Retailers, Consumers Adjust to Decline of the Penny
Making Cents of It
Karen Randall says Randall’s Farm is resisting when it comes to retiring the penny, but she’s not sure how long it can keep doing that.
Gerald Friedman says he’s been advocating, quietly, for the death of the penny for more than 30 years now.
Indeed, while he’s certainly not a fan of the Trump administration, he believes this is one thing it got right.
“It just makes sense; they’ve done the right thing,” said Friedman, a professor of Economics at UMass Amherst, adding that, if he was in charge, he wouldn’t stop there, and would also phase out the nickel and convert to a dollar coin, which he believes would be far more convenient than bills.
But for now, let’s focus on the penny, which is no longer being produced and is being phased out of use. Consumers are coping, said th ose we spoke with, and so are retailers, many of which have implemented systems of rounding sales up or down so that no pennies need to be exchanged.
Springfield-based Rocky’s Ace Hardware implemented such a system a few months ago, said Johnny Falcone, director of growth for the company and the fourth generation of the Falcone family to lead the business, started almost exactly 100 years ago.
“We tried to prolong it as long as we could, but our local banks started running out of pennies,” he explained, adding that the chain worked with its software company to implement a rounding system.
He acknowledged that rounding doesn’t permit a totally accurate account of total sales, something businesses prefer to have, but assuming a roughly equal amount of rounding up and down, it’s basically a wash.
“Our accounting team likes to refer to it as ‘an immaterial amount,’” he went on. “That said, from an overall sales perspective, we’ve seen a very minor decline because, when in doubt and to take care of the customer, we’ll err on the side of rounding up the customer’s change or rounding down the sale.”
When asked to quantify this impact, he said it might be a few dollars a day, a figure that reflects the downward trend in the use of cash.
Gerald Friedman
“It just makes sense; they’ve done the right thing.”
Meanwhile, Ludlow-based Randall’s Farm is “resisting for the moment,” said owner Karen Randall, noting that the company is still dispensing pennies, though she’s not sure for how much longer. The banks have stopped supplying pennies, she noted, adding that she has been encouraging employees to roll what pennies they have, and the store holds on tight to the few pennies that come in from customers during the day.
“I think we might be able to hold out a few more weeks — it depends on how many pennies people bring us,” she said, adding that the company, which dispenses maybe 500 to 600 of them a day, has a system in place for rounding cash transactions up or down and will put it to use when it can no longer meet demand.
There are fewer pennies seemingly every month, she noted, adding that cash is involved in fewer than 20% of transactions. Falcone put the number at closer to 10% to 15%, adding that the number has continued on a downward trajectory for years now, with most consumers using debit and credit cards, Apple Pay, Venmo, and other methods of payment that don’t involve cash.
And those we spoke with expect that trend to continue and even accelerate as members of all generations move away from cash. But retail establishments need to meet consumers where they are when it comes to how they pay, and that means continuing to handle cash.
As for the penny … they don’t make it anymore, so its days are numbered, said Friedman, adding that he’s not sure how many days.
“On the outer edge, it will be until pennies wear out, and most pennies will wear out in a decade,” he explained, adding that most consumers and businesses will stop dealing with them long before then.
Much Ado About … Very Little
Friedman said he doesn’t believe many people are bemoaning the demise of the penny.
“It only hurts the people who make them,” he said with recognizable cynicism in his voice, listing zinc mine owners whom he suspects have been behind successful efforts to lobby for continued production of the coin for years now, even as inflation has rendered it all but worthless. “It helps everyone else.”
By that, he meant retailers who will no longer have to devote a cash register drawer to the coin or count them at the end of the day, as well as banks, which will no longer have to supply them, and consumers, who will no longer have to carry them around or figure out what to do with those they’ve accumulated.
Indeed, he said the penny is not worth the aggravation it creates — figuratively and quite literally.
“From an overall sales perspective, we’ve seen a very minor decline because, when in doubt and to take care of the customer, we’ll err on the side of rounding up the customer’s change or rounding down the sale.”
“We produced 3.5 billion pennies in 2024; they were worth $35 million, and they cost $100 million to make,” he said, adding that this simple math explains why the penny should have been discontinued long ago. “We’re going to save money, and that’s a good thing. Businesses will save because who wants to deal with pennies — you have to sort them, you have to count them … it’s an expense for business.
“And consumers … I used to have quart containers filled with pennies; I used to put them in wrappers and bring them to banks, but it’s not worth it to do that anymore,” he went on. “It costs the Treasury money, it’s a hassle to business, and most cash registers have a limited number of drawers. If we got rid of the penny, we could use that drawer for dollar coins.”
Drawing on what he’s seen when other countries, such as Canada and France, have discontinued their lowest-value coin, Friedman said the phasing out of the money should be a relatively painless exercise, and there is little impact on consumers, although he acknowledged that rounding generally favors business.
“The Federal Reserve had a paper on this a while back, and their expectation was that doing away with the penny would lead to a small increase in prices paid by consumers,” he said, adding that the overall impact will be mitigated by the continued downward spiral in the use of cash.
That trend brings conveniences for businesses — fewer trips to the bank and fewer change orders, for example — but also expenses, in the form of the fees charged on debit card purchases (just under 1% on average) and credit card transactions, generally 2% of each sale, with American Express charging closer to 3%.
“It’s the reality of the digital world we live in, and we need to make sure that we’re ready to accept payment however the customer is most comfortable making it,” Friedman said, adding that this will always include cash.
Randall agreed, adding that, for some younger employees, this means training that would not have been necessary a decade or so ago. Indeed, she said many younger employees simply don’t know how to use cash because they’ve never had to. Many don’t know how to write a check, either, but that’s another story.
“We’ve sent people home to learn how to count money before we’d hire them,” she noted. “We tell them, ‘talk to your parents and learn how to count cash and understand money,’ because they don’t have any conception — because they’ve just sent the money. It’s a little scary, but it’s reality.”
Penny for Your Thoughts
Speaking for most retailers, Randall said that, when it comes to the phasing out the penny, “the consumer will get used to it.”
Speaking from what certainly appears to be the minority perspective, she added quickly, “I don’t like it — I don’t mind the penny, and I still use cash.”
Most probably don’t mind the penny, but they also don’t give it much thought. And soon — how soon no one really knows — they won’t have to give it any thought.
Because, in most respects, as Friedman said, it’s just not worth it.
