Since the beginning of this year, the U.S. Treasury stopped minting one-cent coins, leading to a noticeable shortage in circulation. Many retailers are now rounding cash sales to the nearest five cents, citing the absence of federal guidelines for handling transactions without pennies. Dylan Jeon, a representative from the National Retail Federation, noted that this situation has implications for businesses that conduct cash transactions.
The U.S. Mint ceased penny production in May 2023, and while the Treasury Department projected that coin shortages would emerge in 2026, they apparently began much earlier. Banks are facing difficulties obtaining pennies from the federal government, creating a cascading effect that leaves businesses without access to the coins. Jeon mentioned that the repercussions of this shortage are being felt by all businesses accepting cash.
In response to the lack of available pennies for making change, retailers are primarily adopting a strategy of rounding sales prices. However, compliance with local regulations complicates this approach; for example, cities such as New York have rules requiring exact change. Retailers aiming to avoid legal issues and customer dissatisfaction are often choosing to round down transactions.
Some businesses are asking customers to provide exact change or are incentivizing them to bring in spare pennies. Convenience stores are among the most affected, with one major chain, Kwik Trip, estimating that rounding down will cost it approximately $3 million this year. Historically, other U.S. coins have also been discontinued, but it has been a long time since a regularly used denomination like the penny ceased production.
The cost of producing a penny exceeds its face value, yet there are arguments that maintaining the penny in circulation is beneficial for lower-income individuals who depend on cash transactions. Advocates stress the need for federal guidance regarding rounding practices and the overall handling of the coin shortage.
Source: https://www.bbc.com/news/articles/c20556ly45eo?at_medium=RSS&at_campaign=rss