US businesses are facing a significant challenge as they grapple with a penny shortage resulting from the Trump administration's decision to halt the minting of one-cent coins earlier this year. This unprecedented measure has led to a dramatic decrease in the availability of pennies in circulation, making it increasingly difficult for retailers to provide exact change to customers. Many stores are now resorting to rounding their cash sales down to the nearest five cents, citing the absence of federal guidelines on how to handle the situation.
In February, former President Donald Trump deemed the production of the penny as wasteful and costly, calling for a reevaluation of the nation's budget priorities, even if that meant cutting back on seemingly insignificant expenses like the penny. The US Mint officially ceased penny production in May, with the Treasury Department initially estimating that shortages would not emerge until early 2026. However, the reality was starkly different, as businesses began to feel the pinch much sooner than anticipated.
As banks struggle to acquire pennies from the federal government, businesses are left without a steady supply. “We first heard about the issue in late August, early September,” remarked Dylan Jeon, senior director of government relations with the National Retail Federation. The cash payment system is particularly affected, as cash transactions that require pennies for change are increasingly problematic. Store clerks are often left unsure of how to handle transactions when their cash registers lack the necessary coins.
To mitigate the issue, many retailers are rounding the price of sales to the nearest five cents, allowing customers to use nickels as an alternative. However, this solution is complicated by varying city regulations. For instance, cities like New York mandate that retailers provide exact change, while others disallow discrepancies between cash and card payments. “To avoid lawsuits and customer complaints, many retailers have chosen to just round down,” Jeon explained, highlighting the financial strain this places on businesses, which could be losing up to four cents per cash transaction.
In response to the penny crisis, numerous stores are now encouraging customers to pay with exact change. Some retailers are even launching promotions to incentivize customers to bring in any extra pennies they may have at home. Convenience stores, in particular, are feeling the brunt of this shortage, as highlighted by Jeff Lenard, a spokesperson for the National Association of Convenience Stores. For example, Kwik Trip, a major convenience chain, has announced it will round down transactions to the nearest nickel, predicting that this decision will cost the company up to $3 million this year.
While the discontinuation of the penny is a recent development, it is worth noting that American coins have faced similar fates in the past. Historically, denominations such as the half-cent, three-cent, and 20-cent pieces were retired in the 1800s. However, it has been many years since a staple like the penny—first introduced in 1793—has ceased production. Lenard pointed out, “People don’t want the penny until they can’t get it back in change,” emphasizing the irony of how its scarcity has shifted public sentiment towards this once-ubiquitous coin.
As the situation continues to evolve, it remains crucial for both businesses and consumers to adapt to the realities of a penny-less economy. The ongoing adjustments will likely shape the future of cash transactions in the United States.
