As U.S. retailers brace for one of the most subtle yet system-wide changes in decades, the discontinuation of the penny, now is the time to ensure your organization is prepared. Oracle Retail Xstore Point of Service (POS) is already capable of handling nickel rounding, but the question is: are your systems, processes, and people ready to adapt smoothly?
The Penny’s Last Run
How would your company fare if your team decided to start selling a large portion of your merchandise below cost? While not a perfect analogy, the United States government has been doing something similar for years now. It now costs almost three cents to make one penny; literally more than they are worth. The US Treasury has decided that the cost can no longer be justified and ordered its last batch of blanks. Pennies will only be made until those blanks run out, estimated to be sometime in 2026.
This means that our US retail stores are going to have to make like our Canadian neighbors and figure out nickel rounding. While there is no mandated date for nickel rounding, some US banks have already started to tell retailers that they will no longer supply pennies. In some areas, what retailers have in their store safes, store banks, and cash drawers are all retailers have to work with. Also, it is better to be ready for it now than to scramble to abide by some last-minute legislation.
At first glance, this might seem like just a point-of-sale change, but looking a little deeper, there are side effects that ripple out to multiple touchpoints in the retail world, including auditing, cashier operations, and even customer trust. Every retail organization needs to be ready to adjust these touchpoints for a seamless transition.
What Exactly Is Nickel Rounding?
Nickel rounding is the calculation of the system to either round up or round down the total amount the customer pays based on the amount due to the nearest multiple of $0.05.
To get a little technical, the math is basically a “half round up.” Here’s how it works in practice:
- A total of $10.01 → rounds down to $10.00
- A total of $10.03 → rounds up to $10.05
- A total of $10.07 → rounds down to $10.05
- A total of $10.08 → rounds up to $10.10
The good news is that this only holds true for cash transactions. Tenders such as credit, debit, gift cards, and those checks that all retailers love, will still be down to the cent.
Xstore POS: Technically Ready for Nickel Rounding
Luckily for Xstore Point of Service users, Xstore versions all the way back to before version 7 know how to handle this calculation. It is just a matter of setting up your tender configuration to account for pennies no longer existing. We will not be getting deep into the technical side, but in general, it is as simple as telling Xstore that the minimum denomination is now $0.05 and removing the penny from the system.
Minor configuration changes are all that are required to get Xstore to start calculating cash to nickel rounding. Not only will it start to calculate the new rounded total, but that rounding will show up on the receipt. There is no configuration update needed to show this; the system sees the rounded total and adds it to the tender area of the receipt.
If you need more details on these configurations, our Xstore experts will gladly walk you through all the changes.
Unfortunately, this might be the easiest part of the changeover. The next challenge that retailers will have to handle is the downstream systems.
Beyond the POS: Downstream Systems Need to Catch Up
Every retail business has some kind of accounting and auditing system. These systems read the transactional logs for many purposes, but one of the biggest is to flag the exact side effects of this change, unbalanced transaction amounts. If the amount paid by the customer does not match the amount due, a flag is raised. Downstream systems will have to do a little more math to manage these transactions gracefully.
Fortunately, Xstore already gives us an easy way to accomplish this one extra math step. In the transactional log, there is already a rounding tag present. Before the configuration changes are made, this tag always has a value of 0.00 because no rounding is being done. Most retailers just ignore it, but it will become very important to retailers since the rounding tag is designed to show the amount that was added or removed from the amount due to denomination rounding.
In the earlier example of the total owed by the customer of $10.01, but the customer paying $10.00, this tag will have -0.01. A total of $10.08 will have a rounded tag value of 0.02. This tag is present for all tender types, so no special coding is required to filter for just cash transactions. The accounting and auditing systems only need to take this tag into account for the totals to balance.
Preparing Store Associates for the Change
The third major touchpoint to get ready is your associates. While the system logic can be updated in minutes, front-line readiness takes planning. The customer-facing users need to be ready to not only understand what they are seeing on the screen but also be able to explain it to those customers. There is no out-of-the-box fix for this issue, but the solution is most likely already baked into retailers’ normal operations and training.
A simple training session should cover:
- Which tenders are affected (cash only).
- How rounding appears on receipts.
- The rounding logic and sample scenarios.
- How to explain the change to customers clearly and confidently.
The easiest way to deploy the tender change to your production stores is going to be through an update build, so this training can be rolled into the training given when deploying any other kind of system change. Just make sure it covers the most important part of their involvement, talking to customers.
Communicating Change to Customers
The most critical path to success is going to be ensuring that your customers understand the change, what to expect, and why, in the end, this change does not really affect them at all. There are going to be a lot of customers who suddenly have to pay an extra $0.02 and are going to want to know why.
- Your employees should be ready to explain what is happening and should be able to point out the receipt where it shows the change. Informing your customers of this change before it happens is the best way to head off any arguments that your managers might have to handle.
- Some marketing emails or signs announcing the change will go a long way in making sure your customers do not feel “cheated”.
- Worst case, have a cashier stash of pennies for customers that want exact change. This, of course, could cause other concerns, but we will leave that for your loss prevention teams to discuss.
Ensure your organization is nickel-rounding ready.
Quick Facts: What This Really Means for Retailers
A few other facts to consider based on other countries’ experiences:
- Only impacts approximately 0.02% of total transactions since this affects cash transactions of a certain amount
- Rounding happens post-tax. This means that a retailer’s pricing strategy will have no effect on the frequency of rounding up or rounding down. Item prices that end in 0.99, 0.45, and 0.00 will be affected the same.
- It is a tender total change so there is no change to the tax liability for retailers. It is the same as a cash drawer over/short count.
- It will speed up all cash count types and has the possibility of even speeding up your transactions, since no one will have to slide out the pennies from the till one by one anymore.
From Pennies to Preparedness
While pennies will still exist in many piggy banks, glass jars, and couch cushions, soon they will not need to exist in your organization’s cash drawers or store banks. This is a monumental change to the American shopper psychology, but it does not need to be an equally monumental change to your operations.
There are a few touchpoints to manage, but with proper preparations, this can be a very smooth transition for everyone involved. Xstore is ready, and if your team does feel the need for help, SkillNet Solutions is always here to help guide your organization to success.
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