The American penny isn’t going anywhere anytime soon.
The US Treasury Department announced Thursday that it plans to start winding down production of the one-cent coin it has been minting for more than 230 years. But the penny will still remain legal tender, and will still be in use at thousands of retailers around the country for sometime to come.
“If we look at the experience in Canada, for the first year after they stopped making pennies, there’s really no change in transactions,” Jeff Lenard, spokesperson for the National Association of Convenience Stores, told CNN. Convenience stores do more cash transactions than any other group, about 32 million a day, or about 20% of the total number of purchases by their customers, Lenard said.
The National Retail Federation, which represents most major US store chains as well as thousands of small retailers, also said it anticipates its members will use pennies even after production stops at some point early next year, although it does anticipate that many will round cash transactions to the nearest nickel once the supply of pennies at banks starts to run short.
“Retailers’ primary goal is serving customers and making this transition as seamless as possible,” said Dylan Jeon, senior director of government relations for NRF.
There are an estimated 114 billion pennies currently in circulation, but they are “severely underutilized” according to the Treasury department. Many are at home in coin jars or junk drawers, or some other forgotten location gathering dust.
The math says that all those pennies could fill a cube roughly 13 stories high. Many people don’t even take them as change, tossing them into the leave-a-penny-take-a-penny dishes at store checkouts.
Lenard said the large number of pennies in circulation means that retailers won’t necessary run out of them for a while. But eventually stores won’t be able to get new rolls of pennies from their banks and will start rounding transactions up or down to the nearest nickel. The decision when to do that will rest with each retailer, not official government policy.
Electronic transactions such as credit and debit card purchases, will continue to be down to the penny, Lenard said, with only cash transactions being rounded.
Even in countries like Canada, where penny production has been discontinued, the penny remains legal tender today. Canada’s finance ministry said pennies retain their value for transactions “indefinitely” despite the fact that it stopped making the coin in 2012. If a customer wants to use pennies to complete a transaction, most retailers are likely to allow them, Lenard said.
“There’s a saying in retail, ‘Never lose a customer over a penny,’” he said. “I never really thought of it in these terms, but it applies even more here. I think if someone wants to pay with pennies, most retailers will err on the side of making those customers happy.”
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