As pennies disappear from circulation, businesses seek federal guidance on cash transactions in a penny-free landscape. Retailers face dilemmas: should they round up or down, and who should benefit from the rounding? Despite calls for federal direction, businesses and states are setting their own policies amid uncertainty. The debate raises crucial consumer protection and legal questions, with concerns over potential lawsuits and safeguarding cash-reliant consumers.
President Trump proposed eliminating pennies due to minting costs of 3.7 cents each. Even before the final production, retailers and banks experienced widespread penny shortages. To address this, New York lawmakers introduced legislation similar to Canada’s rounding standard, adjusting to the nearest five cents. Georgia and Utah have issued nonbinding guidance for businesses. Katherine Tschopp of MultiState noted, “States do not have the luxury of waiting for the federal government.”
The situation is further complicated by jurisdictions mandating cash acceptance to protect consumers without electronic payment options. New York recently mandated cash acceptance, joining eight other states. New York Assemblymember John T. McDonald III emphasized the importance of state action for clarity, benefiting consumers, merchants, and the state. A bipartisan federal proposal for rounding cash transactions to the nearest five cents remains stalled in Congress.
McDonald’s proposed legislation aligns with Canada’s policy after their penny elimination, advocating symmetrical rounding to the nearest five-cent mark. Purchases ending in certain cents would round down or up accordingly. This proposal aims for fairness in cash transactions. McDonald highlighted bipartisan support within the National Conference of State Legislatures. State Sen. Tim Reed urged communication with retailers and the public about rounding issues, acknowledging concerns over strategic pricing by businesses.
Sen. James Sanders Jr. supports rounding down to protect consumers, noting that repeated rounding up by large corporations could raise product costs. Sanders plans to introduce legislation but remains open to McDonald’s proposal. Retailers have adopted varied policies amid the penny shortage. The Retail Industry Leaders Association reported chains rounding down to benefit customers, though it costs businesses significantly. The association continues to push for a federal response.
Christopher Phillips from Holland & Knight highlighted practical and legal challenges for retailers, including compliance with cash acceptance laws and the risk of class-action lawsuits. Federal regulations banning extra charges for SNAP purchases add complexity. Retailers seek a consistent standard, with some rounding down or adopting cashless payments. Without federal guidance, approaches remain inconsistent.
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