Retailers in the United States are expressing significant concern regarding the recent cessation of penny production by the U.S. Treasury. This decision, which was made earlier in the year due to high production costs, has prompted the Retail Industry Leaders Association (RILA) to call for legislative action when Congress reconvenes in Washington, D.C., next month.
The U.S. Treasury announced that it would stop minting new pennies, citing the process as costly and inefficient. In 2024, it cost approximately 3.7 cents to produce a single penny, which is nearly four times its face value. This led to annual losses exceeding $56 million for the U.S. Mint, as reported by PYMNTS in May. The report highlighted that more than half of all pennies are currently in circulation, often stored in jars and drawers, while the rise of digital payments has further diminished the need for small change.
The situation mirrors trends in other countries, including Canada, Australia, and New Zealand, all of which have eliminated their lowest-denomination coins. According to PYMNTS, this transition is expected to save taxpayers millions and simplify cash handling for businesses.
Despite these potential benefits, RILA reports that retailers are facing significant challenges due to a lack of clear legal guidance regarding the future of the penny. One major concern is the rounding of cash transactions, which has had financial implications for retailers. During the holiday season, when cash transactions typically increase, this lack of clarity resulted in additional costs for stores. Austen Jensen, RILA’s Senior Executive Vice President of Public Affairs, emphasized the urgency of the situation, stating, “Congress should act quickly to provide the fix needed for retailers and ensure that cash tendered payments aren’t disrupted by the abrupt end of the penny.”
In a recent survey conducted by RILA of 25 of the largest retailers in the U.S., nearly one-quarter reported that over 1,000 of their store locations no longer had pennies available. Additionally, two-thirds of retailers indicated they were rounding transactions in favor of customers when pennies were not accessible. While this practice is viewed as fair to consumers, it has the potential to cost retailers millions in lost revenue.
The U.S. Treasury clarified last month that, although penny production has ceased, the coin “remains legal tender and will retain its value indefinitely.” At that time, there were an estimated 300 billion pennies in circulation, a quantity deemed sufficient for commerce by the Treasury.
As retailers navigate the complexities of this evolving landscape, the call for legislative clarity grows louder. With the future of the penny hanging in the balance, the outcome could have lasting implications for businesses and consumers alike.
