Executive Letter: The Penny Phase-Out

By Rose Oswald Poels

Earlier this year, the Treasury advanced President Trump’s plan to discontinue the penny. The final penny blanks are set to be minted in early 2026, and many members and their customers have a growing number of questions: Are pennies still available? Can banks continue to distribute pennies? How will businesses handle cash transactions moving forward?

Here are the key facts: 

• Pennies are still legal tender. They remain useable for transactions, deposits, and withdrawals, though their availability will gradually decline as existing coins fall out of circulation. 
• Production cost exceeds value. It costs about 3.7 cents to make a one-cent coin, marking the nineteenth consecutive year where manufacturing costs outweighed value.
• Policy discussions are underway. Bills like the Common Cents Act seek to formalize this change and establish consistent rounding rules for cash transactions.
• Other countries provide successful precedents. Canada, Australia, and New Zealand have successfully eliminated their lowest-denomination coins and use rounding rules for cash transactions. 
• Estimated Effect on Consumers. Rounding cash transactions could cost U.S. consumers about $6 million per year in total, spread across millions of purchases. Most cash-users are unlikely to notice more than a penny or two difference over time.

All to say: Banks, businesses, and consumers will not be required to turn in pennies, nor will coins in circulation lose their value. Pennies would phase out slowly over time as they are spent. Cash transactions would likely be rounded to the nearest five cents, while digital transactions would remain exactly the same. 

I have recently heard from members that they are not able to order pennies in cash orders from the Federal Reserve. As a result of this change, I recommend members work with customers, particularly heavy cash-using business customers, to help them plan for the anticipated discontinuation. Perhaps consider a penny drive to collect pennies from customers similar to the efforts taken during COVID-19 times when coins were difficult to order from the Federal Reserve. This may help bridge a gap while customers and retailers adjust.  

WBA will continue to monitor policy developments to ensure our members have accurate information. We also encourage our members to keep an eye on our communications to prepare for customer questions on the penny phase-out.  

WBA remains committed to providing our industry with education and guidance during times of transition. We will continue to share updates as they become available.