A penny for your thoughts.
Pennywise, pound foolish.
A penny saved is a penny earned.
A pretty penny.
In for a penny, in for a dime.
You get the picture. That one-cent piece has coined many popular phrases to live by.
It’s also in danger of becoming an endangered species.
Now, with an estimated 114 billion pennies in circulation, you wouldn’t think that would be the case.
However, the U.S. Treasury has removed it from the production rotation as a cost-cutting measure, given the increasing popularity of cashless, digital commercial transactions.
When the last pennies ran off the assembly line in November, it cost 3.69 cents to produce one coin, according to the U.S. Mint.
If the number of pennies in circulation were anywhere close to that estimated figure, there wouldn’t be any need to change our habits.
The problem lies partly with the countless number of pennies imprisoned in our piggy banks, glass jars and various other receptacles.
It’s a concern that’s already prompted some retailers to take pre-emptive steps, including launching penny buy-backs from customers using incentives like converting rolled coins into gift cards.
Others, like Dunkin’, have enacted policies that round a customer’s change up to the nearest nickel, which precludes the need for penny transactions.
The lack of clarity in this penny downsizing process lies in the dearth of direction from the federal government.
Its decision to discontinue penny production came without a phase-out period or guidelines on how to manage the transition.
Canada went through a similar process in 2012 when the Royal Mint ceased distribution of its penny.
But according to the National Retail Association, the government there provided businesses and consumers with guidance, including the introduction of a new rounding practice that accompanied the decision to cease production.
Cash transactions lacking available pennies were raised to the nearest five-cent increment. The rounding occurred on the final bill of sale after any tax or fee calculations.
Non-cash payments continued to be settled to the cent.
Since there’s no federal process on which to rely, states, including Massachusetts, must take it upon themselves to provide guidance.
“It looks like a minor issue, but it isn’t a minor issue,” said state Rep. Tackey Chan, chairman of the Consumer Protection Committee.
“The penny matters these days. Obviously, we’re living in an inflationary period but … every penny does matter when we’re in a K-shaped economy,” added the Quincy Democrat, alluding to an economic environment with huge disparities between the well-heeled and those struggling to make ends meet.
Chan, who said roughly 20% of the U.S. population is “underbanked” or has insufficient access to a bank, noted that others simply feel safer operating in cash.
Last month, he filed a bill that seeks to simplify the process for those who pay with cash. It would also establish a standard set of rounding rules for cash transactions across Massachusetts businesses.
If the total transaction amount — including all taxes and fees — ends with 1 cent, 2 cents, 6 cents or 7 cents as the final digit, it would be rounded down to the nearest number divisible by five.
Conversely, If the total transaction amount ends with 3 cents, 4 cents, 8 cents or 9 cents as the final digit, the amount would be rounded up to the next number divisible by five.
For example, if a transaction totaled $4.32, the customer would pay $4.30. But if the transaction total was $4.38, the customer would pay $4.40.
Retailers could also round minuscule transaction totals of $0.01 and $0.02 up to $0.05.
Rounding rules would not apply to payments made electronically, or with checks, gift cards or other non-cash methods.
Chan’s bill would also entrust the Office of Consumer Affairs and Business Regulation with writing the rules around fair notice to shoppers.
The legislation currently rests before the House Committee on Rules as it awaits referral to another committee.
“When we look at other countries, it’s a slow process and retailers eventually move to (prices ending with) 0 and 5, so no longer 99 cents or 97 cents,” Chan said.
The system Chan’s bill envisions mirrors what the National Conference of State Legislatures called the “most recommended” way to deal with the point-of-sale headaches created by the penny’s demise.
The NCSL said 60.7% of prices in 2025 ended with .99, 28.6% ended with .05, and 7.5% were a whole-dollar amount.
“It is widely agreed that rounding practices should be consistent nationwide, fair to consumers, retailers and state tax revenue collection, and respect the autonomy of individual jurisdictions,” NCSL said in a brief it published in November. “… The principal change would occur at the point of payment: for cash transactions, the total amount due, including all taxes and fees, will be rounded to the nearest nickel, ensuring compatibility with available currency.”
Chan’s bill may solve penny issues with private commercial transactions, but it might run afoul of municipal or state government payments, which are legally bound to reflect the exact sum owed.
We look at the state rep’s bill as an important first step in seeking answers to a problem that doesn’t have a one-cent solution.
Original article
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