A couple credit unions have reached out to us about the recent announcement from the U.S. Department of the Treasury officially ceasing production of the penny. There are no laws nor any NCUA regulations that address how credit unions should manage the loss of the penny in cash circulation. Federal law does not require cash; a few states and municipalities have made it illegal to discriminate against cash-paying customers. None of the legislation addresses financial institutions.
As with any emerging state or even federal regulation change like this, we will be tracking the news at it evolves and look for guidance from regulators as well as our clients to help us design what you need from a software standpoint. What that will look like is yet to be determined, and in the end the burden may end up falling more on merchants than on financial institutions.
What you can do
We have not received any guidance, even any hints, from CUs as to what they think the software might be able to do to help you adjust to the change. Therefore there are no software changes we can even imagine at this point. Credit unions first have to decide what their procedures will be in scenarios where a member’s transaction might result in needing pennies back, when you have none on hand:
- What new procedural steps are you taking with your tellers?
- Although billions of pennies remain in circulation, are you choosing now to no longer give out pennies, or waiting until you have an actual supply problem?
- Are you encouraging members to bring them in? Using a “keep a penny, leave a penny” jar on teller counters?
- Will you just always deposit funds to the member’s account so any cash-back amount doesn’t require pennies?
- Will you round transactions, and if so, up or down based on amount? Or in the member’s favor always?
- Our neighbors to the north in Canada did away with minting pennies many years ago. Is there anything we can learn from how their financial institutions responded?
- Given the many different scenarios that involve cash, what would you imagine the system could do for you in an automated fashion?
First come the procedures, which perhaps might lead to ideas for ways the software might be able to assist you in following your procedures.
In the meantime, we should learn from each other. If your credit union has clever ideas for how you are adjusting your procedures, leave a comment below and let’s talk!
Other resources
- The Cross State Credit Union Association has published some suggestions for credit unions on addressing this topic.
- Per the Federal Reserve FAQ there is no federal law that requires a business to accept pennies, but states may enact their own laws.
Chef for this recipe: Dawn Moore
