News You Can Use

Hampton Roads businesses, banks prepare for scarcity of pennies

The federal government says it’s time to stop saving — and start spending — your pennies.

After 232 years, the U.S. Mint officially ceased penny production, at President Donald Trump’s urging, in November to save a projected $56 million a year. Over the past 10 years, the cost to produce each penny, including materials, facilities and overhead, has risen from 1.3 cents to almost 3.7 cents, according to the U.S. Department of Treasury.

The Federal Reserve will continue to recirculate the roughly 114 billion pennies left for as long as possible, and the Treasury Department, on its website, encourages consumers to spend their pennies for a smooth transition.

Pennies remain legal tender, but the shortage of 1-cent coins already is creating rounding issues for cash transactions in Hampton Roads.
 

State rounding legislation

Bill HB954, introduced by Del. Vivian Watts, D-Annandale, passed the House and Senate in the Virginia General Assembly and is awaiting Gov. Abigail Spanberger’s signature. The legislation would allow local governments to switch to nickel-based cash accounting, including rounding to the nearest 5-cent increment when pennies are not on hand at least until July 1, 2027.

The bill was introduced after municipalities and retailer merchants came to Watts with the proposed national standard for rounding.

“I believe strongly that we need to act now,” Watts said. “We are indeed changing our money system and we no longer have the pennies.”

Symmetrical penny rounding is one solution that local retailers are using.

It works like this: If final prices — after taxes — end in one, two, six or seven cents then payment in cash rounds down. If the final price ends in three, four, eight, or nine, then the cash payment rounds up. So, for instance, $1.91 becomes $1.90; $1.96 rounds down to $1.95; $1.93 becomes $1.95; and $1.98 rounds up to $2.

But rounding may lead to an increased demand for nickels, which cost close to 14 cents each to make, according to the U.S. Mint’s 2024 annual report.
 

Banks provide their 2 cents

Dollar Bank, like many financial institutions nationwide, is paying close attention to the potential impact of limited penny supplies and is considering options for the future as a shortage becomes more imminent, said Morton Stanfield, senior vice president retail banking and community development.

“We are actively monitoring our penny inventory and coordinating internally to ensure branches can continue to meet everyday customer needs,” Stanfield said in an email.

Dollar Bank’s branches, including in the region, maintain a supply and will continue to make them available to customers, he said.

“A recent survey of our business customers did not reveal any significant concerns related to penny availability,” Stanfield said. “That may change as time goes on and we are committed to working closely with customers to assist in any way we can as they transition to a penny-free environment.”

Southern Bank, also with branches in the region, is providing its business clients with flyers to help clarify what the end of penny production means.

An article on TowneBank’s website details what the end of the penny means for businesses. Towne suggests business owners take inventory of their pennies, learn the round up and round down system, encourage digital payment methods, be transparent with customers, and train employees.

Suffolk-based TowneBank has an adequate supply of pennies at Hampton Roads branches, but is no longer able to obtain additional pennies for its North Carolina and Richmond markets, said Robin Cooke, president of retail banking.

“We will continue to monitor the situation, and as penny availability declines, TowneBank will round up the value of checks when they are cashed,” Cooke said. “This will ensure that our members will not take a loss when cashing checks.”

TowneBank members who want to exchange dollar bills for pennies at the Hampton Roads locations can do so, but are limited to a maximum of two boxes per person, she said.
 

Keeping consumers in the know

Signs are popping up at local stores alerting customers of the penny shortage.

At Food Lion, a sign on the entrance doors says, “Exact change is appreciated.”

PetSmart customers are encouraged to — if possible — pay with exact change or use credit, debit or contactless payment.

A sign at Lidl on Providence Road in Virginia Beach says, “In response to the national penny shortage, this location will start rounding all cash transactions to the nearest nickel once we are out of pennies. All rounding will be in the favor of the customer.”

A sign at the counter at DSW Designer Shoe Warehouse in Chesapeake details how the rounding works: “Your purchase total will not change, only the change you receive back will be affected. If you’re paying with a card or other form of digital payment, you won’t be impacted.”
 

‘Leave a penny, take a penny’

Small-business owners also have chimed in on how the penny shortage is affecting their practices.
Penguin’s Snoballs in Norfolk hasn’t really been affected for several reasons, owner Tanya Prosser said.

“When we started our business 8 years ago — because of the type of product we’re selling and customer base — we decided it was easier to price our products on the half or whole dollar,” she said in an email. “And the listed price is also inclusive of state and local tax. Combined these practices make it easy on our consumers and they love it.”

The mom-and-pop business makes and serves a snow cone-type product with softer ice. Prosser admits roughly 90% of sales are paid by credit card, Cash App, or Apple Pay.

“I do, however, keep exactly five pennies in our cash register each day should the need arise,” she said.

Steve Matousek, owner of Atlantis Games & Comics in Norfolk and Portsmouth, said it’s been business as usual so far.

“We haven’t had to do anything yet because we are still able to get pennies from the bank,” he said.

He does wish a plan was in place before the penny went away.

The business’s point-of-sale system is based out of Canada and a penny rounding feature is built in for the Canadian version, but is not yet an option in the U.S., Matousek said.

“Our plan is to just round up or down,” he said. “For customers (with) an active account in our point of sale, we can offer the option to round up and put that extra charge onto their account for a future purchase.”

But Matousek said he imagines it will be pretty rare because most people drop their pennies into the “leave a penny, take a penny” tray on the counter — another penny-related item that may soon be obsolete.

« Return to "Home Blogs"