The Common Cents Act (H.R. 3074) passed the U.S. House of Representatives this past Tuesday by a unanimous voice vote. This legislation mandates the permanent end of penny production for general circulation, which should help eliminate government waste (since pennies cost over 3 cents each to produce).
In the meantime, all existing pennies currently in circulation will remain valid legal tender indefinitely.
One of the most notable pieces of the legislation creates a uniform federal rounding framework for cash transactions in the post-penny market.
The bill outlines a symmetric rounding system: transaction totals ending in 1, 2, 6 or 7 cents are rounded down to the nearest nickel, and those ending in 3, 4, 8 or 9 cents are rounded up to the nearest nickel. The rounding would apply exclusively to physical cash. Electronic payments and checks will continue to execute exact change transactions.
The bill still needs to be passed by the Senate before it goes to the President. We do not anticipate any major lobbying roadblocks in the Senate. Credit unions and retailers both strongly support a uniform federal rounding law to prevent a confusing patchwork of differing state rules. And barring procedural gridlock or delays, the Common Cents Act is on a fast track to passing the Senate and being signed into law.
Specifically, the Common Cents Act (H.R. 3074) would:
- Establish a national framework for cash transaction rounding;
- Provide clarity regarding the treatment of federal, state, and Tribal laws on rounding;
- Require the Federal Reserve Board to develop a strategic plan and periodic reporting on coin terminal operations and the stability of the nation’s coin distribution system.
