Pennies Fading From Circulation as More Consumers Go Cashless
After more than 200 years, it is time to say goodbye to the penny.
As the Wall Street Journal (WSJ) reported Thursday (May 22), the U.S. Treasury Department will cease putting new pennies into circulation by early 2026.
Eventually, the department told WSJ, there won’t be enough pennies for use in day-to-day transactions, meaning that businesses will need to round up or down to the nearest five cents.
The report noted that the move to phase out the penny is one with support on both sides of the aisle, with both President Donald Trump and President Barack Obama critical of the coin, which predates the U.S. Constitution.
Doing away with the penny will save the U.S. Mint $56 million per year, the report said, as the one-cent coin costs almost four cents to make. Last year, as production costs climbed, the government lost more than $85 million on the approximately three billion pennies it produced.
At the same time, Americans throw away as much as $68 million in coins each year, leaving them in airport security checkpoint bins or using them in art projects. There is also up to $14 billion in coins in people’s change jars, the report added, citing Federal Reserve data.
Consumers will still be able to use pennies to make payments once production ends, the report added. But businesses will need to adjust pricing as pennies phase out. Non-cash transactions, the report said, will still be priced at exact change.
The end of the penny is happening as American consumers are increasingly avoiding cash/coin payments altogether.
While the U.S. lags behind countries like Singapore and Japan, the share of in-store payments made with digital/mobile wallets increased by 4.3% between 2002 and 2024, according to PYMNTS Intelligence research.
That mirrors a broader shift away from in-store payments with traditional cards and cash, which fell a respective 7.7% and 8.4% during the same period.
Still, there are still consumers who prefer using cash in certain situations. That’s according to another PYMNTS Intelligence report, “How People Pay: Budgeting Anxiety Drives Debit Card Usage” which examines the nuanced decision-making driving payment method selection in brick-and-mortar stores and digital channels.
“For in-store purchases, debit cards and cash were favored by those focused on budgeting and convenience, with 14% of debit card users and 20% of cash users citing budget management as a key reason for their choice,” PYMNTS wrote recently. “Conversely, credit card use in-store was predominantly driven by the desire for rewards or cash back, cited by 40% of users. Security concerns also factored into in-store choices, with cash being the preferred method for consumers prioritizing payment security.”
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