America’s retailers are expressing significant concern following the U.S. Treasury’s decision to halt penny production. The Retail Industry Leaders Association (RILA) has called on lawmakers to address this issue when Congress reconvenes in January 2024. This situation emerged earlier this year when the Treasury declared that producing new pennies was both costly and inefficient.
In 2024, the cost to mint a single penny reached nearly 3.7 cents, which is almost four times its face value. This led to annual losses exceeding $56 million for the U.S. Mint, as noted by PYMNTS. With more than half of all pennies sitting unused in jars and drawers, coupled with the rise of digital payments, the coin’s practical utility has significantly diminished. The U.S. follows the examples set by Canada, Australia, and New Zealand, which have already phased out their lowest-denomination coins.
According to RILA, retailers face challenges due to the absence of clear legal guidance regarding the future of the penny, particularly on critical issues such as rounding cash transactions. This uncertainty has resulted in substantial financial implications for businesses. Austen Jensen, RILA’s senior executive vice president of public affairs, emphasized that the lack of direction cost retailers millions during the holiday season, a peak period for cash transactions. Jensen stated, “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.”
The RILA’s recent survey of 25 of the largest retailers in the U.S. revealed that nearly one-quarter reported having more than 1,000 of their store locations without pennies. Two-thirds of the retailers indicated they had been rounding transactions to the benefit of shoppers when pennies were unavailable. Although this practice may be seen as fair to consumers, it carries the risk of costing stores millions in the long run.
The Treasury Department confirmed last month that while penny production has ceased, the coin remains legal tender and will retain its value indefinitely. An estimated 300 billion pennies are currently in circulation, which the Treasury noted exceeds the amount necessary for commerce. As retailers call for swift legislative action, the future of the penny remains uncertain, leaving many businesses navigating the implications of its absence.
