The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Bahamas Federation of Retailers yesterday voiced several concerns with the adjustments required by eliminating the one cent coin even though it hailed the move as "a positive change".

Tara Morley, its co-president, detailed potential issues as The Bahamas gears up to cease using the coin as legal tender by year-end. In particular, she told Tribune Business there were concerns over the “return on uneven amounts” - something that merchants encounter on a fairly regular basis.

As an example, the Federation said that if a customer purchased several items costing a total of 42 cents via a cash transaction, the post-elimination "rounding" system rounds this down to 40 cents.

However, if the customer later returns one of the goods, and the retailer has to round up, the sector fears it would lose the percentage involved in rounding down and thus miss out on marginal profits. They fear losing the two cents they originally rounded down to, in addition to any marginal losses from only one of the items being returned and not the whole set.

The Federation also expressed concerns with “multi-payment method transactions”, adding: “Currently, the suggested rules anticipate differentiating between cash transactions and other tenders. However, transactions can often be mixed tender.

"For example, a customer may come in to purchase a pair of shoes and allocate a certain portion of the transaction to a credit card based on an available limit at the time, and pay the remainder in cash. This would have contradictory implications for rounding based on the current rules.”

The Federation identified lay-a-ways as another issue, adding that they also present an “obstacle” to rounding based on payment tender. While a consumer may make an initial cash payment at the beginning of the lay-away, future payments could take the form of debit, credit card or other electronic transactions.

Similarly, with “multi-payment invoicing”, the Federation said: “Similar to lay-a-ways, some invoices are paid over a period of time depending on the item. For example, a special order for a construction project may require a deposit, another payment upon arrival of goods to the island, and then a final payment upon delivery of goods.

"Or, alternatively, purchases of furniture, appliances and electronics might be purchased through in-house financing with payments and interest over a period of time. In either scenario, the invoice would be created at the time of purchase. However, the payments can be made in any tender.”

The Federation continued: “Some retailers offer in-house charge accounts. The tender of payments at the time of the charge would not be known, yet the invoice is created at the time of the sale which may result in a balance of a few pennies after payment is made depending on the tender used.

"Unlike a BPL or Cable Bahamas bill, which is a recurring monthly invoice, some retail customers may only come in once or twice a year to use an in-house charge account. This will create an unintended additional administrative burden.

“For example, the company will continue to generate and send out monthly invoices for one or two cents until such time as settlement is made on the account in full. Additionally, as the systems are designed to close or freeze an account with an outstanding balance longer than 30 days, this will create customer service issues if there is a positive balance of a few pennies," it added.

"Alternatively, if there is a negative balance of a few pennies, it will trigger additional accounting requirements to track the liability for any accounts with a negative balance of one or two pennies.

"In the event a refund is required, there are instances where it would occur in a different tender from the original transaction, which may trigger a different rounding method to be used from that of the original sale. This will result in an additional administrative burden or inconvenience to the customer.”

The Federation recommended that "to streamline the roll-out of the elimination of the penny, amounts are rounded on the total irrespective of payment tender. This will greatly reduce administrative burden and logistics surrounding the bulk of the issues raised above.

“The Central Bank has offered to revert on the above and take this into consideration. We look forward to a successful outcome to this suggestion in order to reduce the continued burden placed on businesses, and our ability to navigate in what we see as a positive change to doing business.”