Estimated reading time: 7 minutes
The clock is ticking for the humble one-cent coin. For years, we’ve heard murmurs, but the looming phase-out of the penny is now a real, operational challenge that convenience store and gas station owners just can’t ignore. The United States Mint is ending production for circulation by early 2026, and frankly, supply is already constrained. This whole situation, which we call the “penny crisis,” is a big deal because c-stores and fuel outlets thrive on high-volume, low-value cash transactions, and that’s where the penny matters most. Forget about the nostalgia; this is a how-to guide for keeping your operations running smoothly, your customers happy, and your business compliant as this small coin makes a surprisingly large exit.
What the Penny Crisis Means for Your Customers and Checkout Speed
The simple truth is that pennies are getting scarce, making it harder for cashiers to give back exact change. The numbers are shocking, the Treasury reported a seigniorage loss of $85.3 million in 2024 from producing over 3 billion pennies that each cost about 3.69 cents to make. Because of this financial hemorrhage and the supply pressures, many Federal Reserve coin-vault locations have already suspended penny orders, making them tough to get.
What this means for the person standing at your counter with a $5 bill for a $2.99 snack: rounding. Retailers are starting to round cash transactions to the nearest nickel. This creates a divergence, consumers paying with cards or mobile payments are entirely unaffected, but cash payers suddenly face what the Federal Reserve Bank of Richmond estimates could be an aggregate $6 million annually in “rounding tax” across the country.
For a convenience operator, having to say “we’re out of pennies” or asking a customer for exact change can really slow down the line and, importantly, lead to frustration. If cash-only customers feel disadvantaged because their $2.01 fuel increment gets rounded up to $2.05, that’s a problem for customer loyalty which we need to avoid.
How to manage the front line:
- Implement Clear Policy: Decide right now if you will adopt rounding. Most retailers use a system where transactions ending in 1-2 cents or 6-7 cents round down, and 3-4 cents or 8-9 cents round up-that tends to be the fairest.
- Signage is Key: Put up clear signs right at the register and the fuel pump. Make the policy totally transparent: “Cash purchases may be rounded to the nearest 5 cents.” That kind of communication prevents arguments.
- Train Staff Consistently: Your cashiers are on the front lines. They need to understand the rounding policy inside and out and be able to explain it calmly and consistently. This really isn’t about making a profit; it’s about making change when the supply chain is broken.
I was at a store the other day buying a soda and the cashier, bless her heart, she just waved me off about the change, and it felt super awkward like I was getting special treatment or something, we need a better system than that.
Taxation, Compliance, and the Nickel Dilemma
The logistics of rounding aren’t just a customer service issue; there are major financial and legal implications to consider, especially for multi-site operators. The operational cost of handling coins, counting, wrapping, and transporting, that is a real expense, and coin shortages actually increase the cost of getting what little change is available. This is where your POS system and back office procedures become absolutely critical.
The Rounding Risk
When you round, you introduce a subtle financial effect. You must ensure that your rounding practice does not conflict with sales tax calculation. Sales tax must always be calculated on the actual price of the product, not the rounded cash payment total. Updating your POS software is non-negotiable here.
There’s also the question of regulatory risk. This is the part that will really keep a multi-state owner-operator up at night, because there is no comprehensive federal law yet that standardizes rounding rules, industry groups like NACS are pushing Congress but until they act, you face a patchwork of state and local rules. For example, under the Supplemental Nutrition Assistance Program (SNAP) rules, a store has to treat customers paying with EBT the same as other cash customers, so if your rounding policy creates different effective pricing, it could violate SNAP equal treatment regulations and that is just one area where the rules are complicated.
Financial and Compliance Checklist:
- POS System Audit: Confirm your POS can track the actual sale price for tax purposes while managing the rounded cash collected amount.
- Review Coin Inventory: Start tracking coin inventory like you track fast-moving products. Which locations are constantly running low on pennies? Use that data to forecast coin needs.
- Monitor Card vs. Cash Mix: Cash transactions are declining, but NACS data shows they still represent about one in five transactions in c-stores, so you still have to manage this; increasing your card payment acceptance and promotion will naturally reduce your dependency on coins.
Strategic Options for Keeping the Change Flowing
A proactive strategy is your best defense against the penny crisis. You have options beyond just rounding up or down and you should explore every single one.
1. Shift to Cashless Payments
This is the cleanest solution: promote debit/credit/app payments which completely bypass the coin problem.
- Display clear signage encouraging card or mobile pay.
- For your fuel customers, make sure that tap & pay at the pump is flawless and fast, and promote your mobile pay apps for in-store purchases.
2. Coin Recycling and Outreach
Some innovative chains have launched coin collection initiatives, asking customers to bring in spare pennies they have lying around in exchange for a free coffee or a small discount. This is a great way to replenish your supply while getting a little positive PR. Additionally, partner closer with your armored courier or bank to secure coin orders in advance.
3. Review Your Pricing
An overlooked strategy is simply adjusting your pricing. Consider setting product prices to end in 0 cents or 5 cents. This might require a menu review but eliminating those 1, 2, 6, and 7-cent endings reduces the need for rounding altogether, and it’s a big win for simplifying the checkout experience, and that’s something we should all be striving for.
4. Advocacy and Education
You need to stay updated on regulatory guidance from both USDA (for SNAP compliance) and your state governments. Engage through your local and national trade associations to push for clear, uniform legislation allowing sensible rounding practices. Educate your store managers and frontline staff about all these new operational changes, because customer messaging and compliance risk are now part of their daily job.
This penny problem, while it seems small, really is a tipping point for retail payments, forcing c-stores to modernize their cash handling and payment infrastructure, which is a good thing for business efficiency and frankly, the future.
Facts & Figures Snapshot
| Detail | Statistic | Source |
| Penny Production Cost (2024) | approx 3.69 cents per penny | US Mint / Treasury |
| Treasury Loss on Penny (2024) | approx $85.3 million | US Treasury |
| Estimated Annual “Rounding Tax” | approx $6 million to consumers | Federal Reserve Bank of Richmond |
| C-Store Cash Transactions | approx One in five transactions | NACS Data |
FAQ for Owner-Operators
If I round up a cash transaction, is that extra revenue taxable?
No, sales tax is calculated on the pre-rounded price of the goods. The rounded amount you collect is simply the final cash exchange. Your POS must track the actual selling price for tax reporting, even if you keep the slightly higher collected cash amount. Consult a tax professional to ensure your bookkeeping aligns with state rules, some states may have different guidance on this.
Can I refuse to accept pennies as payment?
Legally, the penny remains “legal tender” so you can’t fully refuse it, but you can enforce a clear rounding policy for providing change. You can also post a sign encouraging customers to use the exact change if they have it.
How do I ensure rounding doesn’t violate SNAP/EBT rules?
Consistency is paramount. The general rule is to treat EBT customers the same as all other cash customers. If you have a clear, written, and consistently applied rounding policy for all cash transactions, including the portions of a transaction paid with EBT funds, it is less likely to be viewed as discriminatory pricing. Document your policy and train staff thoroughly.
Should I worry about customer pushback if I round up?
Consumer backlash is a risk if the policy isn’t transparent. You should communicate clearly that rounding is a necessity due to a national coin shortage, not a choice for profit. The most equitable approach-rounding down as often as rounding up-minimizes friction, making it a fair system.
