How the Penny Is Changing

As the U.S. moves away from producing new pennies, many retail business owners are asking the same question: What does this mean for day-to-day operations?

The answer is likely less disruptive than it sounds, but it's worth understanding the potential impact on cash handling, pricing, and customer transactions.

The U.S. Department of the Treasury has stopped manufacturing new pennies, citing rising production costs. According to the U.S. Treasury, it costs approximately 3.69 cents to produce a single penny, resulting in significant annual losses for taxpayers. The government estimates that ending penny production will save roughly $56 million annually in material costs alone.

Importantly, existing pennies remain legal tender and will continue circulating for the foreseeable future. However, as fewer pennies are available, businesses that accept cash may eventually need to adapt.

What This Means for Retailers

Cash Transactions May Be Rounded

As pennies become less common, cash purchases are expected to be rounded to the nearest five cents. Similar systems have been used successfully in countries including Canada, Australia, and New Zealand. Digital payments would continue to be charged to the exact cent. Wind River Payments notes that countries that have eliminated their lowest-value coin have generally continued processing electronic transactions to the exact cent while applying rounding only to cash purchases.

For most retailers, this change should have minimal financial impact because rounding generally balances out over time. Some transactions will round up, while others round down.

Pricing Strategies Likely Won't Change

There is no immediate need to abandon familiar pricing structures such as $9.99 or $19.99. Since most consumers increasingly pay with debit cards, credit cards, or mobile wallets, exact-cent pricing will remain relevant. Retailers can continue using established pricing strategies while monitoring customer preferences and industry trends.

Point-of-Sale Systems May Need Updates

Businesses should stay in contact with their point-of-sale (POS) providers regarding any future rounding requirements. Many technology providers are already preparing for potential adjustments to cash transactions, making implementation relatively straightforward if changes become necessary.

"As pennies become less available, the biggest adjustment for many businesses won't be pricing. It will be ensuring point-of-sale systems and cash-handling procedures can accommodate rounding when needed. Fortunately, electronic payments can continue to be processed exactly as they are today," said Joshua Haas of Wind River Payments.

Day-to-Day Operations May Become Simpler

Beyond technology updates, the transition away from pennies could create small efficiencies at checkout. Businesses may spend less time handling, counting, and storing pennies as they become less common in circulation. While cash transactions represent a smaller share of consumer payments today, reducing coin management can help streamline cash-handling procedures.

Wind River Payments also recommends retailers stay informed about future guidance from payment processors and tax authorities. Industry experts note that businesses may need to pay attention to how rounded cash transactions are reported and documented for tax and compliance purposes as new standards emerge.

How Retailers Can Prepare

While retailers don't need to make major changes today, a few proactive steps can help businesses prepare:

• Review POS capabilities and ask vendors whether cash-rounding functionality is available.
• Monitor guidance from payment processors and state tax authorities regarding rounding and sales tax reporting.
• Train cashiers and customer-facing employees on how rounding works so they can answer customer questions confidently.
• Continue using existing pricing strategies while staying informed about future industry trends.
• Evaluate cash-handling procedures and change-fund requirements as pennies become less common.
• Communicate any future cash-rounding policies clearly at checkout to avoid customer confusion.
• The retirement of new penny production is less about eliminating cash and more about modernizing currency management. For most retailers, the change will be gradual, manageable, and largely invisible to customers, provided businesses stay informed and ready to adapt.