As the U.S. phases out the penny, states are moving to clarify how cash transactions should be handled. New York has proposed symmetrical rounding to the nearest five cents, while other states offer nonbinding guidance. Retailers are using mixed approaches, creating legal and consumer‑protection concerns that advocates say require a uniform federal solution.
Pennies Are Vanishing — Should Retailers Round Up or Down? States Move to Provide Clarity
A photo illustration of pennies.
As pennies fade from circulation across the United States, states are stepping in to advise retailers on how to handle cash transactions without the one-cent coin. With no uniform federal guidance, lawmakers, consumer advocates and merchants are debating whether cash totals should be rounded up, rounded down or rounded symmetrically to the nearest five cents.
Why This Matters
Small amounts add up. While rounding changes affect only a few cents per purchase, the aggregate impact can be significant for both consumers and retailers. Policymakers also worry about protecting people who rely on cash — including low-income households, older adults and those without bank accounts.
State Responses and Proposals
New York lawmakers have proposed legislation that mirrors Canada’s post‑penny practice: symmetrical rounding to the nearest five cents. Under that plan, after-tax cash totals ending in 1, 2, 6 or 7 cents would be rounded down; totals ending in 3, 4, 8 or 9 cents would be rounded up.
Georgia and Utah have issued nonbinding guidance to businesses, and several other states are exploring policy options. Advocates say states cannot wait for Washington to act.
Federal Efforts and Political Context
A bipartisan pair of bills in the U.S. House and Senate would require cash transactions to be rounded to the nearest five cents, but neither has reached a floor vote. Advocates say federal action would create a uniform standard for retailers operating across multiple states.
Legal And Consumer-Protection Concerns
Legal experts warn of several complications if there is no clear policy. Many jurisdictions now require businesses to accept cash and forbid charging cash customers more than noncash customers, with per-transaction fines for violations. Rounding practices could also trigger class-action suits alleging deceptive pricing.
“The unintended consequences of these administrative actions, and these laws and how they flow together, create real problems that were certainly never envisioned,” said Christopher Phillips, a partner at Holland & Knight.
Federal rules add complexity: for example, SNAP regulations prohibit charging more for purchases made with food-stamp benefits, and inconsistent rounding could produce disparities between cash and SNAP transactions.
What Retailers Are Doing
With pennies scarce — the U.S. Mint’s Philadelphia facility struck its last penny on Nov. 12 and many distribution sites reported shortages — retailers have adopted mixed approaches. Some chains, like Kwik Trip, began automatically rounding cash totals down to the nearest nickel to favor customers. Others have encouraged cashless payments, rounded up for charity, or kept differing policies across locations.
Industry groups such as the Retail Industry Leaders Association and the American Bankers Association are urging the federal government to set a national standard to avoid patchwork rules and financial uncertainty for multi-state retailers.
Looking Ahead
State legislators and national task forces have generally recommended symmetrical rounding as the fairest approach. But until Congress or federal regulators act, expect a patchwork of state guidance, voluntary retailer policies and ongoing debate over consumer protection, fairness and legal risk.
Reporter contact: Stateline reporter Kevin Hardy at khardy@stateline.org.
