The Penny Shortage Needs a Federal Solution

The penny shortage has moved from an inconvenience to an ongoing operational challenge for retailers. Months after penny production came to an end, businesses that accept cash are still trying to manage transactions in an environment where exact change is often impossible to provide. 

Congress has a path forward in sight. The Common Cents Act, federal legislation pending in the House, would address many of the issues retailers are facing by creating clear rules for rounding cash transactions and providing legal certainty for businesses that follow those rules.  

A House vote cannot come soon enough. 

In the absence of federal action, states have begun moving ahead with their own approaches. Some states have enacted laws. Others have issued agency guidance. Still, others are considering legislation. According to one state policy analysis, more than 55 state penny phase-out bills have been introduced, with states taking different approaches to cash rounding, sales tax treatment, and related compliance questions. 

State action is understandable. Retailers, consumers, and state agencies all need answers. But a state-by-state approach is not a substitute for one clear federal standard. 

For retailers operating in multiple states, a patchwork system creates significant compliance and operational problems. A retailer with stores in dozens of states may be forced to follow one rounding rule in one state, a different rule in another, and informal guidance somewhere else. That means different point-of-sale updates, different employee training, different signage, different receipt disclosures, and different customer-service procedures depending on where a store is located. 

That kind of inconsistency is not good for retailers or shoppers. 

Cash transactions should be simple. A customer should not have to wonder whether a purchase will be rounded differently depending on the state, city, or store. A cashier should not have to navigate conflicting legal requirements while trying to keep checkout lines moving. And a retailer should not face legal risk simply because it is trying to complete a cash transaction when pennies are no longer available. 

The legal risk is especially important. Retailers that are out of pennies often have no practical choice but to round cash transactions often in favor of the customer. But without federal legislation, rounding can create uncertainty under state and local laws, consumer protection rules, cash acceptance requirements, and programs such as SNAP. Industry groups have warned that retailers need the ability to round to the nearest nickel and a safe harbor so businesses following the law are not exposed to lawsuits or conflicting requirements. 

A federal policy would solve these problems more effectively than a patchwork of state laws. It would establish one national standard for rounding cash transactions. It would make clear that electronic payments continue to be processed to the exact cent. It would protect consumers by ensuring rounding is applied consistently and transparently. And it would protect retailers from frivolous lawsuits when they follow clear federal rules. 

The penny may be small, but the consequences of inaction are not. Retailers need Congress to act quickly and pass a federal solution that provides consistency, protects consumers, and allows businesses to keep cash transactions running smoothly. A single national policy is the clearest way to prevent confusion and ensure the end of the penny does not create unnecessary problems for retailers and shoppers alike.