Penny pinching
Businesses dealing with discontinuation of the coins
On Nov. 12, the final U.S. pennies were struck at the U.S. Mint in Philadelphia.
Why? The cost to manufacture the one-cent coin – which had been in circulation since 1793 – rose far above its face value. At the time pennies ceased being made, it cost 3.69 cents to produce one.
The U.S. Mint said it expects to save approximately $56 million annually.
The move has led to a shortage of pennies in cash registers for making change in cash transactions, and businesses are rethinking how they handle them.
“A lot of banks aren’t giving out pennies, so we have not really had any pennies,” said Maddie Huseman, general manager of From Scratch Uptown, a Uniontown coffee shop and eatery. “We’ve been rounding up and rounding down. I’m trying to figure out how to make everything add up to a zero or a five, but it’s not that easy with tax.”
Now, some states, including Pennsylvania, are proposing solutions to the penny problem by setting rounding guidance for cash purchases.
State Rep. Nathan Davidson (D-103rd District) is introducing “round up or round down” legislation that would allow cash transactions to be rounded to the nearest nickel.
If the final price, after taxes, ends in 1, 2, 6 or 7 cents, payments in cash round down. For example, $1.91 or $1.92 becomes $1.90. If the price ends in 3, 4, 8 or 9, cash payments round up. For $1.98 or $1.99, the customer pays $2.
The legislation is similar to rounding policies adopted by other countries that have ended the use of pennies, like Canada (which stopped using its penny in 2012), Australia and New Zealand.
The bill aims to make the rounding process financially neutral, so that sometimes customers benefit and sometimes retailers benefit. Over time, neither party comes out on top.
Many retailers are already voluntarily rounding up or down in cash transactions. But the legislation would help the state officially remain in compliance with SNAP regulations and supercede the laws of local municipalities that do not embrace rounding policies.
Some stores have posted signs informing customers that change may be limited and explaining their rounding policy.
“Many Pennsylvanians prefer to pay in cash, and the penny shortage has made it difficult to provide change to the nearest cent,” Davidson said in a recent memo. “Since many of these fees are set in statute, counties and local governments have no flexibility and are left with no good choices. For this reason, I will be introducing legislation that would allow cash transactions to be rounded to the nearest nickel.”
Dave Rhome, owner of Sam’s Pizza in Canonsburg, said pennies have been hard to come by.
He said the shop, which is a cash-only establishment, rounds in favor of customers, even though the business could end up losing out on transactions – which makes a difference for small businesses.
“Our goal is always to do right by our customers. If an order is for $5.92, we would give them a dime, versus fooling around with the pennies,” said Rhome.
At Shorty’s Lunch restaurants in Washington, the penny shortage has not been an issue yet, according to owner Matt Alexis.
“We’re just continuing with the way it used to be,” said Alexis, noting some customers pay with exact change, while others pay with bills and coins that require making change. “We haven’t had a problem yet.”
Giant Eagle stores still give and receive pennies, and in November the grocery chain hosted a “penny exchange” event, where customers traded in pennies – between 50 cents and $100 – for double their value in store gift cards, which helped restock penny supplies for the short term.
Giant Eagle Public Relations Manager Jannah Drexler said the grocery chain’s penny situation “is OK and we are continuing to provide customers with exact change, when necessary.”
Some convenience and retail stores are encouraging customers at their stores to use cashless options or to round up their totals to support charities.
And, some local convenience stores still have a “take a penny leave a penny” dish by the cash register.
Broc Sleek, incoming president and CEO of CHROME Federal Credit Union, said the credit union still has plenty of pennies on hand, but the credit union’s vendors are preparing for how the discontinuation of penny production – and the Federal Reserve’s stoppage of providing banks and credit unions with the coin – will impact transactions.
At the federal level, the Common Cents Act was introduced last fall, but has stalled in Congress. At least 22 other states, like Pennsylvania, are working on solutions.
If passed, the Common Cents Act would supersede state acts.
Sleek said people are encouraged to put their pennies – which often end up in jars, in car cupholders, or under couch cushions – to put their pennies into circulation to help with shortages.
In the meantime, stores will continue to make the best of the situation.
“This is just how it is now,” said Huseman. “We’ve been letting our customers know, and everybody’s been nice about it, and that’s helped.”
About the penny:
– In 1909, Abraham Lincoln became the first U.S. president to appear on a coin, commemorating his 100th birthday. The reverse has changed several times since.
– The original penny was a large copper coin featuring a woman with flowing hair symbolizing Liberty. The last version, featuring Lincoln, was a smaller coin composed of copper and zinc.
– A coin’s typical lifespan is 30 years.
– The U.S. Mint produced and shipped approximately 3.2 billion pennies in fiscal year 2024.
– At least 114 billion pennies are currently in circulation and remain legal tender, but their availability is declining.
– The Mint will continue to produce collector versions of the penny in limited quantities.