Business Insights

What the elimination of the penny means for small businesses and their customers

It’s had a good run. But, beginning in 2026, the U.S. Mint will no longer coin the humble penny. Given how each penny costs nearly four cents to make, it’s a decision that certainly adds up.

Once new pennies stop being made, shortages will be inevitable and beyond the control of any bank. Expect a limited availability of pennies from banks and suppliers, one that will grow more acute over time.

If you’re in a business that takes cash payments, the shrinking inventory of pennies could cause questions among customers, not to mention adjustments in how you manage cash transactions. Here are key points to consider – and proactive steps to take – over time.

First things first: The penny is still currency

When the U.S. Mint ceases production of the penny, that doesn’t mean it’s out of circulation. Pennies in coin jars and piggy banks everywhere are still legal tender—and will remain so for the foreseeable future.

However, over time, there will be fewer pennies exchanged in everyday business. In fact, given how pennies are now used in a small percentage of transactions, this is just the continuation of a broad trend.

With a penny shortage looming, perhaps more quickly than you might expect, the time to take measures is now.

Plan for coin shortages

Once production of new pennies stops, shortages will be inevitable and beyond the control of any bank. That makes it important to expect an increasingly limited availability of pennies and manage your inventory accordingly.

One expedient? During past penny shortages, businesses often offered discounts or premiums to customers who paid with pennies.

Make digital payments easier

Australia, Canada, and New Zealand have all eliminated penny production. In those countries, some retailers began rounding to the nearest nickel increment for cash transactions, including sales taxes, as pennies ran low.

However, while the penny shortage may affect cash payments, it will have no effect on the final sales price on digital transactions. So, to limit confusion, consider adjusting prices based on digital payments. At the same time, consider making it easier to accept credit/debit cards, mobile wallets, or payment apps.

Train your staff

Managing customer expectations will prove important. Signage and notices can communicate these changes to customers -- before they reach your registers to make a purchase.

Further, teach your staff about how to communicate these changes clearly and confidently to customers.

Monitor regulations

When it comes to how the IRS or your state and local revenue agencies view rounding, the rule book remains mostly unwritten. It is a good idea to be on the lookout for any updated guidelines from the IRS, Treasury, and state revenue departments. And consult your tax advisor for the latest tax advice.

Over time, the loss of the penny should not have a big impact on how you receive payments. At the same time, the steps you take today will help avoid any issues when the penny shortage takes place. To learn more about penny discontinuation and what to expect, visit regions.com/penny today.

That way, you’re prepared to make the change in the easiest possible way.