As pennies disappear from the American economy, businesses are urgently seeking federal guidance on handling cash transactions without them. Should businesses round up, down, or favor customers? With federal advice still pending, states are stepping in to fill the void. While dealing with just a few cents per transaction, these decisions raise crucial consumer protection and legal considerations.
President Donald Trump previously proposed eliminating the penny, citing the cost of minting — 3.7 cents per penny. Even before the final minting, a penny shortage was widespread. New York lawmakers propose legislation mimicking Canada’s rounding system, while officials in Georgia and Utah offer nonbinding guidance.
“States do not have the luxury of waiting for the federal government,” stated Katherine Tschopp from MultiState. The lack of federal action has pushed states to act, aiming to protect consumers reliant on cash. New York recently became the ninth state to mandate businesses accept cash, joining other major cities.
Federal legislation proposing cash transaction rounding to the nearest five cents remains stalled. Tschopp anticipates a future federal policy but expects more states to act in the interim. New York Assemblymember John T. McDonald III supports Trump’s penny elimination and advocates for state-driven clarity.
McDonald’s legislation reflects Canada’s rounding policy after eliminating its one-cent coin. His bill suggests symmetrical rounding to the nearest five cents, benefiting both merchants and consumers. This method has bipartisan support and has seen no opposition in New York.
South Dakota’s Sen. Tim Reed emphasized the need for clear communication with businesses and the public. Concerns about “strategic pricing” were deemed a “limited risk” by the NCSL task force.
New York Sen. James Sanders Jr. underscores the importance of cash acceptance to avoid a “two-tiered system,” highlighting cash as vital for many. Sanders plans to propose legislation soon, open to McDonald’s symmetrical rounding approach.
The U.S. Mint’s last penny was minted on Nov. 12, amid a nationwide penny shortage. The Retail Industry Leaders Association reports that several major chains face penny shortages, often rounding transactions to benefit customers by rounding down. The association and others, like the American Bankers Association, advocate for a federal solution.
Christopher Phillips from Holland & Knight notes the legal complexities for retailers, including potential lawsuits and compliance with federal regulations. Without a uniform federal policy, businesses like Sheetz and Kwik Trip have adopted their own rounding practices, highlighting the diverse approaches nationwide.
