We laugh, we joke about it, we exaggerate it slightly. In Ukraine, merchants insist upon customers being able to pay with exact change. It is so different from business standards (at least in America) that it deserves more than a summary dismissal. Why? Why is the emphasis placed on the customer to provide exact change? To be honest, I don't know. At least, I don't know if what I've come up with is, in fact, the real reason or basis behind this practice. My explanation will probably come close...but probably not, um... exact...

First, a very, very brief history is in order. Ukraine used the Ruble when it was part of the now defunct Soviet Union. In the era of the Soviet Union, it was illegal to possess American dollars. Under a state controlled economy, this enabled the government to exchange dollars to rubles at a rate greatly favorable rate. As well, the Ruble had substantially greater purchasing power than it does today. Coins actually had value.

With its independence, the government of Ukraine established its own currency using the Ukrainian Hryvia (UAH) as the nomenclature for its paper currency, and Kopecs for its coinage. The transition was extremely difficult for the Ukrainian economy, not only was it a period of high inflation, but many (if not most) of its banks went bankrupt. A lot of people lost their life's savings.

As a consequence, many Ukrainians retain an active distrust of the banking industry. This translates to a great many Ukrainians not using banks to keep their money. Many keep their life savings in cookie jars, in hidden repositories deep in their closets, etc. Some may have the equivalent of US$10,000 hidden away, even today. There is a whole helluva lot of money not circulating in Ukraine's economy. Considering that in some cases, Ukrainian citizens can earn an APR of 10% on their regular savings account, this equates to a large loss of potential.

Penny wise, pound foolish? In the United States, there is a tradition to put pennies into the Piggy Bank. The Piggy Bank may sit there for years. In a few cases, some people have taken their "Piggy Bank" into buy a new truck. From my observations, Ukrainians do not save their coins in this manner. They save their Hryvnias like that.

In observation over the past two years, and despite their insistence on exact change, I've found Ukrainian cashiers (grocery stores, office stores, banks, etc.) to be substantially better at math than their American counterparts. For one, most are not able to rely upon sophisticated cashier's machines. They make very, very few errors - so it is not a case that they cannot do the math or calculate how much change they owe. In the vast majority of instances with established chains, a glance into their till demonstrates that they have plenty of change available (1, 2, 5, 10, 25, and 50 kopecs). So, it is not a matter of their not having coins, either.

So, if it is not a lack of ability or supply for a store clerk to provide change, what else could it be? My inclination is to think it is a customer driven dynamic. With wages as they are, Ukrainians are thrifty with what they do have. They make use of their change much more than Americans do. It's a habit I'm just beginning to get used to and understand. It is efficient.

If as a cashier everyone automatically gave you exact change, even in just the course of a few weeks, this would be come the rule. Giving change would be the exception. Almost everyone, in almost every business, regards the "exceptions" as nuisances. We like a standard, we want everything to comply with that standard. We heave a slight sigh of frustration when something comes along that does not comply with that standard.

It's amazing this much could be written about the simple issue of exact change. But, it is not just a matter of understanding exact change - but engaging to understand the psychology behind the average Ukrainian's manner of money management. For the westerner, this may seem backwards and an indication of poor customer service. This is a view that we would do well to reconsider.