Interesting. I wondered when the Americans would come to this realization. Canada has been using other alloys for pennies and nickels for years. The nickel became 94.5% steel, 3.5% copper, 2% nickel plating in 2000, and the penny has been 94% steel, 1.5% nickel, 4.5% copper plated zinc since 2000.

I was in New Zealand last year and they have already eliminated the penny. They round transactions to the nearest nickel, (1.02 and 0.98 would round to 1.00, and 0.93 to 0.97 would round to 0.95). The argument above that the consumer would be hurt is only logical if everything is bought for $1.00, in which the worst case would almost be the same as a 1-3% tax. However, economies of scale work out so round a $19.98 item to $20 would only be equivalent to a 0.01% tax.

The other side of the coin is a net benefit to the consumer. The whole reason that items are prices at $1.99 or $4.98 is for psychological reasons. These items, for all intents and purposes, may as well be priced $2 or $5, and that is how many of us discuss the prices. To maintain this illusion of pricing, the stores would drop their prices down by a nickel, not a couple of pennies, so we would see $1.95 or $4.95 prices instead.