Penny for Your Thoughts—But What’s the Policy?

The penny may be on its way out. But for banks, retailers, and consumers, the real issue isn’t the coin—it’s the lack of clarity.

In May, the Administration announced plans to stop minting the penny, citing $56 million in annual savings. Since then, the Federal Reserve has begun quietly suspending penny orders and deposits at select coin terminals. At last count, more than 60 Federal Reserve coin distribution locations across the country have ceased fulfilling penny orders or accepting deposits. More are expected to follow.

What’s Missing: A Federal Playbook

Despite the shift, there’s been no formal guidance from the Fed or Treasury on how to handle cash transactions as pennies become more and more scarce. Retailers are left guessing: Should they round at the item level or the invoice level? Before or after tax? Round up or down to the nearest nickel?

Banks, too, are in limbo. Without a consistent framework, they face operational strain, reputational risk, customer service challenges, and potential regulatory scrutiny. Some fear UDAAP complaints could arise from inconsistent rounding practices. [pwc.com]

People Are Feeling the Impact

For consumers—especially those who rely on cash—the transition is already creating confusion, yet neither Treasury or the Fed has taken steps to educate the public or increase awareness. Cash transactions may be rounded to the nearest nickel, but rules vary by location. And while digital payments remain precise, cash users could face a “rounding tax” of up to $6 million annually.

Retailers and Banks Want Answers

The Fed could provide more clarity by taking these steps:

• Issue clear rounding guidance to avoid confusion and legal risk.
• Coordinate with Congress and Treasury to ensure a unified approach.
• Re-open all coin terminals to accept penny deposits, and to the extent possible, fulfill penny orders.
• Provide operational updates on penny inventory levels and deposit options.
• Facilitate industry-wide collaboration to set a sunset date for penny distribution.

Without these steps, businesses risk inconsistent messaging, system disruptions, and customer frustration.

The Bottom Line

The penny may be fading, but the need for clarity is growing. Until federal agencies step in with a roadmap, rounding remains a gray area—and for millions of Americans, that’s more than just small change.