The recent announcement by the U.S. Treasury that it has minted the final penny marks a significant shift in how businesses handle cash transactions. For many small business owners, this change could alleviate long-standing frustrations associated with managing coin shortages and attempts to provide exact change. Square, a popular payment processing company, has stepped up to address these challenges by piloting cash rounding functionality for its sellers in the U.S.
As cash payments still represent a notable portion of transactions—19% of Square transactions are in cash, with food and beverage businesses seeing the highest volume—this new feature could streamline cash management. Each week, local businesses using Square process approximately 16.7 million pennies. This creates a pressing need for solutions to help navigate the transition away from the penny.
Square’s cash rounding functionality will automatically adjust cash transactions to the nearest five cents. This change not only simplifies the transaction process for merchants but also enhances customer experience by eliminating the hassle of struggling over small change. “Removing the penny may seem small, but the impact on day-to-day operations is very real,” noted Willem Ave, Global Head of Product at Square. “Large chains have teams who can model scenarios and adjust quickly. There are millions of neighborhood businesses who also have a critical need to maintain smooth operations.”
The ability to round cash transactions could be particularly beneficial during busy retail periods. Small business owners often face increased foot traffic during the holiday shopping season, and complexity in cash handling can lead to longer wait times at the register. By minimizing the need for pennies, this new functionality could help reduce friction for cash-paying customers and keep lines moving efficiently.
For businesses already struggling with coin shortages, the implementation of this cash rounding system provides a straightforward path to adapt to the reality of operating without the penny. By integrating this feature, Square ensures that sellers continue to keep precise records for tax purposes. The system allows sellers to report the total dollar amount of tax collected as they adjust their cash transactions.
However, while the transition may offer numerous benefits, small business owners might also want to consider potential challenges. Rounding may lead to slight increases in pricing for consumers, particularly in communities where every cent counts. Additionally, some customers may still expect the option to receive exact change, potentially leading to confusion during transactions. Adequate communication surrounding this change will be essential to create a seamless customer experience.
Square’s experience in markets like Australia and Canada—both of which eliminated coins like the penny long ago—has prepared them to roll out this solution efficiently. Their pilot program aims to optimize the system before a broader launch, taking feedback from U.S. sellers into account.
As small businesses adapt to the retirement of the penny, tools like these from Square can make everyday operations smoother. Whether they’re managing a bustling cafe or a quiet neighborhood boutique, business owners can look forward to a simplified cash payment process that saves time and reduces the stress associated with cash transactions.
For further details about Square and their latest functionalities, check out their official announcement here.
Image via Google Gemini
This article, “Square Launches Cash Rounding Feature to Ease Transition from Pennies” was first published on Small Business Trends
source https://smallbiztrends.com/square-launches-cash-rounding-feature-to-ease-transition-from-pennies/
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