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The method of payment increasingly influences the total amount consumers pay at checkout.
With the U.S. Mint halting penny production last year, numerous merchants now round cash transactions to the nearest nickel. State laws govern rounding practices, and a potential federal law offering guidance may emerge.
Simultaneously, some retailers and service providers are implementing credit-card surcharges, which can elevate the total cost of using credit cards.
“We’re observing more merchants, especially smaller ones, imposing surcharges,” noted Crystal Kaldjob, a partner at Goodwin Procter in Washington, D.C., within the firm’s financial industry group.
The shift occurs as cash usage declines and credit card transactions rise. Per the 2026 Diary of Consumer Payment Choice, consumers made an average of 47 monthly payments in 2025, with 16 via credit card, 15 by debit card, and six in cash. In contrast, in 2016, consumers made 45 monthly payments, with cash being the most common method (14 transactions).
Cash is predominantly used by older, rural, and low-income populations, according to Federal Reserve research.
States and Congress Explore Rounding Rules
The final penny for circulation was issued in November by the U.S. Mint in Philadelphia, ending its 232-year production run. In the decade before discontinuation, the cost of manufacturing each penny rose from 1.42 cents to 3.69 cents. An estimated 300 billion pennies remain in circulation.
Following the penny’s production halt, 20 states enacted laws permitting or mandating cash rounding, with others considering legislation, according to the National Cash Rounding Legislative Observatory by Centsless, a regulatory compliance platform.
A bipartisan bill, the Common Cents Act, would allow—but not require—merchants to round totals to the nearest nickel when exact change isn’t available. The measure also outlines specific rounding rules: total amounts ending in 1, 2, 6, or 7 cents would be rounded down, while 3, 4, 8, or 9 cents would be rounded up.
The bill has passed both the House and Senate, though discrepancies between chambers require resolution before final approval. Timelines for enactment remain uncertain.
Surcharges Offset Merchant Costs
While Visa and Mastercard have permitted credit-card surcharges since 2013, small merchants are increasingly adopting them to offset processing fees. These fees, particularly for credit card transactions, have risen significantly. The average swipe fee reached 2.35% of the purchase price in 2024, up from 2.02% in 2010, according to the National Retail Federation.
“The surcharges are a direct response to the high swipe fees merchants pay,” explained Dylan Jeon, vice president of government relations for the National Retail Federation.
Credit card spending in 2024 increased 5.1% from the previous year to approximately $6.46 trillion, while processing fees rose 9.3% to $148.52 billion, as reported by the Nilson Report. Swipe fees totaled nearly $200 billion last year, becoming the second-highest operating cost for retailers after labor, Jeon stated.
A pending settlement involving an antitrust lawsuit filed by retailers in 2005 against Visa and Mastercard aims to reduce fees and allow merchants to reject certain premium credit cards with higher charges. However, retailers oppose the settlement, citing inadequate benefits for controlling the interchange system’s lack of competition. Visa asserts the settlement provides meaningful relief and flexibility, while Mastercard states it balances all parties’ interests.
