Dive Brief:
- The U.S. Senate has passed a bill providing a federal framework for how businesses can round cash transactions given the decline of 1-cent coins since the government stopped minting pennies last year.
- The Friday night vote on the Common Cents Act came after senators agreed to an amendment by Massachusetts Sen. Elizabeth Warren that requires the Treasury Department to notify Congress of any future currency discontinuation, along with a transition plan, according to two retail industry trade associations.
- House members will need to vote on the bill a second time due to the slight Senate change, Evan Armstrong, senior vice president of government affairs for the Retail Industry Leaders Association, said Monday in an interview.
Dive Insight:
The measure “gives a singular, uniform approach around rounding that just clarifies the rules of the road for everybody moving forward,” Armstrong said.
The legislation, which passed the House of Representatives on July 14, enacts formal guidelines for businesses to round tabs to the nearest 5 cents as the U.S. gradually retires the penny.
Under the bills, transactions that end with 1, 2, 6 or 7 cents would be rounded down to the nearest amount divisible by five; those ending with 3, 4, 8 or 9 cents in the sum are rounded up. Electronic transactions are excluded.
The measure is “a long overdue and essential step toward ensuring retailers can continue serving cash-paying customers amidst dwindling penny supply and usage,” a spokesperson for the National Retail Federation said in an email Saturday.
Merchants need the legislation because rounding “can create conflicts with consumer protection laws at the state level,” Armstrong said. More than a dozen states have moved ahead “with various types of rounding legislation that necessarily complicates issues for us,” he said. “This gives a singular uniform approach around rounding.”
RILA and other trade groups hope to move the bill from Congress to President Donald Trump in September, he said.
Senators passed the bill Friday evening using a “hotline process” to query each senator to sign off on the bill, allowing the legislation to move quickly, Armstrong said. Warren introduced the language to mandate consultations with Congress on future currency changes during that process.
In November, the U.S. Mint announced that it had struck its final batch of pennies, nine months after Trump directed the U.S. Treasury to stop making pennies, citing their cost inefficiency. The department estimated $56 million in savings by ending penny production.
The legislation “will eliminate confusion and ensure transparent cash transactions that benefit operators and consumers alike,” Michelle Korsmo, CEO of the National Restaurant Association, said Monday in an emailed statement.
The “abrupt discontinuation” of the penny was “particularly chaotic for restaurants” because the industry operates with margins of 5% or less and one quarter of transactions are paid in cash, the association said in a July press release.
The bipartisan legislation dates to last year, when bills were introduced in both houses by a group of lawmakers that included Rep. Lisa McClain, a Michigan Republican; California Democratic Rep. Robert Garcia; Sen. Cynthia Lummis, a Wyoming Republican; and Sen. Kirsten Gillibrand, a New York Democrat.
