US/Canada Currency Question

[steviep24]

Why is it that merchants in Canada will readily accept US dollars (they convert it and give you Canadian money back in change) but merchants here in the US refuse to accept Canadian money except for smaller coins?

[kunilou]

Which part of the U.S. are you talking about? I imagine your chances of finding someone who'll take Canadian money are going to be better in places like Pembina, ND and Bellingham, WA than, say, Atlanta.

[steviep24]

Originally Posted by kunilou

Which part of the U.S. are you talking about? I imagine your chances of finding someone who'll take Canadian money are going to be better in places like Pembina, ND and Bellingham, WA than, say, Atlanta.

Western New York State which borders Canada.

[Hari Seldon]

Basically, it is the fact that the US is ten times as large is the answer. Assuming, say that 10% of Canadians visit the US every year and 10% of Americans visit Canada, and, assuming that the disparity in the number of businesses is also factor of ten, you would have that the average Canadian businessman will see 100 times as many Americans as the average American business will see of Canadians. Thus the Canadian businessman is simply more likely to deal with Americans that vice versa. If you go to a business near the border in, say, Plattsburg, NY you will find the businesses more accommodating. Also, 90% of Canadians live within 100 miles of the border.

[samclem]

Originally Posted by steviep24

Why is it that merchants in Canada will readily accept US dollars (they convert it and give you Canadian money back in change) but merchants here in the US refuse to accept Canadian money except for smaller coins?

BAnks in the US, generally, will exchange paper currency at favorable rates. Coins, not at all. They have to send it back to Canada by post, and that costs money.

[apollonia]

Certainly not every place in Canada will take American money. If you're in a border town visiting from the US to shop, or in a tourist spot, then you'll probably find a place that accepts US currency. If you're anywhere else in Canada...they probably won't.

[t-bonham@scc.net]

I remember visiting Canada from northern Minnesota many times as a child. Never had any problem with stores on either side of the border accepting money from the other country.

Except that there was always an exchange rate, for example, the American dollar was only worth 96¢ in Canada, so you had to pay a bit extra. Then when you came back into Minnesota, and had a pocket full of Canadian money to pay for something, there was again an exchange rate, so you had to pay a bit more in Canadian money.

Somehow, it always seemed that this 'exchange rate' was against you -- you had to pay a bit more. I wonder if merchants near the border were using this to make a little extra profit from tourists?

[Lord Feldon]

Originally Posted by t-bonham@scc.net

Somehow, it always seemed that this 'exchange rate' was against you -- you had to pay a bit more. I wonder if merchants near the border were using this to make a little extra profit from tourists?

Exchanging currency isn't usually a free service, so it's always "against you" in the sense that you won't ever break even if the exchange rate stays the same. And realistically, none of the stuff you bought from the merchant was sold at cost, including the local currency that you bought.

[Disheavel]

Also don't forget that the Canadian dollar is less than the U.S. dollar (1.03CAD = 1.00USD 8.June 2012). So accepting the U.S. dollar on a 1:1 basis will cover your conversion fee persumably or be closer to it anyway.

[dtilque]

When I was growing up, Canadian coins circulated fairly freely at par in the US. And not just in areas right on the border. I got a lot of Canadian coins in Spokane, which is a ways away from the border.

Then sometime in the 80s (I think), the Canadian dollar dropped to an especially low value, to somewhere below 60 cents, IIRC. At that point, some "entrepreneurs" started to take advantage of this by going,to Canada, buying rolls of coins, and turning them in to banks in the US at par. I think they usually diguised them by replacing the end coins with the appropriate US coin.

It didn't take long for the powers that be to take notice. Soon the Federal Reserve dictated to banks that they wouldn't take any more Canadian coins. Canadian coins disappeared from US circulation almost overnight. Except for pennies -- no one cared much about those.

That's why banks won't take Canadian coins. Also why lots of banks won't take already-rolled coins. They want to run them through their own coin counters which will reject Canadian coins.

[md2000]

The Canadian dollar hit a low in the mid-80's, IIRC, of about 63 cents. So Canadian quarters are really only 17 cents US at that rate. Why take something at par that was that much less? While Canadian coins look the same size, they are different enough that vending machines can discriminate, also making them useless.

Also, most Canadians live within an hour's drive of the USA. Most Americans are more that an hour from Canada. American stores are cheaper usually, and have a far wider selection of goods, since Canada is dominated by a few conglomerate chains with lazy buyers. (hyperbole) As a result, more Canadians want to shop in the USA, and so will accept US money because they know they can use it.

(When my wife worked at a restaurant, she was allowed to buy US money for what the place had exchanged it for - 62c/$1 meant $1US was worth $C1.61 but the place took them at 75c, meaning she could buy them for $1.33C. The owner didn't care, he rarely went to the USA and the banks would charge him almost as much for the conversion. That was a deal! However, they still only gave the exchange for bills. Coins at par, so we also had baggies of coins bought at par. )

[Polycarp]

When I was a kid, around 1960, my father and I were into coin collecting big time. He would get large quantities of small change from the propritors of the local bus compny, who were neighbors, and go through it looking for rare or high qualiuty coins. (We got a `909 VDB cent in about-uncirculated condition out of this once.) Canadian money was about at par at the time, and circulated relatively freely in our small city, about 30 miles from the Canada border. Wiorkling from 5-0year-old memories,

1-cent
0-50-% US Lincoln memorial Cents (We started collecting the last year of wheat cents, but by the time we stiopoped, half the coiuns were memorial-reverse cents)_
70-20-% US wheat cents
28% CDN maple leaf cents (about 2:1 Elizabeth II over George VI)
1% George V Canadian cenyts
1% US Indian Head cents
-0/0-1% Belgian 5vme 'fez' liberty-cap coins (No idea why these showed up, but they did, at about 1 per 10,000 coins)
0.091% Newfoundland sundew cents

5 cents
~75% US Jefferson nickjels
15% Canadian beaver nickels
7% US "Indian head" nickels
1% Canadian war4time 'V' nickels
0.01% Canadian Arnprior-mine nickels

10--cent coins
65% US Roosevelt dimes
20% Canada bluenose dimes
15% US Mercury dimes

25 cents
756% US Washington quarters
15% Canadian caribou quarters
1-0% US Liberty standing quarters

50 cents
60% US Ben Franklin halves
39% US Liberty walking halves
1% Columbian Exposition halves (Yes, they did circulate = rare, but by noi means unheard of)
Canadian halves did not seem to circulate. Even US halves were rare in change.)

US Peace dollars were all that we saw, and they were more in the nature oif 'gift' coins than regularly circulatuing currency.

As a kid, I saw virtually no Canadian bills in circulkation, but this may have been n artifact of my age, not of actual commercial practice.

[steviep24]

Thanks for the info guys.

Originally Posted by Hari Seldon

Basically, it is the fact that the US is ten times as large is the answer. Assuming, say that 10% of Canadians visit the US every year and 10% of Americans visit Canada, and, assuming that the disparity in the number of businesses is also factor of ten, you would have that the average Canadian businessman will see 100 times as many Americans as the average American business will see of Canadians. Thus the Canadian businessman is simply more likely to deal with Americans that vice versa. If you go to a business near the border in, say, Plattsburg, NY you will find the businesses more accommodating. Also, 90% of Canadians live within 100 miles of the border.

This will explain why I can spend US dollars freely in Niagara Falls or Toronto but when I return home to Rochester, NY (which is about 3 1/2 hrs drive from Toronto) I can't use Canadian dollars here. Not really a big deal for me, I just spend it the next time I go to Canada.

[Cat Whisperer]

Originally Posted by Disheavel

Also don't forget that the Canadian dollar is less than the U.S. dollar (1.03CAD = 1.00USD 8.June 2012). So accepting the U.S. dollar on a 1:1 basis will cover your conversion fee persumably or be closer to it anyway.

At the moment - for the last five or so years, the Canadian dollar has been at par or higher than the USD. Taking USD at face value can be used as a tourist feature here - I've seen that, and I've also seen signs telling people what the current exchange rate they can expect (for example, USD accepted at 90 cents on the dollar). USD usually are accepted here, but on the merchant's terms.

Originally Posted by steviep24

Thanks for the info guys.


This will explain why I can spend US dollars freely in Niagara Falls or Toronto but when I return home to Rochester, NY (which is about 3 1/2 hrs drive from Toronto) I can't use Canadian dollars here. Not really a big deal for me, I just spend it the next time I go to Canada.

I think your question was basically answered with the answer that the US is ten times the size of Canada - it doesn't matter much to US merchants if they get Canadian tourism, but it matters to Canadian merchants if they get US tourism.

[Raygun99]

Originally Posted by apollonia

Certainly not every place in Canada will take American money. If you're in a border town visiting from the US to shop, or in a tourist spot, then you'll probably find a place that accepts US currency. If you're anywhere else in Canada...they probably won't.

I grew up a significant distance from the US border, and while I couldn't say for certain that every business would accept US currency, I would say that most would, and "US currency accepted at (x%)" signs were common.

[minor7flat5]

Originally Posted by steviep24

Western New York State which borders Canada.

As a kid, I remembered Canadian coins freely circulating in Michigan, so when I moved to Upstate New York I was surprised that folks did not accept Canadian quarters—as in "what's wrong with these people, it's just a Canadian quarter" kind of surprised.

[Capt Kirk]

FYI just a note about exchange rates, I deal with this all the time. The posted daily exchange rate is the rate for currency traders, no one actually gets this rate not even banks. For example on return from Europe official exchange rate was appx $1.32 to the Euro, bank gave us $1.29 IIRC. The banks have costs associated with currency exchange, they have to return the currency to the host nation(the robbery at JFK in the 70's stole cash coming back to the US) and these costs are passed on to the retailer who accepts foreign currency(probably with a profit margin). The retailer who accepts foreign currency is just doing it for their customers convenience and may well lose a little bit for it.

[t-bonham@scc.net]

Originally Posted by Capt Kirk

The retailer who accepts foreign currency is just doing it for their customers convenience and may well lose a little bit for it.

Most retailers on the northern Minnesota-Canada border don't -- they seldom use any bank 'exchange service'. They just give the Canadian money as change to people going north into Canada, and accept American money from people coming into the US. Mostly, it balances out.