The Retirement of the Penny and Restaurants

From Brennan Duckett, Director of Technology and Innovation Policy at the National Restaurant Association.

The Retirement of the Penny and Restaurants

Main Street businesses are running out of pennies and urgently need new federal guidance for cash transactions, warned the National Restaurant Association and other business groups in the attached letter this week to Capitol Hill. While restaurants have seen most transactions shift from cash to plastic, the retirement of the penny could be problematic for restaurants and other merchants given that some state and local cash mandates provide contradicting guidance on rounding processes.

The Association is urging Congress to pass The Common Cents Act (S. 1525/H.R. 3074), which would provide clear and expedited guidelines and relief in order to be able to carry out cash transactions with customers.

The Issues:

• States like New Jersey, Massachusetts, and Rhode Island have laws in place requiring businesses to be able to transact with cash, with similar laws also in place in San Francisco and Philadelphia.
• There is currently no guidance about “rounding up” or “rounding down” with respect to the elimination of the penny.
• The Federal Reserve is reporting that dozens of coin distribution locations have already run out of pennies to distribute to facilitate commerce.

Background: The U.S. Mint produced its last pennies in June, and the Federal Reserve (which distributes coins across the country) is reporting that dozens of coin distribution locations have already run out of pennies that facilitate commerce.

• The Common Cents Act would provide clear guidelines for businesses completing cash transactions with customers. The legislation would follow Canada’s lead on rounding: if the final digit of a purchase ends in 3, 4, 8 or 9 cents, the total will be rounded up; if it ends in 1, 2, 6 or 7 cents, it will be rounded down. Transactions ending in 0 or 5 cents are not rounded.

The Association will continue to work with fellow members of the Merchant Payments Coalition (MPC) to advocate for clear federal guidance on rounding following the phase out of the penny.