After being in circulation for 30 years, the British £1 coin is set to retire and be replaced by a new 12-sided, more secure counterpart, which will be introduced in 2017. Since the vending machines in the UK are adaptable to the round-shaped coins, the introduction of a new designed coin means the machines will have to be replaced. This means significant replacement costs for small businesses and the vending machine industry. According to CEO of Automatic Vending Association (AVA), Jonathan Hilder, if the new British £1 coins were to fail for any reason, technical or otherwise, the repercussions could cost the vending machine industry up to £400 million in retrofitting and related expenses.
Speaking to Wired.co.uk, he said that according to his estimations based on the design of the new coin, the failure of it could cost the vending machine industry “four or five times” more than what it had cost them when the five and 10 pence coins had failed when they had been converted to nickel-plated steel from the earlier cupro-nickel. In 2012, the nickel-plated five and 10 pence had proven to be a failure due to technical issues, which cost the vending machine industry approximately £80 million, according to the British treasury.
Hilder, who represents 200 of the British vending machine firms, said that even the £400 million cost estimation for the vending machine industry, in retrofitting and related expenses to gear up for the new £1 coin, was a modest calculation as the real expense on replacing the existing pound coin may rise much further. “This cost would be no added benefit for the industry,” he added.
The British Parking Association expressed similar reservations. Kelvin Reynolds, of the association, said they could incur expenditures worth £50 million in the process of converting the parking meters to accept the new £1 coin, which is to be 12-sided as compared to the present round shape of the currency.
Federation of Small Businesses National Chairman, John Allan, also voiced concerns about the costs that small firms may have to bear to replace machinery to accommodate the new £1 coin. Nevertheless, he also stated that counterfeit currency have posed to be a bigger threat for the businesses, especially firms that deal with low-priced items have suffered serious damage in terms of revenues. He said fake currencies are not only worthless but businesses can face prosecution charges if they are passed on.
A representative of the British Retail Consortium pointed out that the change would mean a huge transition both for the people and the government and therefore, it would have to be “effectively planned and managed in order to minimize hardware costs for businesses.”
With 400,000 machines being operated by small firms in the country, the cost is expected to mainly fall on them. Anything from supermarket trolleys to soda vending machines to pay-phones to train tickets operate using the £1 coin and will have to be changed, he said.
Meanwhile, even though the Royal Mint has not revealed how much it will cost to make the new coins, it did confirm that £2 million have already been invested developing the new security techniques used on the machines. Head of circulation at the Royal Mint, Andrew Mills, has estimated the expenditure to change each machine would cost approximately £10 to £12, with the cost of changing all the machines in the country estimated to be between £15 and £20 million.
With the costs of the changes estimated to be so high, was it necessary to introduce the new £1 coin? According to the Royal Mint it is pivotal, as approximately three percent, £45 million worth, of the existing £1 coins are counterfeits, which is costing the national exchequer exorbitantly. Based on the design of the three pence piece that discontinued circulating in the 1970s, the new £1 coin is being claimed to be “the most secure in the world.”
Among its prominent features, the new coin will be constructed from different metals and will have the same gold and silver colors as the euro. Moreover, its 12-sided shape will make counterfeiting the coin more difficult. As with all coins in circulation, the new coin will also have Queen Elizabeth’s face on the head side of the coin, while for the reverse, the tail side, the design is yet to be decided – through a pubic competition. With such significant changes to the new British £1 coin, it is no surprise that the vending machine industry is concerned for the possible failure of the coin, which may cost them up to £400 million or more in expenses – certainly not just loose change.
By Faryal Najeeb