A sweeping new financial mandate is set to reshape the New York retail landscape this week, as a statewide law requiring businesses to accept cash takes effect on March 20, 2026.
The legislation, Senate Bill S4153A, arrives at a critical juncture for the American economy. It follows the U.S. Treasury’s decision to cease all penny production on November 12, 2025, a move that has triggered a “rounding tax” debate and left retailers scrambling to manage a dwindling supply of one-cent coins.
The End of the “Card Only” Era
Signed by Governor Kathy Hochul, the new law prohibits most “retail establishments” and “food stores” from refusing physical U.S. currency for in-person transactions. The mandate is designed to protect the “unbanked”—the millions of New Yorkers who lack access to credit cards or traditional bank accounts.
Under the new regulations:
- Mandatory Acceptance: Businesses must accept cash for all in-person purchases under $20.
- Price Parity: Retailers are strictly prohibited from charging higher prices to customers who choose to pay with cash.
- Steep Penalties: Non-compliant businesses face civil penalties of up to $1,000 for a first violation and $1,500 for subsequent offenses.
While many modern venues like stadiums and high-end cafes have transitioned to “cashless” models for speed and security, they must now pivot. The law allows one major loophole: the use of “Reverse ATMs.” These on-site kiosks convert cash into prepaid debit cards, provided they charge no fees, have a $1 minimum deposit, and the funds never expire.
The “Penny Shortage” Complication
The timing of the law coincides with the rapid disappearance of the penny. In 2025, the U.S. Mint ended a 232-year run of the copper-plated coin, citing production costs that had ballooned to nearly 4 cents per penny.
With approximately 300 billion pennies still in circulation but concentrated in banks rather than registers, New York retailers face a mathematical dilemma. If a store lacks pennies to make change, the law forbids them from “rounding up” to their own benefit.
“The law prohibits rounding practices that would result in cash users paying more than those using other payment methods,” notes legal analysis from Holland & Knight.
How Rounding Works in 2026
While New York’s law emphasizes price parity, several other states have already moved to codify “Symmetrical Rounding” to handle the lack of pennies. In a symmetrical system, the final total (including tax) is adjusted as follows:
- 1, 2, 6, or 7 cents: Rounded down to the nearest nickel.
- 3, 4, 8, or 9 cents: Rounded up to the nearest nickel.
Retailers are advised that these rules apply only to the final cash total at the register. Digital and card payments must remain exact to the cent.
Economic Impact and National Trend
New York joins a growing list of states, including New Jersey and Massachusetts, that have banned cashless businesses. Proponents argue these laws are a civil rights victory for low-income residents, while critics in the retail industry warn of increased labor costs and security risks associated with handling physical money.
As the March 20 deadline nears, New York’s Division of Consumer Protection is expected to begin proactive investigations to ensure that in the “Empire State,” cash remains legal tender in practice, not just in name.
