Arizona’s Move to Address Penny Shortage: The Impact on Cash Transactions
The gradual disappearance of pennies from circulation is prompting legislative action in Arizona. As the U.S. Mint halted the production of new pennies last November due to the high cost of manufacturing each coin at 3.7 cents, state lawmakers are navigating the implications for daily transactions.
Senator John Kavanagh is spearheading a legislative proposal, known as SB 1108, aimed at instituting “Swedish rounding” to manage cash transactions. This method would see cash totals ending in 1, 2, 6, or 7 rounded down to the nearest nickel, while totals ending in 3, 4, 8, or 9 would be rounded up. Such a system is designed to simplify transactions and avoid the need for pennies.
Kavanagh emphasizes the necessity of this regulation to prevent businesses from unfairly rounding up, which could accumulate significant profits over thousands of transactions. “Some merchants can consistently round up more than they should,” Kavanagh noted, highlighting the importance of a standardized approach.
This legislative effort is not isolated, as it draws from a “model legislation” by the National Conference of State Legislatures, echoing similar actions in other regions. The proposal has received backing from the Arizona Food Marketing Alliance, with President Lisa Bednar approving the measure as a “simple, common-sense update” that ensures transparency and consistency for retailers and consumers alike.
The proposed bill specifies that rounding should only affect the final total, not individual items, ensuring that the maximum impact of rounding is limited to two cents. Additionally, electronic transactions, including credit, debit, and mobile payments, will continue to be processed at the exact amount, unaffected by rounding.
To maintain transparency, retailers would be required to display notices stating, “Cash transactions are rounded to the nearest five-cent increment pursuant to state law,” ensuring consumers are informed about the rounding practice.
While the bill does not render pennies illegal nor obligate businesses to accept them, it aligns with ongoing legislative discussions about cash transactions. A separate bill, HB 2555, which mandates merchants to accept cash for transactions under $100 and prohibits charging extra for cash payments, is also under consideration by the state legislature.
—
Read More Arizona News
