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A two-metre-high mural in the shape of a penny is displayed at the Currency Museum of the Bank of Canada. It’s entirely made up of over 16,500 individual pennies.

The penny is beginning to drop.

Canada's most ubiquitous coin will play a dwindling part in everyday business beginning today, as Ottawa phases it out to cut costs. The passing of the penny will affect the full spectrum of the nation's economy, from big banks to the corner store – forcing businesses and consumers to change some of their habits.

Some retailers are spending hundreds of thousands of dollars to revamp their cash-register systems to automatically round total cash purchases to the closest nickel and train staff about the changes.

But many smaller shops are far from prepared for the overhaul, and will count on cashiers to calculate the rounding manually, potentially slowing the checkout process.

Ditching the penny will inevitably cause confusion in the coming weeks as retailers adopt an array of different strategies to deal with the move. Discount giant Wal-Mart Canada Corp. will continue to take and give change in pennies until next month, when its systems will start to automatically round out total cash transactions (including tax) to the nearest five cents.

Grocery titan Loblaw Cos. Ltd. will begin this week rounding down cash purchases to the closest nickel. And Sears Canada Inc. is leaving its cashiers to manually figure out the rounding, without current plans to update its systems.

Most major retailers, including Tim Hortons, will round cash transactions to the nearest five-cent increment. But the coffee chain, which still does most of its business in cash, will stop giving out pennies as change this week, although it still will accept them.

"It's one more nuisance to deal with," said Kenric Tyghe, retail analyst at Raymond James Ltd.. "The retailer with the most advanced, flexible systems wins."

Overall, an estimated 22 per cent of merchandising transactions are done in cash, the Retail Council of Canada says. Retailers that deal mostly with smaller purchases, including dollar stores and convenience chains such as Alimentation Couche-Tard Inc., tend to do a higher proportion of their business in cash.

The Royal Canadian Mint stopped producing new pennies in May. After Monday, it will stop shipping them to retailers and banks, saving the federal government about $11-million a year in production costs.

The move was announced nearly a year ago in the federal budget. Still, Canadians are mostly in the dark about the death of the penny, according to a recent poll commissioned by Home Depot Canada.

It found 88 per cent of consumers don't know the penny is being phased out of circulation after Feb. 4 and 41 per cent don't know what retailers are doing to manage the change.

"I think it will be more of a transition for customers" than for retailers, said Calvin McDonald, chief executive officer at Sears Canada.

Ottawa has given retailers some flexibility about how to calculate transactions. Home Depot, for example, will round down to the nearest nickel for its sales and round up for returns.

Most retailers, however, are following the federal government guidelines and rounding to the closest five cents.

"If retailers all go a different route, it could get complicated for the customer," said Jim Thompson, chief operations officer at Wal-Mart Canada. "That's why we adopted the government's rounding."

Wal-Mart is moving to rejig its cash register systems to ensure that the changeover during March and April will be smooth, he said.

"I can't afford the slowdown at the checkouts of having people sitting there with a calculator trying to figure it out," Mr. Thompson said. Thirty-eight per cent of its transactions are in cash.

Most merchants – 66.8 per cent – won't spend the money to change their registers and will just do the rounding manually, a retail council survey found.

Research in countries such as Australia and New Zealand that have eliminated single-unit coins has found rounding tends to even out wins and losses, according to a 2010 report of the Senate finance committee that studied the impact of dropping the penny.

In the long term, businesses will enjoy savings, including staff having to do less counting, wrapping and depositing of coins, it found. Even so, "there certainly will be more costs than there will be savings," said Diane Brisebois, president of the Retail Council of Canada.

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