The move follows similar phase-outs in Canada (2012) and Australia (1992). The abrupt transition, marked by short notice and a lack of clear rules, risks distorting inflation perceptions, undermining financial literacy, eroding trust in U.S. currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More, and creating logistical nightmares for businesses.
According to the U.S. Mint’s 2024 Annual Report, producing a single Lincoln centFraction of a currency representing the hundredth of the unit of account. More costs 3.69 cents — up from 3.07 cents in 2023 and 2.72 cents in 2022. Given these costs, many argue that eliminating low-denomination coins is a responsible step. However, the cost of minting a nickelMetal used in the manufacture of coins. More has surged to 13.78 cents per coinA coin is a small, flat, round piece of metal alloy (or combination of metals) used primarily as legal tender. Issued by government, they are standardised in weight and composition and are produced at ‘mints’. More. With pennies gone, the MintAn industrial facility manufacturing coins. More will need to increase nickel production, but the operational and financial implications remain unclear. There are currently over 300 billion pennies in circulation.
The penny’s disappearance forces retailers to round prices to the nearest nickel—a changeThis is the action by which certain banknotes and/or coins are exchanged for the same amount in banknotes/coins of a different face value, or unit value. See Exchange. More that may seem minor but carries major psychological and financial consequences.
When a $1.99 item becomes $2.00, the one-cent difference may appear trivial, but the cumulative effect is significant. According to the National Association of Convenience Stores, rounding down in cashMoney in physical form such as banknotes and coins. More transactions—where two pennies in change are typical—could cost the industry $1.25 million per day.
Conversely, rounding up shifts the burden to consumers. The Federal Reserve BankSee Central bank. More of Richmond estimates that rounding to the nearest nickel would cost consumers about $6 million annually, but the psychological toll could be far greater. Shoppers may perceive rounded-up prices as evidence of rising inflation, even if the actual rate remains stable. This perception is dangerous: if people believe prices are climbing, they may cut spending, demand higher wages, or lose confidence in economic stability.
| Scenario | Estimated Cost | Affected Party |
| Rounding down | $1.25 million/day | Retailers (lost revenue) |
| Rounding to nearest nickel | $6 million/year | Consumers |
| Canadian-style rounding | Distributed | Shared between retailers and consumers |
A 2018 paperSee Banknote paper. More by Christina Cheung ‘Eliminating the Penny in Canada: An Economic Analysis of Penny-Rounding on Grocery Items’ found that penny-rounding in grocery transactions imposed a “rounding tax” of approximately $3.27 million, from Canadian consumers to grocery vendors. For a typical grocery store, this amounted to an estimated additional revenue of $15, indicating a minimal impact on individual consumers.
Retailers have long used pricing strategies ending in .99 to create the illusion of a bargain. Without pennies, this tactic collapses. Prices defaulting to .95 or .00 erase the perception of savings, making goods seem more expensive. For low-income households, who rely heavily on cash, the impact is acute. Programs like SNAP (Supplemental Nutrition Assistance Program) require exact change, but the penny shortage makes compliance impossible. Retailers are caught between legal requirements in at least 10 states and cities that mandate exact change and the reality of a disappearing coin.
The lack of federal guidelines has created a patchwork of rounding policies. Some retailers round up or down based on the total, while others absorb the cost. The American Bankers Association (ABA) has proposed adopting the Canadian model: rounding down for amounts ending in 1, 2, 6, or 7 cents, and up for 3, 4, 8, or 9 cents. However, without congressional action to legalize this approach, businesses face compliance risks and customer confusion.
The departure of Ventris C. Gibson, the Mint Director, in November 2025 has left a leadership void just as retailers need clarity. Industry groups are lobbying Congress for legal protection to round to the nearest nickel, but progress is stalled. Meanwhile, the holiday shopping season—already a high-stress period—is now complicated by inconsistent change policies.
The penny has been a cornerstone of financial education for generations. Its disappearance removes a tangible tool for teaching children—and adults—the value of moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More.
Pennies were often a child’s first introduction to counting, saving, and budgeting. Without them, financial literacy programs must adapt. Digital transactions lack the physicality that reinforces lessons about money, particularly in underserved communities where cash is still king.
Research shows that people spend more when using credit cards than cash, partly because physical money creates a psychological “pain” of paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More. The penny’s absence accelerates the shift toward digital payments, risking poorer financial habits. For adults who rely on cash, rounding obscures the true cost of purchases, making budgeting harder.
The penny was more than a coin; it was a symbol of stability and inclusivity. Its abrupt removal, combined with the Mint’s leadership crisis, risks undermining trust in U.S. currency.
Nearly 7 million unbanked U.S. households rely on cash for transparency and control. The penny’s demise is another step toward a financial system that excludes those without digital access. Retailers in states with exact-change laws face fines or lawsuits if they round, while customers paying in cash may feel penalized compared to those using cards or apps.
With no federal standards, businesses are improvising. The ABA and retail groups warn that without legal protection, the transition will be chaotic.
| Event | DateThe year in which a medal or coin was minted. On a banknote, the date is usually the year in which the issuance of that banknote - not its printing or entering into circulation - was formally authorised. More | Impact |
| Mint announces penny phase-out | June 2025 | Retailers begin preparing for rounding |
| Federal Reserve suspends penny distribution | August 2025 | Shortages worsen; ad-hoc policies emerge |
| Resignation of Mint Director Ventris C. Gibson | November 2025 | Leadership gap deepens uncertainty |
| Retailers report $1.25M/day potential losses | November 2025 | Industry lobbies Congress for rounding rules |
| Holiday shopping season | December 2025 | Confusion peaks as customers encounter inconsistent policies |
The Mint produced billions of pennies annually, accounting for roughly 60% of its coin output. The sudden halt threatens jobs, facilities, and the agency’s mission. The departure of Director Gibson has stalled strategic decisions, leaving the Mint without a plan to offset lost revenue or modernize operations.
A Scramble for Relevance
The Mint must pivot to producing more nickels, dimes, and quarters or explore new revenue streams like commemorative coins. But these transitions require time and investment—resources the agency lacks amid a leadership vacuum
Unlike Canada’s three-year phase-out, the U.S. transition has been rushed.
Convenience stores, where half of 125 million daily purchases are in cash, face the brunt of the challenges. Some absorb the cost; others round arbitrarily. The National Retail Federation warns that without federal intervention, the confusion could harm holiday sales and erode consumer trust.
The Federal Reserve’s decision to close most of its 165 coin hubs has cut off penny supplies, leaving banks unable to meet retailer demand. The ABA has urged the Fed to reopen hubs, but no action has been taken.A Small Coin, a Big Mess
The penny’s disappearance was meant to save money. Instead, it has created a $1.25 million/day dilemma for retailers, confused consumers, and eroded trust in U.S. currency. The Mint’s leadership vacuum and lack of clear rules have turned a manageable change into a challenge.
The lesson? Institutional changes require planning, transparency, and strong leadership. The penny may be gone, but the fallout from its poorly managed exit will linger—unless action is taken now. The cost of failure isn’t just measured in cents; it’s measured in the confidence the American currency.