Cash rounding

Swedish rounding is rounding the basic cost of a purchase which is to be paid for in cash to the nearest multiple of the smallest denomination of currency. The term "Swedish rounding" is used mostly in Australia and New Zealand, where such a method has been practised since the 1990s.

Details

Rounding becomes necessary where low denomination coins in a currency are withdrawn or otherwise made unavailable, but the currency's subdivisions remain the same. Since it may not be possible to make exact change for a purchase, rounding the total bill to the lowest available denomination of coinage is required if a customer is paying in cash. If payment is being tendered using credit card, debit card, EFTPOS or cheque, no rounding is necessary.

The practice was introduced in Sweden following the removal of 1 and 2 öre coins from circulation in 1972. It is called "öresavrundning", meaning "öre rounding". A similar system was later adopted by the Reserve Bank of New Zealand in 1990, when the 1 and 2 cent coins were removed from circulation, and the Reserve Bank of Australia which did the same for its own currency in 1993. At this time, the phrase "Swedish rounding" came into use in both countries.

Mechanics

Rounding with 5c intervals

This was used in Sweden from 1972 to 1985, New Zealand from 1990 to 2006, and is used in Australia, Bosnia and Herzegovina, Brazil, Finland, Hungary, Malaysia (though 1 sen coins are still legal tender), The Netherlands, Singapore, Switzerland, and sometimes Italy and Turkey (even though the 1 kuruş coin can still be used).

Prices are rounded down to the nearest multiple of 5 cents for sales ending in 1c, 2c, 6c, 7c;
Prices are rounded up to the nearest multiple of 5 cents for sales ending in 3c, 4c, 8c, 9c;
Values ending in 0c or 5c remain unchanged.

Rounding with 10c intervals

This is currently used in New Zealand, which eliminated its 5 cent coin in 2006.

round down to the nearest 10 cent value for sales ending in 1c, 2c, 3c, 4c;
round up to the nearest 10 cent value for sales ending in 6c, 7c, 8c, 9c;
It is up to the business to decide if they will round 5c intervals up or down. The majority of retailers follow government advice and round it down.^[1]

In the People's Republic of China, coins smaller than Ұ0.10 are now rare though still valid. As a result, many shops simply truncate their bills down to the next Ұ0.10 increment, giving the customer a discount of up to Ұ0.09.

Rounding with 25 øre intervals

The following system was used in Denmark until the 25 øre was demonetised on 1 October 2008:

Sales ending in 1-12 øre round down to 0 øre.
Sales ending in 13-24 øre round up to 25 øre.
Sales ending in 26-37 øre round down to 25 øre.
Sales ending in 38-49 øre round up to 50 øre.
Sales ending in 51-62 øre round down to 50 øre.
Sales ending in 63-74 øre round up to 75 øre.
Sales ending in 76-87 øre round down to 75 øre.
Sales ending in 88-99 øre round up to the next whole Danish krone.

Rounding with 50 öre intervals

The system used in Sweden since 1992^[2], in Norway since 1993^[3] and in Denmark since 1 October 2008^[4] is the following:

Sales ending in 1-24 öre round down to 0 öre/øre.
Sales ending in 25-49 öre round up to 50 öre/øre.
Sales ending in 51-74 öre round down to 50 öre/øre.
Sales ending in 75-99 öre round up to the next whole krona/krone.

In practice, the proportion of transactions rounded upwards is greater, due to psychological pricing of items ending in 90 öre/øre.^{[original research?]}

References

^ "Change for the Better: Questions and Answers". Reserve Bank of New Zealand. Retrieved 2009-01-28.
^ "Svensk författningssamling (SFS) — Lag (1970:1029) om avrundning av vissa öresbelopp". Parliament of Sweden. Retrieved 2007-12-31.
^ "Avrundingsregler ved kontant betaling i norsk mynt". Norges Bank. Retrieved 2010-06-20. {{cite web}}: Cite has empty unknown parameter: |1= (help)
^ "New rounding rules". Danmarks Nationalbank. Retrieved 2010-05-02.
^ "Cessation of minting of 1 & 2 Cent Coins". South African Government Information. 2002-03-22. Retrieved 2008-08-14.

[1] "Change for the Better: Questions and Answers". Reserve Bank of New Zealand. Retrieved 2009-01-28.

[2] "Svensk författningssamling (SFS) — Lag (1970:1029) om avrundning av vissa öresbelopp". Parliament of Sweden. Retrieved 2007-12-31.

[3] "Avrundingsregler ved kontant betaling i norsk mynt". Norges Bank. Retrieved 2010-06-20. {{cite web}}: Cite has empty unknown parameter: |1= (help)

[4] "New rounding rules". Danmarks Nationalbank. Retrieved 2010-05-02.

[5] "Cessation of minting of 1 & 2 Cent Coins". South African Government Information. 2002-03-22. Retrieved 2008-08-14.

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