Heads Up! The New Dollar Coin Is Here
The Mint hopes Americans will go for the gold.
By Lisa Arnseth
After long months of planning and research, the U.S. Mint is debuting the new golden dollar coin this month. The design features Sacagawea, a Shoshone Indian who helped lead Lewis and Clark on their expedition to the Northwest Territory.
According to a study conducted by Oxford Associates for the U.S. Mint, of all the industries that will be utilizing the new dollar coin, carwashing was deemed to be the area with the greatest potential use. The reasons for this include the number of carwashes involved and the positive reception the Mint expects to receive from this industry.
At recent regional meetings, talk of the new coin ranged from ecstatic to pessimistic. Kevin Reilly of Reilly's Buggy Bath Carwash in Stockton, CA, speaking at the Western Carwash Association convention, said, "The new coin will impact as much as the foam brush did 20 years ago."
At the same show, Fiesta Car Wash manager Jim Brewer from Mesa, AZ worried about the timing of the coin as well as its effectiveness. "I don't know if the public will want to be carrying around a bunch of heavy coins instead of bills."
Other operators--and manufacturers--are taking a wait-and-see approach to the coin's debut. Tom Coutre of America's Best Car Wash in Arlington Heights, IL has been spending the past several months trying to inform his fellow self-service operators of the facts surrounding the new golden dollar and what to expect. Coutre says that he feels that historically the self-service industry has been "slow to react" on certain issues, and that it could happen again with the new coin.
"Operators are in disagreement as to whether or not the dollar coin will actually make them more money," Coutre says. "Without the incentive of making more money, it's hard to get people to spend more money on a coin acceptor or upgrade a bill changer so it will handle the new coin."
The key to the coin's success is in the hands of the general public. Since the Susan B. Anthony endured such a chilly reception, many in the coin operating and vending industries are wary. A real concern is that there won't be enough of the new golden dollar coins actively being used in retail circulation to make a difference.
Rowe Manufacturing vice president Tom Kozlik says, "If the Federal Reserve gets all the retail shops to start using them, and you put them into heavy circulation so you see them every day, that's when you're going to see them getting popular in laundromats and carwashes."
The government is aware of the uphill battle the new dollar coin has to overcome the legacy of the Susan B. Anthony. It has been doing its homework to find out how to make the coin more appealing. The U.S. Mint has conducted market research on this issue and is also launching a nationwide publicity campaign that will include print, television and radio advertising.
According to a U.S. Mint press release, 65 percent of American adults expect to receive and use the new coin in retail transactions, and 30 percent will prefer to receive the golden dollar over the dollar bill when getting change in a transaction. Jim Benfield, executive director of the Coin Coalition in Washington, DC cautions that these figures are optimistic but not necessarily an indication of how the coin will actually perform once it is released.
Benfield, who has been pushing for the golden dollar coin for years, says he would prefer a commitment from retail to use the coin. "It's difficult to say what's going to happen," he says. "It's like saying you expect to have a good time when you go to see a movie."
Technically speaking
Out on the lot, the new golden dollar coin should behave similarly to the Susan B. Anthony because the Mint has gone to great lengths to recreate the same electronic signature to minimize the impact on change machines and their manufacturers. Although the new coin will be different to the touch, the copper, zinc manganese and nickel cladding over a copper core alloy can be read by most machines that accept the Susan B. Anthony. Advances in coin-reading will help to cut down on counterfeiting and rejection.
Some manufacturers, such as IDX, Inc., use optic sensors to read coins as they fall into the machine in several different ways. For example, IDX reads the signature of a coin in three places--the leading edge of the metals, the center metal and the trailing edge metal. Operators concerned that their current acceptors can only read a certain number of coin signatures can, in most cases, have the machines retrofitted or programmed for the new coin by most manufacturers.
Buying a new coin acceptor is an option too. Coutre says that in his research, he found that the general price range for acceptors starts under $200 and goes up to about $285 for electronic models. There are also non-electronic high performance acceptors, which use an electrical switch that is fired when the coin passes by. When it comes to sorting, machines are running much more expensive.
Mike Oliver, sales manager at IDX, Inc. in El Dorado, AR says sorting with the new golden dollar shouldn't be any different than before. "Obviously a manual sort will be easy because of the golden color," he says. Although some coin sorting mechanisms cost as much as $2500, it is ultimately operator preference that determines what works best--and most manufacturers are saying the same thing as the acceptor manufacturers. Most sorters that currently handle Susan B. Anthony will be fine with Sacagawea.
The options increase
While many operators may be planning to move their prices to one dollar increments once the coin comes into circulation, still others are planning to accept multiple coins and tokens. Coutre says, "I think most operators are going to opt to have both quarters and dollars. When you limit yourself to having dollar incremental increases, it's pretty tough to jump from $2 a cycle to $3 a cycle." Coutre is concerned because a competitor with more flexibility down the street would be able to go from $2 to $2.25.
Kozlik says that he is seeing a geographical split when it comes to who plans to use the dollar coin exclusively. "My gut feel is that we're going to get some operators that jump on the bandwagon, primarily in the Northeast," he says.
While Kozlik cannot pinpoint the exact reasons that most interest in the new golden dollar coin comes from this area, he does think mechanical issues are the main driving factor. "As a manufacturer, I would much rather have 100 dollar coins going through my mechanism than 400 quarters. It's less wear and tear by a factor of about 75 percent," he notes.
Not only will the coin acceptors benefit from the reduced strain, but so will operators' backs. A bucket holding $1,000 in quarters weighs about 50 pounds, while $1,000 in dollar coins weighs in around 17.5 pounds, according to Benfield. Also, the coin is much more durable in the long run, as a coin will last for up to 30 years, and the average dollar bill has a lifespan of only about 18 months.
The "fewer-coins" argument is fairly strong, and not only do enthused operators agree with manufacturers but it appears the public may benefit as well. Oliver says he knows of an East Coast operator who has been using Susan B. Anthony coins and tokens valued at $1 for years who manages to get the majority of the business in his area. He says that the customers at this wash seem to prefer the convenience that comes with fewer coins to handle.
"Just think, you've got $5 and you don't have to worry about chasing them down all over the place if you drop them," says Oliver. He says that he has encountered some resistance to the new coin from some distributors because they are saying that their customers have been telling them they don't want the new coin. According to Oliver, "I find that when you talk to the customers they do want the new coin. Distributors are as much at fault as anybody in getting the carwash operators enthused about it. The key is getting the operators excited."
So with all the talk about how useful the new coin could be and how it can help carwash business, what happens to the dollar bill? Kozlik says he is doubtful that the coin will ever replace the paper bill, but he does think doing so would make sense. "If you look at almost any other country in the world, they don't co-circulate a bill and a coin. We're the only country that seems to think that's the right way to do it," he says.
Looking to other countries for an indication of how the golden dollar coin will perform offers an interesting perspective. Canada eliminated its dollar bill in favor of the Loonie ($1 coin), and Benfield says that although they are positive about it now, "People in Canada were really grumbling when they pulled the one dollar bill."
In Bermuda, a dollar coin was a huge disappointment until the equivalent bill was removed from distribution. Economically speaking, it would be cheaper on taxpayers if the Mint produced only one form of the dollar, but before that could happen Benfield warns the United States would have to go through a "squeal period," when the general public, retail and coin-operating industry would likely complain about the change.
"It's a novelty," says Benfield of the new coin. "I don't know if it will be a flash in the pan or not. I think the numbers in circulation are going to be very high, and I think a lot of coins are going to disappear because of that."
Coutre originally saw the new dollar coin in a negative light, but he admits that he was "converted to believe" that the dollar coin was going to be a good thing for the carwashing industry. He spoke with Canadian and Australian operators who were flourishing under new dollar coins, but he acknowledges that in the United States it will be harder to figure out what will happen. "The only way that we can really focus using the dollar coin is by both dispensing it in our bill changers and accepting it in our coin acceptors at our locations," says Coutre.
But he does not want to switch to using only the dollar coin or going up to dollar increments on prices. He plans to install a multiple coin acceptor that will accept three coins--dollar coins as well as quarters and tokens. He doesn't want to give up the marketing edge he has with tokens, and he doesn't want to force his customers to pay three dollars the next time he has to raise prices by limiting himself to dollar increments. More importantly, Coutre doesn't want to eliminate his last coin alert.
"If I go to dollars exclusively and don't have the ability to take quarters, my last coin alert is meaningless. If you have to force them to throw in another whole buck, that's not very customer friendly," says Coutre.
Overall, manufacturers of vending machines, vacuums and bay equipment have all been working to ensure a smooth transition to the new dollar coin for those who wish to use it. Converting may mean installing new, larger hoppers to accommodate coins larger than quarters and tokens, or re-programming coin acceptors in the field. With the carwash industry considered by the U.S. Mint to be one of the main movers and shakers in making the golden dollar coin into a hit, many observers will be looking here for evidence of the next gold rush.
Dollar Coin Details
- The color of 14K gold
- A smooth edge, like the penny and nickel.
- Tactile and visual features that make the $1 coin readily identifiable. The coin will have a wider rim than any other coin in circulation.
- The diameter will be 26.50 mm (1.043 inches), the same as the Susan B. Anthony.*
- The thickness will be 2.00 mm, the same as the SBA.
- The weight will be 8.10 grams, the same as the SBA.
- The metallic content will have exactly the same electronic footprint as the Susan B. Anthony, which means the golden dollar and the SBA can circulate side by side in coin validation equipment and all coin handling processes.
Note: Tokens should not be manufactured within 1.018 and 1.069 inches. The United State Mint's Final Statement of Treasury Policy Regarding the Use of Metal Tokens can be found on page 28679, Federal Register of Monday, July 15, 1985.
For more information and updates on these issues:
The Coin Coalition:
www.coincoalition.org
(202) 783-5595
The United States Mint:
http://www.usmint.gov/dollarcoin/default.htm
(877) 357-2646