It may be dubbed the "most secure circulating coin in the world to date," but the new British £1 ($1.66) coin is going to cause a headache the size of a couple of million of the coins for the U.K.'s vending machine business.
Jonathan Hilder, the CEO of the Automatic Vending Association (AVA), which represents manufacturers of vending machines, said that the cost for British businesses to change the coin mechanisms to service the new coins would have a knock-on effect for vending manufacturers – as well as costing businesses vast sums.
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"We don't have to take back the vending machines but people buying them have to upgrade," Hilder said.
"Imagine a company with 12,000 machines. They have to change every single coin mechanism. They have to put 12,00 engineers' visits on the clock, they've got to change the software, upgrade the hardware, and all of that comes out of bottom line. There is no government support for it whatsoever. So the way it will impact on machine manufacturers is there will be less money for people to buy new machines."
Hilder appreciated the need to halt counterfeit coins in the U.K., but that did not affect many businesses directly in the vending industry: "The public at the moment, if the machines reject their coins, they just move on. There isn't a huge amount of impact on the vending industry. So at themoment there is little cost to the vending industry, but there is a huge cost to change it."
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George Osborne, the U.K. finance minister, announced the proposal of the new £1 coin in his latest budget at parliament on Wednesday.The idea is to replace the current coin - which has been in circulation since 1983 - with a new 12-sided coin. This would be based on an old "threepenny bit" in the U.K. which was a coin in circulation between 1937 to 1971.
The Royal Mint estimated that 45 million £1 coins currently in circulation were fakes.
Andrew Mills, the head of circulation at the Royal Mint, said that the cost to economy of changing coin-operated mechanisms would be £15 to £20 million ($25-33 million) as machines alter their software and hardware to accepting the new coin by 2017.
Speaking to the BBC, Mills said "Our role is very important - for now it is to consult with our stakeholders and a major stakeholder is the automatic vending association. We have to make sure that, as well as being a secure coin, we look at the impact to industry and make sure that we do everything we can to make the changeover as smooth as possible."
While the AVA appreciated the long timetable given to ensuring the transition to the new coin was smooth, Hilder argued against Mills' estimate for £15 to £20 million.
"I'm not sure if Hans Christian Andersen would understand: £15 to £20 million is barmy," he said. "I'm not prepared to go into what it would be because we haven't 'costed' it yet, but if I told you that the cost of changing to the new 5p and 10p for the vending industry alone – and that wasn't even half of the machines – cost £25 million."
When the new 5 and 10 pence coins were announced in 2010 and introduced in 2012, the Treasury estimated that changing all coin operated machines would cost the industry £80 million ($132 million).
Hilder emphasized that it was not just vending machines that would have to be changed by other ancillary products such as trolleys, parking meters and payphones that would have to be altered.