California AB1793: The Cash Rounding Rule Retailers Must Know

Most California retail owners have never heard of it, but a provision buried in AB1793 will reshape how you handle cash transactions starting July 1, 2027. And if you get it wrong, you face the same legal consequences as overcharging a customer.

What the Law Requires

Under Section 1789.62 of AB1793, every merchant accepting cash payments must round the final transaction total to the nearest 5-cent increment before collecting payment from the customer. That means totals ending in $0.01–$0.02 round down to $0.00, totals ending in $0.03–$0.07 round to $0.05, and so on.

The operative date is July 1, 2027. After that, rounding is not optional—it is a legal requirement.

The Compliance Risk

Here's the critical part: if you collect more than the rounded amount from a customer, the law treats it as overcharging. That triggers the same penalties and enforcement procedures as Business and Professions Code Section 12024.2, which governs unlawful overcharging. In practice, this means:

• Potential civil liability and customer complaints
• Enforcement action by the California Attorney General or local district attorneys
• Statutory damages and attorney fees in some cases

This is not a guideline or best practice. It is a mandate with legal teeth.

Who Is Affected

If your business accepts cash—whether you're a grocery store, restaurant, pharmacy, gas station, or any other retail operation—you are affected. The rule applies to all merchants in California. Digital payment systems and credit card transactions are unaffected; this applies only to cash.

What You Need to Do Now

You have time to prepare. The law does not take effect until July 1, 2027. But preparation should start soon:

• Audit your POS system. Check whether your cash register or point-of-sale software can automatically round to the nearest 5 cents. Many systems will need updates or configuration changes.
• Train staff. If manual cash handling is part of your operation, ensure employees understand the rounding rule and apply it consistently.
• Update signage and receipts. Consider how you will communicate the rounding to customers and whether your receipts need to reflect the rounded amount clearly.
• Document your process. Keep records showing that you are complying with the rounding requirement. This protects you if a dispute arises.

The Bottom Line

AB1793's rounding requirement is a compliance obligation, not a suggestion. Starting July 1, 2027, every cash transaction must be rounded to the nearest 5-cent increment, and collecting more than that rounded amount is treated as illegal overcharging. Retailers should begin reviewing their payment systems and procedures now to ensure they are ready when the law takes effect.

For a detailed, business-specific guide to AB1793 and other California retail compliance requirements, contact your local chamber of commerce or retail trade association.