Paying in cash? Why retailers are asking for exact change

Retailers and banks across the U.S. are feeling the penny pinch after President Donald Trump’s decision to abruptly stop producing the penny earlier this year. 

With no guidance from the federal government on how to phase out the coins, many stores are left pleading for customers to pay in exact change – and costing businesses millions by rounding down to avoid lawsuits. 

The penny problem

What they're saying:

Banks and retailers say they support the elimination of the penny, but they thought there would be a plan to phase them out, not abruptly stop making them. 

"We have been advocating abolition of the penny for 30 years. But this is not the way we wanted it to go," Jeff Lenard with the National Association of Convenience Stores told The Associated Press. 

One convenience store chain, Sheetz, got so desperate for pennies that it briefly ran a promotion offering a free soda to customers who bring in 100 pennies. Another retailer says the lack of pennies will end up costing it millions this year, because of the need to round down to avoid lawsuits.

"It’s a chunk of change," said Dylan Jeon, senior director of government relations with the National Retail Federation.

The other side:

It’s unclear whether the federal government is planning to offer guidance to retailers or banks regarding the penny shortage. The Treasury Department did not respond to AP’s request for comment.

Rounding down

Dig deeper:

The lack of pennies has turned into a legal issue for stores and retailers. In some states and cities, it is illegal to round up a transaction to the nearest nickel or dime because doing so would run afoul of laws that are supposed to place cash customers and debit and credit card customers on an equal playing field when it comes to item costs.

So, to avoid lawsuits, retailers are rounding down. While two or three cents may not seem like much, that extra change can add up over tens of thousands of transactions. A spokesman for Kwik Trip, the Midwest convenience store chain, says it has been rounding down every cash transaction to the nearest nickel. That’s expected to cost the company roughly $3 million this year. Some retailers are asking customers to give their change to local or affiliated charities at the cash register, in an effort to avoid pennies as well.

What's next:

A bill currently pending in Congress, known as the Common Cents Act, calls for cash transactions to be rounded to the nearest nickel, up or down. While the proposal is palatable to businesses, rounding up could be costly for consumers.

Why is the penny being eliminated? 

The backstory:

The last pennies were minted in June, and by August, those pennies were distributed to banks and armored vehicle service companies.

"Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time," Trump wrote on Truth Social.

The United States is not the first country to transition away from small denomination coins or discontinue out-of-date coins. But in all of these cases, governments wound down the use of their out-of-date coins over a period of, often, years.

Big picture view:

The problem with pennies is they are issued, given as change, and rarely recirculated back into the economy. Americans store their pennies in jars or use them for decoration. This requires the Mint to produce significant sums of pennies each year.

Pennies, especially in bulk, are heavy.

By the numbers:

The U.S. Mint spent 3.7 cents to make a penny in 2024, according to its most recent annual report (it spends 13.8 cents to make a nickel).

The Mint issued 3.23 billion pennies in 2024, the last full year of production, more than double that of the second-most minted coin in the country: the quarter. The government is expected to save $56 million by not minting pennies, according to the Treasury Department.

"We don’t want the penny back. We just want some sort of clarity from the federal government on what to do, as this issue is only going to get worse," the NACS’ Lenard said.