By now, many Americans understand the quirky math behind minting coins: it costs around 4 cents to make a single penny. You probably have a few in jars or scattered in pockets and purses.
Despite its size, the penny holds cultural significance. Imagine if it vanished—along with traditions like “take a penny, leave a penny” and tossing coins into fountains for luck.
However, the penny’s time is running out. The U.S. Mint produced its final 1-cent coin on November 12, 2025, as instructed by the White House. While pennies will still be legal tender, we will start seeing them less frequently in circulation.
This shift could disrupt small, cash-based businesses. As cash transactions round to the nearest nickel, people without bank accounts—often the most vulnerable—may face unexpected price hikes.
As a finance expert and professor, I see both sides of this change.
Who Stands to Gain?
The U.S. government could save tens of millions of dollars by ceasing penny production. Pennies are costly to mint, making eliminating them a clear choice for improving efficiency.
Banks and credit unions are also likely to benefit. Handling pennies incurs extra labor and equipment costs. Removing these low-value coins could streamline operations, resulting in immediate savings across thousands of branches.
Interestingly, the armored-carrier industry stands to gain. Companies like Loomis and Brink’s find pennies to be heavy and unprofitable to transport. Eliminating penny pickups could save them on fuel and labor.
Larger retailers may find it easier to adjust. They can reprogram cash registers and stockpile pennies without much hassle. Plus, large chains benefit from lower credit card processing rates compared to smaller retailers, which often face higher costs for the same transactions. This could lead to a rise in plastic payments, favoring big businesses.
While some banks and retailers have voiced concerns about the pace of this change, for most, it’s a minor adjustment. Online businesses are used to cash-free transactions, making this shift simpler.
Who Might Suffer?
For small businesses, the phasing out of the penny underscores existing challenges. As cash transactions round to the nearest nickel, experts predict a potential “rounding tax,” costing businesses and consumers around $6 million annually, according to the Federal Reserve Bank of Richmond.
Switching to credit cards offers its own challenges. Small merchants often find it difficult to negotiate lower card-processing fees, which can average 2.5% to 3.5% per transaction. For example, in a typical quick-service restaurant where a customer spends $14, processing fees can reach around 41 cents per transaction, significantly cutting into already tight margins.
Interestingly, handling cash comes with costs, too. Studies show that taking cash can cost about 53 cents for every $100 of sales, compared to more than a dollar when accepting debit cards. Each payment method has its challenges, and businesses must weigh their options carefully.
The groups most affected will be those relying on cash: older adults, low-income households, and those without bank accounts. Price increases—however small—can impact their budgets directly, unlike those who use credit cards and benefit from rewards programs.
A Shift Toward Digital
Many who pay electronically may hardly notice the penny’s absence. Digital payment methods, from phone taps to QR codes, could continue to work seamlessly. One workaround for businesses is to adjust cash transactions while keeping electronic payments precise.
Yet, even digital payments come with hidden costs. Research shows that using credit cards leads to increased spending—often 10% to 20% more than when paying with cash. Those higher merchant fees also mean that consumers may end up paying more at the register.
Ending penny production may make economic sense for the government and larger businesses. However, it highlights a deeper impact: efficiency often benefits the already efficient. For many, every cent still matters.
