State lawmakers draft rounding rules as U.S. Mint stops penny production

The U.S. Mint has halted production of new pennies, prompting at least six state legislatures to introduce bills standardizing how retailers round cash transactions to the nearest nickel.

The shift affects cash transactions, which represented 18 percent of all point-of-sale purchases in 2023. Card and digital payments calculate exact change electronically and remain unaffected by the absence of pennies.

Three states are considering requirements that would force all cash purchases to round to the nearest five cents, according to legislative filings reviewed this month, according to PBS News. Illinois, Ohio and Pennsylvania have bills under consideration. The bills differ on whether rounding would favor consumers, retailers or follow a neutral mathematical formula. New York’s proposal would allow retailers to choose their rounding method but require visible signage at each register explaining the policy.

The shift affects an estimated 11 billion cash transactions annually in the U.S., according to Federal Reserve payment data. Consumer advocacy groups warn that rounding policies favoring retailers could extract an extra two cents per transaction on average, possibly transferring hundreds of millions of dollars from shoppers to stores. The National Retail Federation said inconsistent state rules would force chains operating in multiple states to program different rounding systems into point-of-sale software.

Retail industry groups have asked Congress to issue federal guidance rather than allow states to impose conflicting rounding requirements. The National Retail Federation warned that a mix of different state laws would create problems. National chains would have to reprogram point-of-sale systems differently in each state, a spokesperson for the trade group said.

“We need uniform standards, or you’ll have a retailer rounding down in Michigan and rounding up in Indiana,” said Jason Miller, chief policy officer at the Retail Industry Leaders Association. “That creates chaos in daily operations and consumer confusion.”

Canada eliminated its penny in 2013 and adopted balanced rounding. Studies of Canadian transactions showed the impact was tiny. Consumers lost or gained less than one cent per purchase on average. Retailers reported no significant complaints. No major U.S. retailer has announced a nationwide rounding policy in response to the Mint’s production halt.

The Illinois bill advanced out of committee last week. It would require rounding in consumers’ favor and impose fines of up to $500 per violation. A floor vote is scheduled for April 12.