Penny for your thoughts? If you've got three, better make that a nickel.
With pennies no longer in production, state lawmakers are moving to set out the rules for what happens at the grocery, clothing store or mall outlet when the total ends in something other than a 5 or a 0.
And what that will mean if SB 1108 becomes law is that cash-paying customers will end up paying a little bit less – or a little bit more.
The U.S. Mint stopped producing new pennies last November. It was a matter of economics: each of the coins actually costs about 3.7 cents to produce.
There are still pennies out there, though some may simply be sitting in jars as consumers empty their pockets of small change and never bother to pick it up in the morning.
While the penny remains legal tender, the net result is that, as stores give out exact change, they're running out of the coins.
Enter Sen. John Kavanagh. The Fountain Hills Republican is proposing to put into law what has become known as "Swedish rounding.'' So, if the final tab ends up with a 1, 2, 6, or 7, the bill is rounded down to the nearest nickel. Conversely, a bill ending in 3, 4, 8, or 9 is rounded up.
Kavanagh said government intervention, complete with possible civil penalties, is appropriate.
"The problem is that some merchants can consistently round up more than they should,'' Kavanagh said.
For just a couple of small purchases, perhaps at a convenience store, Kavanagh said it probably doesn't matter much overall. But pennies do add up.
"Some of these merchants that are dealing with tens of thousands of sales a day can rack up a lot of cash,'' he said. "It's a matter of uniformity and making sure nobody takes advantage of it.''
Anyway, Kavanagh said, it's not like Arizona is striking out on its own. He said this is "model legislation'' crafted by the National Conference of State Legislatures.
"Beyond the consumer protection thing, it's simple for everybody using the same system,'' Kavanagh said.
That's also why Lisa Bednar, president of the Arizona Food Marketing Alliance, said her members are supportive.
"SB 1108 is a simple, common-sense update that gives retailers clear, consistent rules for handling small-coin shortage at the register,'' said Bednar, whose association represents food retailers. What it also does is set the rules of the road so customers, unable to get their change in pennies, are aware of how -- and why -- a retailer is adjusting the bill.
"It protects customers with fair, transparent rounding that will be uniform across all Arizona businesses while letting businesses keep lines moving and systems compliant,'' Bednar said.
And that also includes programming cash registers and other point-of-sale software so that the rounding occurs automatically and matches what customers expect.
Kavanagh's bill also includes some limits on these computations – that rounding occurs not on each individual item being checked out but solely on the final bill. No matter how much someone purchases, the worst-case scenario is that the final tab will be no more than two cents higher due to rounding.
SB 1108 also is set up so that consumers who are not using cash avoid that cost – or the savings, as the case may be.
So anyone with a credit or debit card would pay the exact amount. Ditto any electronic funds transfer, mobile payment application or even a check.
And just so there are no questions from customers, the proposal would require merchants to post a notice at the point of sale stating, "Cash transactions are rounded to the nearest five-cent increment pursuant to state law.''
Nothing in the measure makes pennies illegal in Arizona, nor does it require retailers to accept them. The Federal Reserve Board says there is no federal law mandating that any private business must accept current or coins as payments for goods or services.
Kavanagh's legislation comes several weeks after the House Commerce Committee voted 9-1 to enact a state law requiring merchants to accept cash for any goods or services worth $100 or less. HB 2555 also would make it illegal to charge more for a customer who wants to pay cash.
That measure is awaiting House debate.
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