Stores Adapt to Penny Elimination: Strategies Revealed – Deseret News

In February 2023, President Trump issued an order for the U.S. Mint to halt penny production. The move addresses the pressing issue of penny production costs, which exceed the coin’s face value. Currently, it costs approximately 3.9 cents to produce a penny, leading to financial inefficiencies.

Challenges in Phasing Out Pennies

As the U.S. Mint stopped producing pennies, businesses across the nation began experiencing shortages. This transition lacks a clear implementation plan, causing confusion among retailers and banks. Dylan Jeon, the National Retail Federation’s senior director for government relations, highlighted concerns regarding cash transactions in an environment where pennies are increasingly unavailable.

Business Strategies for Penny Shortages

Retailers are implementing various strategies to tackle the penny shortage. Many businesses are modifying their coin management processes, given the difficulties in acquiring pennies from banks.

• Display signage at points of sale urging customers to use exact change.
• Rounding cash transactions temporarily to minimize customer dissatisfaction.
• Educating customers on potential changes in cash transaction practices.

While rounding to the nearest nickel is considered a straightforward approach, certain local and state regulations may restrict such practices. The National Retail Federation is actively advocating for federal guidance to help manage this transition effectively.

Lessons from Canada’s Experience

Canada’s phase-out of its one-cent coin a decade ago provides valuable insights. The Canadian government supported businesses with consistent guidelines during its elimination process. In contrast, U.S. retailers are calling on Congress for similar support, fearing legal repercussions in the absence of a clear plan.

Impact on Major Retailers

Companies like Love’s Travel Stops, which operates over 640 locations across 42 states, reported significant operational challenges due to penny shortages. Should a store run out of pennies, Love’s adjusts change transactions in favor of the customer, temporarily absorbing the financial impact.

State-Level Initiatives

To assist business owners, the Utah Department of Commerce issued a business advisory addressing the penny shortage. This advisory was developed in collaboration with the Utah State Tax Commission and promotes clarity on handling cash transactions.

Recommended Rounding Practices in Utah

According to the advisory, businesses can simplify change calculations as follows:

As businesses adapt to the elimination of the penny, coordinated efforts at both the state and federal levels will be crucial for a smooth transition.