Pennies on the Way Out? What Retailers Need to Know About the Coming Change
Recently, some hardware retailers have gotten a heads up from their local banks: Pennies may be on the way out. For more than a century, pennies have been the quiet constants of American cash drawers—small, plentiful, and often taken for granted. But change is literally in the air. With the U.S. Treasury halting penny production and regional banks already limiting supply, hardware retailers may soon find their coin rolls coming up short.
Production Costs Outpace Value
The U.S. Treasury has placed its final order for penny blanks, signaling that no new pennies will be minted once current inventories are depleted, according to a May 2025 report from WYPR. The decision effectively begins the phase-out of the one-cent coin, a move Treasury officials say reflects the high cost of producing pennies—each costing roughly twice its face value to mint.
The Federal Reserve has confirmed that its coin distribution locations will vary in their ability to fulfill penny orders as existing stock runs low. Some regional cash centers have already stopped distributing pennies or are limiting how many banks can order, according to the American Bankers Association Journal. In certain areas, banks are also declining penny deposits to preserve their remaining supply for circulation.
Industry groups are already taking notice. The National Association of Convenience Stores (NACS) has urged Congress to pass rounding legislation that would allow businesses to round cash transactions to the nearest nickel once pennies are unavailable. NACS notes that many coin distribution points “are already running out of pennies,” and retailers need consistent rules before shortages spread nationwide.
Transition Timeline, Rounding Rules Remain Uncertain
For now, there is no federal law eliminating the penny or mandating rounding, and pennies remain legal tender, according to the Federal Reserve Bank of Richmond. While the Treasury has ended production, the U.S. Mint and Federal Reserve still hold significant coin inventories. That means the transition will happen gradually—more through attrition than by a hard cutoff date.
The American Banker reports that the shift will unfold unevenly across the country, with some regions feeling the pinch earlier than others depending on their local Fed cash center. Retailers in rural or coin-intensive areas are likely to notice first.
Meanwhile, Congress has yet to pass any comprehensive policy establishing rounding rules. Bills such as the Common Cents Act, which would authorize nickel rounding on cash transactions, have been introduced several times but not advanced. Until legislation is finalized, retailers are left to follow bank guidance and adapt to regional differences.
4 Smart Penny-Wise Tips for Hardware Retailers
With penny supplies tightening, hardware and home improvement retailers should start preparing now. Here’s what industry experts and banking sources recommend:
- Stay in contact with your bank. Ask your financial institution how it plans to handle penny orders and deposits. Some may stop distributing them entirely by late fall.
- Plan for rounding at the register. The Richmond Fed estimates that rounding could add a modest “rounding tax” of roughly $6 million annually nationwide, a negligible impact spread across millions of transactions. Still, staff should be trained to explain rounding practices clearly to customers.
- Adjust your POS systems. Many point-of-sale systems already allow rounding options. Updating that functionality early can avoid confusion when pennies run short.
- Keep a small supply while possible. Maintain enough pennies for customer goodwill and to ease the transition. Over time, expect to shift toward nickel-based pricing and rounding.
While the end of the penny won’t happen overnight, the signal is clear: the era of the copper coin is closing. Retailers who prepare now—communicating with banks, updating systems, and educating staff—will be ready when “take a penny, leave a penny” finally becomes a thing of the past.
