At this point, most Americans are aware of the odd economics behind coins. It costs around 4 cents to produce one penny. You probably have a few stacked up somewhere—a jar, your pocket, maybe even the ashtray in your car.
Though it’s tiny, the penny represents more than its size—it holds cultural significance. If it disappears, we might also lose the charming, simple tradition of “take a penny, leave a penny,” plus the nostalgic penny loafers and the custom of tossing coins into fountains.
However, the penny’s future is looking bleak. The last penny was minted on November 12, 2025, as per a directive from the White House. While they remain legal tender, older pennies are slowly being phased out.
This change will ripple out beyond just the disappearance of the coin. Small, cash-reliant businesses on Main Street will face new hurdles in altering their operations to fit into a world that increasingly favors scale, technology, and plastic payment methods. Those who rely on cash—including many individuals without bank accounts—will be especially affected; they have the least margin for handling even minor price increases.
My background as a CFO for a large credit union and as a small business owner gives me a unique perspective. Now, in my role as a professor, I’m trying to connect the dots between theory and real-life applications, or what you might call “practical science.” I’m particularly interested in the challenges faced by local businesses.
When the penny fades away, some will gain, others will struggle, and some might just flip a coin to decide.
Winners
The most apparent beneficiary will be the U.S. government, which could save tens of millions annually by halting the production of coins that cost more to mint than their actual value. It sounds straightforward to stop making these coins for improved efficiency.
Banks and credit unions might gain as well. Handling pennies is disproportionately costly; they require counting, sorting, rolling, and verifying before being sent back to the Federal Reserve, racking up labor and equipment costs that often exceed their worth. Eliminating pennies would remove these expenses, creating savings across numerous branches.
Another beneficiary, albeit indirectly, is the cash transportation industry. Companies like Loomis and Brinks find pennies are cumbersome, low-value loads, and their removal would streamline operations, lowering fuel use and labor hours.
Larger retail stores could also benefit. Their size makes transitioning to cashless payments easier, whether that means adapting cash registers or stockpiling pennies for rare occasions. Big retailers generally have the resources to understand their costs and whether it’s better to accept cash or card payments. Considering most of their transactions are already digital, they may not feel the change much at all.
Additionally, larger retailers often negotiate lower processing fees for card payments based on their high sales volume, while smaller businesses typically pay more for the same service, meaning a shift to card payments could disproportionately favor big chains.
While some banks, credit unions, and major retailers have expressed concern and surprise over the swift transition and lack of federal guidance, for most people, the end of the penny will likely be a minor detail in their daily lives. Online businesses, especially, operate in a world without the complexities of cash.
Losers
For small businesses, I predict the penny’s removal will expose existing challenges and require them to reconsider what payment methods are most beneficial for their finances.
As the penny is phased out, local shops may round cash transactions to the nearest nickel, creating what economists refer to as a rounding tax. This rounding could cost businesses and consumers around $6 million a year, according to research from the Richmond Fed.
Even if consumers start using more plastic, it won’t ease the burden much. Many small retailers lack the weight to negotiate down processing fees.
Merchants face multiple costs when accepting cards, including interchange fees, network costs, processor fees, and more. When added together, these fees can sum up to 2.5% to 3.5% of a sale. Plus, there are costs associated with implementing and maintaining payment technology.
Take, for example, a quick-service restaurant where a customer spends about $14. If they use a credit card, the fees—around 2.2% plus 10 cents per transaction—would cost the business approximately 41 cents per sale. Even low-cost debit cards can create a disproportionate impact if there’s a fixed fee involved. For average sales under $10, processing fees can barely be covered.
However, handling cash comes with its own expenses. Sometimes, it’s tricky to determine what method is best for a business. Research indicates that accepting cash costs about 53 cents per $100 in sales, compared to higher costs for debit payments. Businesses also need to accommodate different customer payment preferences.
Unfortunately, those who rely on cash—like seniors, low-income families, and the unbanked—are likely to feel the most significant effects when the penny disappears.
To a person who uses a rewards credit card, a few extra cents on groceries may not mean much. But for cash users, even a minor increase is felt directly, without any perks like points or cash back. And stores frequently set prices ending in 99 cents, often causing prices to round up, not down. Thus, even minor cumulative increases have a disproportionate impact on those least prepared to absorb them.
A Coin Toss for Some
Those who primarily use digital payment methods probably won’t even notice when the penny is gone. With a quick tap of their phone or a QR code scan, they’ll continue using payment apps effortlessly.
Though businesses haven’t yet received definitive instructions on navigating payments in a penny-less world, one approach could involve rounding electronic transaction prices to the nearest cent while rounding cash prices to the nearest nickel. Even if widely applied, this would ensure accuracy for electronic payments.
Consumers who utilize cashless options might assume their choices don’t impact their shopping habits, but studies indicate otherwise. Credit cards can lessen the pain of spending, causing people to shell out more—often by 10% to 20%—compared to cash transactions. Additionally, credit card reward programs encourage even more usage. It’s worth noting that the costs associated with these non-cash payments often get passed on to consumers through higher retail prices.
While eliminating the penny could benefit governments and certain businesses, it reveals a more profound reality: increased efficiency tends to favor those who are already efficient. Yet, for many, every single penny still carries weight, regardless of how small the change might seem.
