Cash rounding

A "BetterAllRound" notice at a cash register in Ireland after the October 2015 introduction of 5-cent rounding

Cash rounding[1][2] or Swedish rounding (New Zealand English[3][4]) occurs when the minimum unit of account is smaller than the lowest physical denomination of currency. The amount payable for a cash transaction is rounded to the nearest multiple of the minimum currency unit available, whereas transactions paid in other ways are not rounded (for example electronic funds transfer such as with payment cards, or negotiable instruments such as cheques). Cash rounding typically occurs when low-denomination coins are removed from circulation owing to inflation. Cash rounding may be a compulsory legal requirement if such coins are no longer legal tender, or a voluntary practice where they remain in circulation but are scarce or impractical.

Cash rounding ("öre rounding", öresavrundning) was introduced in Sweden in 1972 when 1 and 2 öre coins were withdrawn from circulation, and has continued to be applied at incremental levels as smaller denomination coins have been withdrawn. The current level of cash rounding in Sweden is to the closest whole krona, after the 50 öre coin was withdrawn in 2010. The Reserve Bank of New Zealand used the name "Swedish rounding" in 1990 when withdrawing their 1- and 2-cent coins. In Canada, cash rounding to the nearest nickel (5 cents) due to the elimination of the penny in 2013 is also called penny rounding.[5]

When small-value coins are withdrawn, an alternative to the implementation of cash rounding is instead to increase the minimum unit of account to the smallest remaining currency unit and to round all prices and bank accounts to this value. Whereas cash rounding is an ongoing process, this alternative is a one-time conversion. It was done, for example, when the British farthing was withdrawn in 1960.

  1. ^ Stevens, Michelle (19 October 2015). "Ireland set to roll out cash rounding". FStech. Retrieved 20 October 2015.
  2. ^ "How to use Cash Rounding". Lightspeed POS Support. lightspeed. Retrieved 20 October 2015.
  3. ^ NZPA (31 March 2005). "Reserve Bank to withdraw 5c coin". The New Zealand Herald. Retrieved 23 October 2015. Most retailers use a Swedish system of rounding prices up or down to the nearest 5c. ... All we would do is use the Swedish rounding system to the nearest 10c
  4. ^ "Swedish Rounding". NZmaths. New Zealand Ministry of Education. 2010. Retrieved 23 October 2015.
  5. ^ "Man comes out 89 cents richer after a year of penny-rounding – Montreal – CBC News". CBC.ca. 27 May 2014. Retrieved 20 October 2015.