(NEXSTAR) — While a penny shortage was anticipated, it seems to have lingered longer than expected. Businesses are now advising customers to avoid cash payments or to be ready for incorrect change.
Several companies are offering free items in exchange for pennies.
As we dive into the holiday shopping season, you might find yourself benefiting from this trend. Let’s explore what’s happening.
Why is there a penny shortage?
Earlier this year, President Donald Trump urged the Treasury Department to halt the minting of new pennies, labeling them a “waste.” Subsequent announcements confirmed that new pennies would cease production by early 2026, with the final order for blanks already completed, according to a Treasury spokesperson.
Without these new blanks, the U.S. Mint can’t produce more pennies.
As of late September, some Federal Reserve Coin Distribution Sites have stopped processing penny orders and deposits.
But it’s important to recognize that there are billions of pennies available—estimates range from 114 billion, as per a Federal Reserve report in 1999, to about 240 billion in more recent evaluations. Still, accessing them isn’t straightforward. Consider all the loose change stashed away in various places around your home. Unless you actively use or deposit them, they might never circulate again, complicating the efforts of distribution sites.
Is it costly to create pennies?
Compared to other coins, the answer is “no,” but when considering their own value, the answer shifts to “yes.” The average production cost for a penny climbed to 3.69 cents last year—marking the 19th consecutive year where the cost exceeded its face value. For context, it costs about 6 cents to make a dime and approximately 15 cents for a quarter, while a half dollar costs about 34 cents.
Attempts have been made to reduce penny production costs, but switching to alternative materials hasn’t achieved the desired results.
How are businesses adapting to the penny shortage?
Gasoline and convenience store chains like Love’s and Kwik Trip are responding by changing their payment processes. Love’s stores are rounding change in favor of customers, meaning if your total is $3.22, you’ll get back $3.25. Meanwhile, at Kwik Trip, cash payments are often rounded down to the nearest five cents.
Another chain, Sheetz, mentioned that they might have limited penny supplies in some locations. Customers are encouraged to utilize the Sheetz app or other cashless payment methods when possible. Additionally, pennies can be exchanged for a complimentary self-serve drink or donated to the Sheetz For the Kidz initiative, with the promise that these coins will be recycled for future customers.
PetSmart is also offering customers the chance to round up their bills with the extra change going to PetSmart Charities.
Conversely, a Burger King representative mentioned that while U.S. locations still accept pennies, exact change may not always be achievable due to the ongoing shortage.
Will product prices also be rounded?
Not likely. Dylan Chong, a senior government relations director at the National Retail Federation, pointed out to Nexstar that changing pricing to eliminate the penny would be considerably more complex than just rounding off transactions.
This complexity arises from two main factors: the need for widespread repricing and the accounting for sales tax.
Chong acknowledged that getting rid of the penny is more intricate in the U.S. than it was in Canada, which implemented rounding practices about a decade ago.
Legal challenges of rounding
The penny shortage was projected to become noticeable around mid to late 2026, but it could emerge sooner. Various stakeholders, including state and federal authorities, businesses, and others, are actively discussing policies for cash transactions without the penny.
Currently, at least 10 states have laws prohibiting the rounding of cash transactions. The National Convenience Store Association has urged legislators to consider national laws to permit rounding.
A proposal has also been introduced by Rep. Lisa McClain (R-Mich.) aimed at providing a legal basis for this change. However, with the government shutdown, the timeline for this bill passing remains uncertain.
Part of the complexity as explained by Chong relates to rules that prevent charging differently based on payment methods, like using a SNAP EBT card versus cash. There’s also ambiguity concerning rounding cash checks, which creates challenges for grocery stores.
Jeon mentioned that the NRF is collaborating with the U.S. Department of Agriculture and Congress to find clarity for businesses grappling with the penny shortage.
Cash payments: what to expect
If you anticipate paying cash when shopping, be prepared to receive more change than expected.
Jeon has advised customers to recognize this “new reality.” Retailers are typically well-organized and likely have strategies to manage the penny shortage.
Nonetheless, pennies remain legal tender, so you can still use them at checkouts. However, hoarding pennies might not bring as much benefit as one would hope.
