The discontinuation of penny production by the U.S. Mint in November has prompted significant changes in how transactions are processed and priced at retail locations. With an estimated 300 billion pennies still in circulation despite the end of the coin’s 232-year production run, merchants and consumers face a new landscape for cash purchases. In response, 20 states have enacted laws permitting or requiring rounding of cash transactions to the nearest nickel, while additional states continue to consider similar legislation. A bipartisan proposal in Congress, the Common Cents Act, would establish federal guidance allowing merchants to round totals up or down to the nearest nickel when exact change cannot be provided, with specific rules dictating whether to round up or down based on the final digits of the total.
Simultaneously, credit card surcharges are appearing more frequently, particularly at smaller retailers seeking to offset elevated processing costs. Visa and Mastercard have permitted merchants to impose surcharges on credit card transactions since 2013, though the practice appears to be accelerating as swipe fees continue rising. The average credit card processing fee reached 2.35 percent of purchase price in 2024, up from 2.02 percent in 2010. Industry representatives cite these fees as a significant burden, noting they represent the second-highest operating cost for most retailers after labor expenses.
Payment methods have shifted substantially over the past decade. According to the 2026 Diary of Consumer Payment Choice released by the Federal Reserve, consumers made an average of 47 payments monthly in 2025, with credit cards accounting for 16 transactions, debit cards for 15, and cash for only six. This represents a reversal from 2016, when cash was the most common payment method. Cash remains more prevalent among older populations, rural communities, and low-income households.
A pending antitrust settlement stemming from a 2005 lawsuit against Visa and Mastercard would reduce swipe fees and grant merchants greater flexibility in accepting specific card types. However, retailer organizations have expressed dissatisfaction with the settlement’s terms, arguing the benefits are insufficient and that the agreement fails to address fundamental competitive issues within the interchange system.
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