U.S. Retailers Face Cash-Crunch as Penny Production Ends

1 November 2025

Retailers across the United States are grappling with an unexpected operational headache following the decision to cease production of the US one-cent coin. With official minting halted earlier this year, convenience stores, gas stations, fast-food chains and major retailers are finding themselves short on pennies forcing them to reframe how they accept cash and manage change.

The shortage stems from a directive by Donald Trump issued in February that instructed the Treasury to stop producing the penny, citing high production costs. By May, the Treasury placed its final order for penny blanks, and the Fed began phasing out distribution. The move is expected to save the government about $56 million annually, given that each penny costs roughly 3.69 cents to mint.

Retailers say the impact is already material. The National Retail Federation reported members including major chains like Walmart, Target and Macy’s are finding themselves unable to give exact change and are demanding exact cash or even rounding transactions. In states such as California, New York and Illinois, laws require businesses to provide exact change, creating legal and operational uncertainty.

Some convenience-store chains have already implemented workarounds. One store chain posted signs stating, “We are short on change. Please pay with card or exact cash,” while another said it would round down cash totals to the nearest nickel when pennies became unavailable. Such practices, although practical, raise concerns: retailers may absorb the cost of rounding or face consumer backlash over perceived unfairness.

Reuters

The issue is particularly acute at smaller establishments that rely heavily on cash transactions. As the shortage intensifies during the holiday shopping season, many worry they will either lose revenues or face disputes over change. The lack of clear federal guidance compounds the problem. “What’s most helpful in the near term is clarity on rounding practices,” Dylan Jeon, senior director of government relations at the NRF said.

On the other side, the move makes economic sense from a federal perspective: the penny has long been argued to be obsolete. With over 110 billion pennies already in circulation and many stored or discarded rather than spent, the coin’s utility has diminished. Eliminating production is seen as a logical step toward modernising currency.

Still, the transition is messy. Without legislation in place, retailers are caught between keeping cash operations fluid and staying compliant with state laws. Lawmakers have yet to pass a bill facilitating rounding, such as the proposed “Common Cents Act.” In the meantime, businesses may face increased costs, inefficiencies and legal risks.

For many consumers, the change may go unnoticed digital payments continue to rise, and most transactions already avoid pennies. But for the parts of the economy still dependent on coins and cash change gas stations, convenience stores, tip jars the penny’s end is causing real-world strain. As retailers adapt, the broader question looms: how smoothly will the U.S. shift to a cash system without the one-cent coin and at what cost to businesses and consumers alike?