Retail chains across the U.S. are adjusting to significant shifts in the way they handle cash transactions, as the country faces a looming shortage of pennies. A well-known convenience store chain with over 850 locations in the Midwest, is one of the latest to introduce a new policy addressing this issue.
Starting in October, the company will begin rounding down cash purchases to the nearest five cents. The decision, reported by The US Sun, follows concerns about the future of the penny as the U.S. government plans to cease penny production by early 2026. Kwik Trip joins other chains like Love’s Travel Stops in implementing similar measures to cope with this upcoming change.
The Struggle with Penny Shortages
The announcement from Kwik Trip comes as retail chains across the country grapple with an ongoing penny shortage. As the Federal Reserve’s decision to phase out the penny approaches, retail chains like Kwik Trip are being forced to find new ways to deal with cash transactions. As stated by the company,
“As stores run out of pennies by location, and since the government has not provided guidance on how to proceed, all cash purchases at Kwik Trip and Kwik Star locations will be rounded down to the nearest five cents.”
This step was taken to maintain a “guest-friendly approach” amidst the coin shortage.
It’s important to note that Kwik Trip isn’t alone in making adjustments to its payment methods. Other retail chains, including Love’s Travel Stops, are also making similar moves. Love’s, with over 660 locations across 42 states, has already begun rounding up cash transactions at some of its stores.
“At this time, only around 50 of Love’s more than 660 locations in 42 states are impacted,” said Ulysses Ochoa, the director of operations at Love’s Travel Stops.
“If a store runs out of pennies, all change will be rounded up in favor of the customer – he added.”
The Economic Impact: A “Rounding Tax”?
While rounding down may sound simple, the shift towards this practice raises concerns about its long-term effects on both consumers and businesses. According to the Federal Reserve Bank of Richmond (FRBR), if businesses round transactions in a way that favors rounding up, consumers may consistently end up paying more, which is referred to as a “rounding tax.”
The FRBR estimates that this change could cost consumers around $6 million a year. This additional cost could have significant effects, especially for those who frequently use cash, as even small amounts can add up over time.
For retail chains, this shift might present challenges in maintaining customer satisfaction. However, many companies are trying to balance these concerns with their commitment to a seamless consumer experience. Kwik Trip’s CEO, Scott Zietlow, emphasized this, saying,
“At Kwik Trip, we’re committed to making everyday transactions simple and fair. This change reflects our ongoing focus on guest experience. We apologize for any confusion this may create for our guests.”
Calls for Federal Legislation
As the penny becomes less common in everyday transactions, retail chains are urging for a clear, nationwide solution. The National Association of Convenience Stores (NACS) has raised concerns with both Congress and the Administration.
The NACS is advocating for federal legislation that would allow businesses to round cash transactions legally. On September 30, the association, alongside other groups, sent a letter to the Senate Banking and House Financial Services Committees demanding action.
One of the major points in the letter highlights that state and local sales taxes often complicate pricing, making it impossible for retailers to adjust prices without the need for rounding. The letter also pointed out that at least ten states have laws that would prevent this practice. As Anna Ready Blom, a strategic advisor for government relations at NACS, stated,
“NACS has raised industry concerns with Congress and the Administration and is advocating for federal legislation to permit the rounding of cash transactions.”
