American businesses are facing losses amounting to millions, even tens of millions, due to the U.S. government's announcement to stop minting one-cent coins in order to save on minting costs.
Businesses in several parts of the United States have reported running out of pennies and are unable to give change. The convenience store chain Sheetz briefly launched a promotion to address the shortage, offering customers a free bottle of soda if they brought 100 pennies.
Other retailers have tried rounding down prices to multiples of 5, or donating the change directly to charity to avoid giving change, but this means millions of dollars in losses for retailers.
This situation is likely to worsen with Thanksgiving and the subsequent Black Friday shopping season. Jeff Lenard of the American Convenience Store Association stated that although they have been advocating for the abolition of the penny for the past 30 years, this is not the outcome they want.
Earlier this year, US President Trump announced a halt to the minting of one-cent coins because the production costs of one-cent and five-cent coins had consistently exceeded their face value. According to a Mint report, the cost of minting one one-cent coin in the US in 2024 was as high as 3.7 cents.
The U.S. Treasury estimates that ceasing the minting of one-cent coins would save $56 million. However, while the production of one-cent and five-cent coins is unprofitable, the U.S. Mint remains profitable through the production of other circulating coins and collector's proof and commemorative coins. Last year, the U.S. Mint earned $182 million in seigniorage profits.
Therefore, even in order to save costs, the Trump administration does not need to rush to completely stop the minting of the one-cent coin, the most widely issued coin, because the current US economy is not yet fully prepared.
In some U.S. states and cities, it is illegal to round transaction amounts to the nearest five or ten cents. While Congress is considering a law to ensure such practices are legal, rounding up would clearly further increase the burden on consumers and fuel discontent.
Meanwhile, pennies were typically used as change after issuance and rarely re-entered the economic system. Americans often kept pennies in jars or used them as decorations. This required the Mint to produce a large number of pennies each year.
In addition, it operates coin terminals for banks. Cash-in-transit companies that handle coins have also begun cutting back on one-cent coin services. Data shows that about one-third of the 170 coin terminals have stopped accepting one-cent coins.
Troy Richards, president of Louisiana Guaranteed Bank and Trust, said he has been running around since August to ensure his customers have enough change. The bank ’s $1,800 reserve of one-cent coins was depleted within two weeks, and his branch now only keeps a small number of one-cent coins for customers who need to cash checks.
A blanket policy is causing unnecessary pain for the US retail industry. Looking at the history of other countries, Canada announced the elimination of the penny in 2012 and began phasing out penny cash transactions in 2013, but ten years later it is still recalling and exchanging pennies. The UK's "decimalization" process, transitioning from quarter-pence and shilling coins to a £1 100-pence monetary system, took nearly a decade.
(Article source: CLS)
