachusetts, says, “I annually purchased 5,000 tokens and by year’s end the number of tokens remaining in the poke is around 3,500. That means that 1,500 of those tokens have walked away. Consider that each token is a profit of 70 cents then in one year that’s $1,050 profit.”
- Marketing Tool
Another fringe benefit of walkaways is their marketing power. Custom tokens placed in the coin tray of the car or in the bottom of a purse serve as a subtle reminder that it could be time for a car wash, family event or date night. Branded tokens with your company name and address point these repeat customers to the right place and encourage return visits since the token can’t be redeemed elsewhere. Others may even find the token collectable or it may serve as a keepsake to mark a particular visit.
TokensDirect and Van Brook say they offer easy transition opportunities to convert current coin vending ventures over to a token based model. Based on the type of customized token selected, they claim that change receptacles can easily be reprogrammed to accept only your tokens.
Switching to tokens can also provide cost-savings opportunities. A change machine that holds 1,200 quarters provides $300 worth of transactions before needing a refill. If that machine is converted to hold one-dollar tokens, it can now hold four times the monetary value and the exchange transactions for a dollar increases to 4,800. If $5 gets a customer 6 tokens and only $5 transactions are programmed you will have 800 dealings before a refill. This not only eliminates the dependency on quarter change, but reduces the number of times employees have to load the machine, saving on labor.
TokensDirect knows the process of minting custom and stock tokens that result in crisply detailed impressions with accurate dimensions that exhibit electrical and weight consistency throughout every batch. Our tokens look great, work great, and accept time after time in all standard coin mechanisms.
We have a talented staff of graphic designers on site that can take a rough sketch and turn it into a workable token design. Our self-contained facility encompasses all the operations necessary to mint over 600,000,000 coins and tokens a year. We’re exceptionally proud that we make all our tokens in the USA. We do not import our tokens or materials from overseas.
Van Brook has been a token innovator in the carwash, vending, parking and amusement industries since its inception in 1964. Van Brook tokens are used in over 97 countries. Home of the CT™ and CTX™ High Security Electronic Tokens. Best used for values of $1 or more, these tokens are available with an “exclusive use” license, which means a specific token will not be sold to another coin-op business withing a 75 mile radius, reducing the issue of cross-play.
Reprinted with the permission of Replay Magazine.
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