The era of the one-cent piece has reached its conclusion. Following a White House directive to the Department of the Treasury on February 9, 2025, the U.S. Mint ceased regular production of the penny, citing a production cost of 3.7 cents per unit. While the Mint completed its final regular run in November 2025, the anticipated “buffer” of 114 billion pennies in circulation has proven insufficient to prevent localized shortages.
Federal Reserve terminals are already experiencing deficits, forcing lenders and vendors who allow cash transactions to make immediate decisions on how to handle this in a “nickel-minimum” economy.
For the small-dollar and payday lending industry, this transition is more than a logistical curiosity. It impacts the entire loan cycle, from disbursement to the final payment on a credit product that sees high volatility in disclosure values when even slight adjustments are made. As we head into major industry periods like the annual tax refund season, leaders in the small-dollar space must evaluate and coordinate their approaches to address the calculative and regulatory risks emerging from this currency shift.
Read More Fintech Insights: How AI is Transforming the Insurance Claims Experience
The New Gap: Interest, Fees, and Rounding
The most significant impact of the penny’s retirement for lenders who accept cash lies in the exactitude of financial calculations. Currently, state laws regarding interest rate caps and fee structures are rigid: calculations must be precise to the penny, particularly in this highly regulated space. Guidance from the Treasury and the National Council of State Legislators (NCSL) is clear that interest and fee calculations must occur before any rounding takes place.
The removal of the penny creates a practical challenge for lenders who accept cash payments at branch locations. When a borrower’s final payoff amount is something like $302.03, the lender must decide how to handle the cents that cannot be tendered in cash. One option is to round the amount up and require the borrower to pay $302.05. However, this effectively increases the consumer’s cost and would generally only be acceptable to regulators or examiners if clearly disclosed and reflected in the finance charge and APR calculations. The more common approach is to round down and waive the remaining amount. While a two‑ or three‑cent waiver may seem insignificant on an individual loan, these small adjustments can compound across a portfolio of small‑dollar accounts. And this example considers only the final payment—if every periodic payment must be rounded, and the servicing system cannot properly support those adjustments; the operational and financial impact can become much more substantial.
States are unlikely to move to nickel increments for interest rate caps because doing so would jeopardize the stability of electronic commerce. In other words, dollar and cent payments are not changing due to the option for electronic payments. Digital payments—via ACH, debit cards, or mobile apps—account for the vast majority of volume and will remain precise to the cent. Consequently, small-dollar finance leaders must prepare for a dual-track system where electronic transactions remain penny-precise, while cash-heavy storefront environments navigate a “50-state gauntlet” of rounding inconsistencies or special requirements.
The Vital Role of Cash in Short-Term Credit
While the broader financial world moves toward digitization, the small-dollar lending industry remains uniquely tethered to physical currency. Sky-high interest rates and tightening credit have made managing household liquidity more daunting than it’s been in years. This economic pressure has forced many consumers to rethink how they manage their day-to-day finances.
For the underbanked or unbanked populations that rely on payday and small-dollar loans, the reliance on cash is often a necessity rather than a preference. When a borrower visits a storefront to make a cash payment, the “penny story” ceases to be a headline and becomes a critical point of friction.
Beyond the teller window, the lack of a federal regulatory framework around rounding carries significant legal risks. Because states have largely refrained from issuing new regulations specifically for small-dollar lenders, companies are essentially making spot decisions on currency rounding at the point of payment. This impacts the servicing side of the loan lifecycle. If a borrower provides a cash payment, the inconsistency in rounding rules could lead to disputes over whether a loan has been “paid in full” or if a deficiency of a few cents remains. Mathematical precision in both origination and servicing is critical. In the highly regulated world of small-dollar lending, this is not merely a matter of spare change; it is a matter of contractual precision and compliance audit trails.
Read More Fintech Insights: How Asset Management Leaders Can Embrace AI
New Strategies for 2026
The elimination of the penny highlights how industry leaders must move beyond the migration mindset and dive into the compliance conundrum created by this shift. For payday and small-dollar lenders, where thin margins and high regulatory scrutiny are the norms, the stakes are particularly high. By establishing clear rounding protocols now, lending companies can protect themselves from the legal and calculative risks of a shifting currency landscape.
While the penny may be a small denomination, the lack of clarity surrounding its departure could lead to outsized headaches for the unprepared. As we move through 2026, the lenders who succeed will be those who bridge the gap between digital precision and the reality of a nickel-minimum cash economy.
To participate in our interviews and Guest Posts, please write to us at info@intentamplify.com