A Penny for Your Thoughts May Soon Cost a Nickel
by Ryan Niesent, SVP Retail Sales & Operations
A Penny for Your Thoughts May Soon Cost a Nickel
by Ryan Niesent, SVP Retail Sales & Operations
After a 232-year run, America’s oldest coin is officially out of production. The reason: rising production costs. The one-cent coin currently takes 3.7 cents to produce. So, what happens next?
For consumers, the short-term impact is minimal. Pennies are still legal tender and remain valid for everyday use. When making cash purchases, consumers may begin to see some retailers rounding the purchase price of goods to the nearest nickel. From a broader perspective, the end of the penny signifies another step toward the dominance of card and digital payments. In 2024, just 14% of all consumer transactions were made using cash, according to the Federal Reserve.
For businesses, it is business as usual for now. As they await official state or federal guidance, many are planning for anticipated changes. Some businesses will begin rounding prices up or down to the nearest nickel, while others may encourage customers to make non-cash payments. Non-cash payments such as credit and debit card transactions will continue to be processed in exact amounts.
Considerations for businesses include:
At BankWest, we will continue to accept pennies as legal tender indefinitely, and will continue to order pennies from the Federal Reserve as inventory is available. Like other businesses, we are making plans to adapt policies, procedures and systems to operate in a penny-free monetary system. Eventually, government guidance will most likely prescribe how bank procedures are developed and enforced. As the penny phaseout progresses, BankWest will monitor circumstances closely and will provide ongoing updates to its customers.
PENNY PHASEOUT FAQs
Q: Will more pennies be produced by the U.S. Mint?
A: The U.S. Mint will no longer produce pennies for general circulation; however, it has stated it will continue to produce collector versions in limited quantities.
Q: Will pennies still be considered legal tender?
A: Yes, pennies will remain legal tender indefinitely.
Q: When will the current supply of pennies in circulation run out?
A: There is no exact answer to this question; however, with an estimated 250 billion pennies in circulation it will most likely take several years for pennies to vanish from general circulation.
Q: Will BankWest continue to issue rolls of pennies to merchants and/or individuals?
A: The bank will honor requests from business customers to purchase rolls of pennies. Individuals will be limited to $5 per customer. We will not fill requests from non-customers.
Q: When pennies are no longer in circulation, how will BankWest cash checks for amounts that require pennies?
A: Currently, we will cash customer checks for the exact amount, even when pennies are required. When pennies are no longer available, we will be able to credit customer accounts electronically to accommodate the exact amount required. For example, if a customer cashed a check for $10.02, we would present them with $10 in cash and credit their deposit account with $0.02.
For consumers, the short-term impact is minimal. Pennies are still legal tender and remain valid for everyday use. When making cash purchases, consumers may begin to see some retailers rounding the purchase price of goods to the nearest nickel. From a broader perspective, the end of the penny signifies another step toward the dominance of card and digital payments. In 2024, just 14% of all consumer transactions were made using cash, according to the Federal Reserve.
For businesses, it is business as usual for now. As they await official state or federal guidance, many are planning for anticipated changes. Some businesses will begin rounding prices up or down to the nearest nickel, while others may encourage customers to make non-cash payments. Non-cash payments such as credit and debit card transactions will continue to be processed in exact amounts.
Considerations for businesses include:
- Changing prices to reduce penny use
- Training staff members regarding policy/procedural updates
- Posting signs to inform customers of penny policies
- Prepping point of sales systems to accommodate price changes and ensure sales tax calculations remain accurate
At BankWest, we will continue to accept pennies as legal tender indefinitely, and will continue to order pennies from the Federal Reserve as inventory is available. Like other businesses, we are making plans to adapt policies, procedures and systems to operate in a penny-free monetary system. Eventually, government guidance will most likely prescribe how bank procedures are developed and enforced. As the penny phaseout progresses, BankWest will monitor circumstances closely and will provide ongoing updates to its customers.
PENNY PHASEOUT FAQs
Q: Will more pennies be produced by the U.S. Mint?
A: The U.S. Mint will no longer produce pennies for general circulation; however, it has stated it will continue to produce collector versions in limited quantities.
Q: Will pennies still be considered legal tender?
A: Yes, pennies will remain legal tender indefinitely.
Q: When will the current supply of pennies in circulation run out?
A: There is no exact answer to this question; however, with an estimated 250 billion pennies in circulation it will most likely take several years for pennies to vanish from general circulation.
Q: Will BankWest continue to issue rolls of pennies to merchants and/or individuals?
A: The bank will honor requests from business customers to purchase rolls of pennies. Individuals will be limited to $5 per customer. We will not fill requests from non-customers.
Q: When pennies are no longer in circulation, how will BankWest cash checks for amounts that require pennies?
A: Currently, we will cash customer checks for the exact amount, even when pennies are required. When pennies are no longer available, we will be able to credit customer accounts electronically to accommodate the exact amount required. For example, if a customer cashed a check for $10.02, we would present them with $10 in cash and credit their deposit account with $0.02.