The Penny is Being Discontinued: How This Affects Retailers

After more than a century in circulation, the penny is finally on its way out. Rising production costs and declining usefulness have made the smallest coin in circulation more trouble than it’s worth. For retailers, this isn’t just a minor change—it affects pricing, cash handling, and how transactions are processed at checkout.

Did You Know?

The U.S. Mint reported that in 2024, it cost about 3.69 cents to make a penny—nearly four times the coin’s actual value.

Global markets provide a useful glimpse: countries like Canada, Australia, and New Zealand have successfully phased out their smallest denominations without major disruptions, offering a blueprint for how U.S. retailers can adapt.

In this blog post, we’ll cover what discontinuing the penny means for retail operations, how point-of-sale (POS) systems and staff will need to adjust, compliance considerations, and the financial and operational benefits for retailers who prepare early.

What Does the Removal of the Penny Mean for Retail?

Discontinuing the penny means changing how cash transactions are handled and affects day-to-day operations in subtle but important ways.

This section breaks down what retailers can expect in their stores:

The End of 1-Cent Transactions

Cash totals will be rounded to the nearest five cents, eliminating 1-cent transactions. Prices themselves don’t need to change, but customers paying with cash will see slightly adjusted totals. Over time, rounding tends to even out, so no customer is systematically overcharged or undercharged.

Impact on Daily Store Operations

From balancing the cash drawer to making change, everyday operations will shift. Staff need to understand rounding procedures and how to communicate them clearly to customers. Clear signage and friendly explanations at checkout can help prevent confusion and maintain a smooth shopping experience.

How Discontinuing the Penny Impacts POS Systems

POS systems are at the heart of modern retail. Updating them for penny removal ensures accurate transactions, smooth operations, and compliance with regulations.

Required POS Updates

The first step is updating your POS to handle penny rounding automatically. This includes configuring rounding rules, adjusting receipt printing to reflect rounded totals, and ensuring your system remains compliant with both federal and local regulations. Automating rounding reduces the risk of human error and keeps every transaction consistent.

POS Training for Cashiers and Staff

Technology can only do so much—your team also needs to know how to handle these changes. Cashiers should be trained to confidently manage cash transactions, explain rounding to customers, and troubleshoot any issues that arise. Clear communication at the register helps prevent confusion and keeps the checkout process smooth.

Integration with Payments & Accounting

Even with rounding in place, your accounting and reporting need to reflect accurate totals. This is essential for day-to-day reconciliation, audits, and financial reporting. Make sure your POS integrates seamlessly with your payment processors and accounting software so that rounded cash transactions are recorded correctly without impacting digital payments.

Impact on Refunds, Exchanges & Voids

Penny removal affects cash refunds differently than card or digital refunds. Cash refunds must follow rounding rules, while card and contactless refunds remain precise to the cent. Staff should clearly understand these distinctions to handle returns smoothly and avoid errors.

Rounding Rules and Settings

Automated POS rounding reduces errors and ensures consistent transactions. Modern POS systems allow flexible rounding settings—round up, round down, or round to the nearest nickel. Automating these rules ensures consistency across all transactions, reduces the chance of mistakes, and saves time during busy periods.

Cash Sales Impacted

While digital payments remain precise, cash transactions are the ones directly affected by rounding. Customers paying with cash will notice slightly adjusted totals, so clear signage and cashier communication are critical for a smooth transition.

Dual Pricing

Retailers with dual pricing, such as gas stations or convenience stores, may display slightly different totals for cash versus card payments. If you operate this way, make sure your staff and customers understand the differences, and consider updating your POS to handle dual pricing transparently and accurately.

Want to take cash management a step further? Explore our dual pricing strategies to learn how your store can offer different prices for cash versus card while keeping your POS running smoothly.

Compliance Requirements and Regulations

Handling cash rounding goes beyond updating your POS—it’s also about staying on the right side of the law. From federal guidance to state-specific rules, retailers need to ensure rounding practices are fair, consistent, and compliant.

Here’s what you need to know before making the switch:

SNAP or EBT Customers

If your store accepts the Supplemental Nutrition Assistance Program (SNAP) or Electronic Benefits Transfer (EBT), these customers must get the same rounded totals as everyone else. Your POS should apply rounding consistently so no one ends up paying more—or less—than they should.

State Laws That Prohibit Rounding Up

Some states and local areas don’t allow cash totals to be rounded up. These rules exist to make sure cash-paying customers aren’t charged more than those paying with cards. Check your POS settings to make sure you’re compliant.

Surcharging State Regulations

Certain states have laws about surcharges and extra fees for payment methods. For example, some don’t allow credit card fees, while others may have restrictions on cash discounts. Staying informed prevents headaches and keeps customers happy.

Federal Legislation: The Common Cents Act

The Common Cents Act aims to standardize rounding nationwide, letting businesses round to the nearest nickel without worrying about conflicting state laws. Until it’s fully in place, keep an eye on both federal and local rules so you’re always in compliance.

Key Operational Changes Retailers Should Expect After Penny Removal

The end of the penny brings operational changes—from cash handling to customer interactions.

Here’s what retailers should prepare for:

Changes to Cash Handling & Register Balancing

With fewer pennies in circulation, counting and making change becomes simpler—but it doesn’t happen automatically. Staff will need to adjust register balancing procedures and get familiar with new rounding rules.

POS systems should be configured to handle rounding consistently, so your team can focus on quick, accurate transactions rather than worrying about missing pennies.

Customer Experience Changes

Customers will notice slightly rounded totals when paying with cash. Clear, proactive communication is key.

Signage at the register and staff guidance can help customers understand why totals are rounded and reassure them that card and digital payments remain exact. This transparency keeps the checkout experience smooth and prevents confusion or frustration.

Inventory & Pricing Strategy Adjustments

Penny removal might also prompt a review of pricing strategies. Retailers may want to adjust prices slightly to make cash totals easier to round, avoiding awkward or inconvenient amounts for customers. Updating POS settings and considering rounding-friendly pricing ensures a seamless shopping experience while keeping transactions efficient.

Financial Benefits of Penny Removal on Retailers

While the end of the penny brings operational changes, it also offers tangible financial and efficiency advantages for retailers.

From reducing costs to improving customer satisfaction, here’s a closer look at how your store can benefit:

Cost Savings

With cash totals rounded to the nearest nickel, retailers may see reduced credit card fees. Some customers may prefer paying with cash when totals are simpler, which can help cut the percentage of transactions subject to card processing fees. Over time, this adds up to measurable savings, especially in high-volume stores.

Faster Checkout

Fewer pennies mean quicker transactions at the register. Counting change and handling small coins slows down checkout lines, particularly during peak hours. By rounding cash totals, you streamline the process, keep lines moving, and enhance the overall shopping experience.

Pricing Adjustment

Discontinuing pennies makes pricing more transparent and eliminates the frustration customers sometimes feel with odd totals like $14.97. Rounded totals simplify the math, reduce customer confusion, and prevent the small irritations that can impact satisfaction.

Improved Store Operational Efficiency

Simplifying cash handling and implementing automated POS rounding reduces human error and saves staff time. Daily operations — from balancing cash drawers to reconciling transactions — become smoother, letting employees focus on customer service rather than chasing pennies.

Positive Impacts on Loyalty Programs

Accurate rounding ensures loyalty points and rewards are calculated fairly. With automated rounding integrated into your POS, customers earn the correct points for their purchases, preventing disputes and maintaining trust in your loyalty program.

From pennies to digital payments, every transaction matters. Loyal-n-Save helps you keep loyalty points accurate and customers happy.

Less Coin Management/Handling

With fewer pennies in circulation, stores spend less time storing, counting, and depositing coins. This lowers operational burdens and even reduces the cost of banking services that handle coin deposits, making overall store management more efficient.

How Retailers Can Prepare for the Transition

A smooth transition away from pennies starts with preparation. Retailers who plan ahead can avoid confusion at the register, keep operations efficient, and maintain a positive customer experience.

Here’s a detailed checklist to help your store get ready:

Update Your POS with Automated Cash Rounding

The first step is ensuring your POS system can handle rounding automatically. By automating this process, you reduce human error, speed up cash transactions, and make sure totals are always accurate. This also helps maintain consistency across all cash transactions, so your accounting and reporting stay precise.

Train Cashiers & Staff

Your team is on the front lines, so it’s essential they’re comfortable with cash handling under the new rules.

Train staff to:

• Understand how rounding works
• Handle cash transactions efficiently
• Explain the changes to customers in a friendly, clear way
  Well-informed staff prevent confusion, improve customer interactions, and help maintain trust.

Update Store Signage & Customer Notices

Customers should never be caught off guard. Use signage, notices, or digital messaging to explain rounding rules and what they can expect at checkout. Clear communication ensures shoppers understand the changes and minimizes questions or complaints.

Review Pricing Strategies

Penny removal is a great time to revisit your pricing strategy. Consider:

• Rounding prices to make cash totals intuitive
• Using dual pricing if appropriate for your store (cash vs. card)
• Ensuring promotions and discounts work smoothly with rounding
  Optimized pricing ensures a seamless checkout experience, reduces customer frustration, and keeps transactions simple.

Curious how penny rounding actually works at the register? Watch Zack break it down step by step and see how your POS can handle cash, rounding, and even loyalty points—no pennies left behind!

Digital Payments Will Become Even More Important

As cash rounding becomes the new norm, digital payments are set to play an even bigger role in everyday retail. Encouraging customers to use cards, mobile wallets, or contactless payments can help keep transactions smooth, accurate, and efficient—both for your staff and your shoppers.

Encouraging Card & Contactless Payments

Digital payments stay precise down to the cent, which means no rounding is needed. They also speed things up at checkout—no coins to count, no change to hand back, and fewer slowdowns during peak hours. Promoting card, mobile, and tap-to-pay options creates a faster flow and a more convenient experience for everyone.

With pennies on their way out, digital payments are more important than ever. See how FTx Card Payments can handle precise card and contactless transactions, streamline checkout, and keep your store running smoothly.

How Loyalty Programs Can Offset Customer Concerns

Some customers may still prefer paying with cash, and that’s okay.

Loyalty programs can help bridge the gap by offering incentives for digital payments—think bonus points, personalized offers, or automatic rewards when they use a card or mobile wallet.

For cash customers, you can also introduce “round-up for charity” campaigns that turn rounding differences into something positive. This approach not only softens concerns but also creates goodwill and supports community causes.

Lower Fraud Risk with Digital Payments

The fewer physical bills and coins your store handles, the lower the chances of theft, loss, or mistakes. Digital payments create a secure, traceable trail that helps reduce shrinkage and ensures your cash management is more accurate and less vulnerable to errors.

Lower Operational Costs

Managing coins—especially pennies—is time-consuming and costly. With more shoppers moving to digital payments, you’ll spend less time counting coins, preparing deposits, and reconciling tills. That translates into real operational savings and frees your team to focus on customer service instead of coin management.

Conclusion

The penny may be gone, but its removal has widespread effects on retail.

Here’s the takeaway for retailers:

Discontinuing the penny impacts pricing, cash transactions, POS systems, and customer communication. Transparency and readiness are essential—retailers who adapt early will experience fewer disruptions and enjoy smoother operations.

By updating POS systems, training staff, adjusting pricing strategies, and promoting digital payments, retailers can turn this change into an opportunity for efficiency, cost savings, and better customer experiences.