As business owners, it’s time to familiarize yourselves with an operational change quietly unfolding across the U.S. cash economy: the phasing-out of the 1-cent coin (the penny). Below is a concise guide — why this is happening, what it means for your business, and practical next steps you can take.

1. Why the change is happening

• The United States Mint reported that producing and distributing a penny cost about 3.69 cents in 2024 — nearly four times its face value.
  
  

• As a result the United States Department of the Treasury placed its final order for blank penny planchets in May 2025 and intends to cease new penny production by early 2026. 
  
  

• The Federal Reserve (through its coin distribution operations) has also indicated that some coin-distribution terminals are no longer processing penny orders or deposits because supplies are being depleted. 
  
  

In short: pennies will remain legal tender for now, but they are on their way to becoming far less common in everyday cash transactions.

2. What this means for your business

• Cash transactions may involve rounding: Because pennies will become scarce, many businesses are already preparing to round cash transaction totals to the nearest five cents. According to a research brief by the Federal Reserve Bank of Richmond, this “rounding tax” could cost consumers and change how cash handling is performed.
  
  

• Inconsistent rules at present: There is no federal law requiring rounding, nor is there a single nationwide standard yet. That means businesses may see different local practices or face uncertainty.
  
  

• Cashless and digital payments remain unaffected: Rounding issues apply to cash payments. Credit cards, mobile pay, and other non-cash methods aren’t impacted by penny shortages.
  
  

For a business accustomed to cash transactions (especially small purchases, tips, perhaps retail or food service), this is a meaningful operational shift.

3. Recommended actions and tips

Here are key steps you can take now to prepare and avoid disruption:

• Review pricing and register procedures: Consider updating pricing so that your item totals more naturally fall on nickel multiples (e.g., endings in .00 or .05) to minimize reliance on pennies.
  
  

• Train your staff: Your front-line employees should be prepared to explain to customers what change in coin handling means (for example, why totals might be rounded or why fewer pennies may be given).
  
  

• Evaluate your coin inventory and register system: If you keep rolls of pennies for change, you may want to reassess how many you need going forward. Also make sure your POS (point-of-sale) system can handle rounding rules if you adopt them. 
  
  

• Communicate clearly with customers: Having signage or notices letting customers know about rounding or penny scarcity will reduce confusion and build goodwill.
  
  

• Encourage digital payments: Since non-cash payments are unaffected, promoting contactless or card payments can reduce dependency on coin change and simplify checkout. 

4. Why acting now matters

• If your business frequently deals with low-denomination cash transactions (think meter charges, vending, small retail purchases, tips, etc.), the impact will come earlier. Regions are already reporting penny shortages.
  
  

• Waiting until a coin shortage becomes acute could disrupt customer experience (e.g., inability to give exact change, customer dissatisfaction).
  
  

• Early adaptation will give you a competitive and operational edge: fewer surprises, smoother cash handling, clearer customer communication.
  
  

5. Bottom line

The end of the penny doesn’t happen overnight, but the momentum is clear. As a business owner, you’re well-advised to plan ahead: revisit your pricing, update your cash-handling procedures, train your team, and communicate with your customers. That way, you’ll be ready when pennies fade into the background — and you’ll avoid headaches or customer confusion.