Introduction: The New Cost of Commerce
The decision by the U.S. Mint to cease production of the one-cent coin — driven by the unsustainable reality that each penny costs 3.69 cents, nearly four times its face value[1] — marks a fundamental and immediate shift in American commerce. This executive mandate has externalized a significant operational burden on the retail and quick-service restaurant (QSR) industries.
The physical coin shortage materialized rapidly, well ahead of projections, following the U.S. Mint placing its final order for penny blanks in May 2025. As the Federal Reserve’s distribution locations began suspending penny services, more than 80 terminals quickly ran out of coins, forcing businesses into an operational vacuum.[2] This lack of exact change necessitates rounding cash transactions to the nearest 5 cents, creating an immediate, high-stakes crisis defined by two critical risks for executives: legal exposure and customer friction.
This white paper outlines the strategic imperatives necessary for retail and restaurant leadership to navigate this transition effectively across four critical domains: (1) legal compliance, (2) POS system architecture, (3) employee training, and (4) customer experience.
I. Legal and Compliance Imperatives: Navigating the Regulatory Void
The most immediate strategic challenge is the absence of consistent federal guidance.[3] Unlike Canada’s structured 2012 phase-out, the U.S. dropped the penny abruptly,[4] leaving businesses exposed to potential litigation and regulatory risk.
The Exposure to Cash Discrimination and SNAP Compliance
The core legal threat involves cash discrimination statutes, which prohibit charging cash-paying customers a different price than those using electronic payments.
- Symmetric Rounding Risk: Implementing symmetric rounding — which rounds both up and down to the nearest nickel — can risk generating a net gain for the retailer over time. This discrepancy (exact for card, up/down for cash) is considered differential pricing and risks violating cash discrimination statutes.
- SNAP Compliance Risk: Supplemental Nutrition Assistance Program (SNAP)-authorized retailers face even higher scrutiny. Federal rules strictly require that SNAP customers receive pricing identical to that of other cash customers. Any rounding policy that results in a SNAP customer paying more is a violation of these equal treatment provisions.[5]
The Legally Defensible Strategy
To minimize these risks, the most legally defensible strategy is customer-favorable rounding. This requires that all cash transactions be rounded down to the nearest nickel.
Major chains have adopted this posture as legal insurance. Kwik Trip, for instance, implemented a company-wide policy to round all cash purchases down, acknowledging that the verifiable economic loss — estimated at $3 million annually — is preferable to the unknown, potentially catastrophic cost of consumer litigation and fines. By contrast, retailers using symmetric rounding, like McDonald’s at some locations, carry an elevated risk profile.[6]
Advocacy for Legislative Certainty
The only comprehensive solution is national legislative clarity. Trade associations are actively urging Congress to pass the Common Cents Act (H.R. 3074 and S. 1525). This legislation would establish a uniform federal standard authorizing rounding cash totals on the final bill to the nearest 5 cents, preempting conflicting state sales tax laws, which currently only provide provisions for rounding to the penny, not the nickel.
II. POS System Adaptation: The Digital Mandate
The point-of-sale (POS) system must function as the compliance gatekeeper. Any rounding performed manually by employees is a critical operational failure risk.
Conditional Logic and Audit Requirements
Executives must ensure POS systems are updated to handle rounding dynamically and conditionally.
- Tender Type Isolation: The system must strictly apply the rounding rule only when the tender type is cash. Card, mobile, and other electronic payments must remain settled to the exact cent amount.
- Audit Trail Segregation: To defend against legal scrutiny, the POS must record the rounding difference (the small gain or loss) not as revenue, but as an adjustment to the internal “cash over or short account.” This procedure frames rounding as a “physical cash handling procedure” caused by the coin shortage, not a difference in the price charged, which is a key legal distinction.[7]
For many operators, particularly those running legacy systems, this requires unforeseen capital expenditure. POS software updates, licensing fees (typically $50 to $300 per month), and service agreements ($100 to $1,000 per year) are now mandatory CapEx to ensure compliance and prevent reconciliation failure.
III. Managing the Customer and Staff Interface
A currency change is a major source of customer friction. Successful management relies on transparent communication and rigorous employee training.
Proactive Customer Communication
Given the lack of a government public awareness campaign, businesses must take ownership of consumer education.
- Explicit Signage: Implement clear, concise signage at every point of sale. Recommended language, adapted from international best practice, should be explicit: A brief sign near the counter can read, “Cash payments round to the nearest nickel because pennies are no longer issued. Card totals are unchanged.” Clear language prevents surprises and preserves trust.
- Strategic Rounding Choice: Wendy’s and GoTo Foods (parent of Auntie Anne’s, Cinnabon, Jamba, and Carvel) have opted for rounding down in the guest’s favor to preserve goodwill and avoid confrontation. Conversely, Sheetz encourages customers to round up cash payments to charity, neutralizing the negative perception of gaining revenue from rounding.
- Menu Engineering: While menu prices do not need to change (rounding occurs post-tax on the final total), some retail experts are recommending reviewing pricing architecture to gradually shift price points to end in $.00 or $.05 increments to simplify transactions and ensure more consistent rounding outcomes.
Mandatory Employee Training
Frontline staff must be thoroughly trained, as inconsistent application of rules leads directly to customer dissatisfaction. Mandatory training programs must cover the policy rationale, the precise mechanics of rounding (symmetric vs. downward), and confirmation that rounding applies only to cash.
IV. Strategic Outlook: The Looming Nickel Threat
The penny phase-out is likely the first act in a larger monetary shift. Executives must begin future-proofing systems for the inevitable elimination of the nickel, which currently costs nearly 14 cents to produce — substantially more than the penny.
- Anticipate Increased Nickel Demand: Demand for nickels is expected to surge by 30% to 40% as they become the de facto lowest denomination for rounding.
- Plan for Dime Rounding: Prudent corporate planning must assume the nickel will be phased out within the next three to five years. Systems procured today must be capable of transitioning seamlessly to rounding to the nearest dime (10 cents) to avoid repeating the costly system overhaul.
V. Executive Action Matrix and Call to Action
The corporate response to the penny’s phase-out is highly differentiated, reflecting distinct risk tolerances. The safest path minimizes legal exposure by prioritizing the customer.
Comparative Corporate Responses
| Company/Sector | Primary | Rounding Rule for Cash | Legal Risk Profile | Rationale & Status |
| Kwik Trip (Convenience) | Customer-favorable (proactive compliance) | Round down to nearest $0.05 | Lowest (acts as compliance insurance) | Avoids cash discrimination and SNAP violations, despite measurable revenue loss |
| Wendy’s / GoTo Foods (QSR) | Customer-favorable (inventory contingent) | Round down to nearest $0.05 when experiencing shortages | Low | Mitigates customer friction when operational constraints prevent exact change |
| McDonald’s (QSR) | Symmetric rounding | Rounds up/down to nearest $0.05 | Elevated | Aims for revenue neutrality but increases exposure to differential pricing complaints |
| Kroger / Home Depot (Retail) | Inventory management | Accepts pennies but requests exact change | Minimal | Delays need for mandatory rounding by managing existing coin stock |
| Price Chopper / Giant Eagle (Grocers) | Inventory buyback | Offers double-value gift cards for returned pennies | Minimal | Rapidly restocks physical inventory to support exact change service and avoid immediate rounding |
Call to Action
The end of the penny is more than a logistical challenge; it is a catalyst accelerating the shift toward a cashless economy and demanding immediate structural change. The successful executive response requires adopting a stance of proactive legal conservatism: prioritizing customer-favorable policies to mitigate class-action risk while aggressively updating technology to manage conditional rounding.
By standardizing training, communicating transparently, and modeling for the inevitable phase-out of the nickel, leaders can transform this unexpected currency reform from a liability into a defining opportunity to modernize operations and secure a stable, compliant financial future.
Notes
[1] The U.S. government is expected to stop producing new pennies for circulation by early 2026. In 2024, the Treasury incurred a seigniorage loss of $85.3 million on penny production. Producing and distributing a single penny costs 3.69 cents, nearly four times its face value.
[2]The Federal Reserve’s FedCash Services operation manages the distribution of currency to financial institutions. As of late October 2025, 83 of those locations—including those in New York, Chicago, Philadelphia, Boston and San Francisco—had distributed their last pennies. More than 60 Federal Reserve coin terminals have already ceased all penny transactions due to falling inventory.
[3] Traditional rounding practices may violate consumer protection rules, including cash discrimination statutes and Supplemental Nutrition Assistance Program (SNAP) regulations, unless retailers apply compliant rounding methods such as rounding all cash and SNAP transactions down. The discontinuation is creating nationwide cash-handling and compliance challenges due to a lack of clear guidance.
[4] Canada phased out its penny in 2012, offering consistent government guidance on rounding cash transactions to the nearest five-cent increment on the final bill after tax calculations.
[5] Under SNAP equal treatment provisions, stores must treat consumers the same, regardless of benefit use.
[6] McDonald’s told CBS News that in some locations, customers paying with cash may no longer receive exact change and will round totals to the nearest 5 cents for cash transactions, which is symmetric rounding. Digital and card payments stay unaffected.
[7] The rounding rule can be framed and applied solely as a physical cash handling procedure when pennies are not available, rather than as a different charge based on payment method. Under this approach, any rounding difference is recorded only in the cash over or short account.
© Copyright 2026. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
