A new California law requires all cash transactions to be rounded to the nearest 5-cent increment—and most retail owners haven't heard about it yet.
Most California retail owners don't realize that a provision buried in AB1793 will fundamentally change how they handle cash transactions. Starting July 1, 2027, every merchant operating a physical retail location in California must round all cash payments to the nearest 5-cent increment. Collecting even one cent more than the rounded amount triggers the same penalties as overcharging under California's existing consumer protection law.
Under Section 1789.62(a) of the California Civil Code (part of the new Title 1.6H), cash transactions must be rounded to the nearest nickel. This applies to every cash sale at a physical retail location in the state.
Here's how it works in practice: A transaction totaling $10.12 rounds down to $10.10. One totaling $10.13 rounds up to $10.15. The rounding applies at the point of sale, not as a courtesy or suggestion—it's a legal requirement.
Compliance requires concrete steps. You'll need to reprogram your point-of-sale (POS) system to automatically calculate and apply the 5-cent rounding. Staff training is essential so that employees understand the rule and apply it consistently. Any deviation—charging a customer more than the rounded amount—exposes your business to enforcement action under Business and Professions Code §12024.2, the statute governing overcharging violations.
The penalties for overcharging under that statute include civil liability, which means customers or the state can pursue damages. This isn't a minor compliance detail; it carries real legal consequences.
Retailers who accept both cash and card payments should note that the rounding requirement applies only to cash transactions. Card transactions are not affected by this rule.
The operative date is July 1, 2027. That gives retailers time to plan, but not an unlimited window. If your POS system requires custom programming or if you operate multiple locations, starting the planning process now—even though the deadline is more than a year away—will help avoid last-minute scrambling.
Retailers should contact their POS vendors to confirm whether the rounding function can be implemented in their existing systems, and at what cost. For businesses with manual registers or older systems, this may require a hardware or software upgrade.
The rule applies to all merchants operating a physical retail location in California. E-commerce and online-only retailers are not affected. Businesses that accept only card payments or digital wallets may have less operational impact, but any business that takes cash must comply.
The provision is part of AB1793, which addresses cash payment calculations more broadly. Section 1789.66 sets the operative date as July 1, 2027.
Retailers should review their current POS setup and begin conversations with vendors and accountants about implementation. Trade associations and business groups have published detailed compliance guides tailored to California retailers—worth reviewing as you plan your transition.