Cash rounding or Swedish rounding (
New Zealand English
New is an adjective referring to something recently made, discovered, or created.
New or NEW may refer to:
Music
* New, singer of K-pop group The Boyz
Albums and EPs
* ''New'' (album), by Paul McCartney, 2013
* ''New'' (EP), by Regurgitator, ...
) occurs when the minimum
unit of account
In economics, unit of account is one of the money functions. A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of rela ...
is smaller than the lowest physical
denomination of
currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
. The amount payable for a
cash
In economics, cash is money in the physical form of currency, such as banknotes and coins.
In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-imm ...
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
Electronic funds transfer (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of b ...
like
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
s, or
negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
s like
cheque
A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
s). Cash rounding typically occurs when low-denomination
coin
A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint in order t ...
s are
removed from circulation owing to
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. Cash rounding may be a compulsory legal requirement if such coins are no longer
legal tender
Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...
, or a voluntary practice where they remain in circulation but are scarce or impractical.
Cash rounding ("öre rounding", ) was introduced in Sweden in 1972 when 1 and 2
öre
Öre () is the centesimal subdivision of the Swedish krona. In the Swedish language, the plural of ''öre'' is either ''öre'' or ''ören''.
The name ''öre'' derives from the Latin word ''aereus/aurum'', meaning gold. The corresponding subdivisio ...
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
The Reserve Bank of New Zealand (RBNZ, mi, Te Pūtea Matua) is the central bank of New Zealand. It was established in 1934 and is constituted under the Reserve Bank of New Zealand Act 1989. The governor of the Reserve Bank is responsible for N ...
used the name "Swedish rounding" in 1990 when withdrawing their 1- and 2-cent coins. In Canada, cash rounding to nearest nickel (5 cents) due to the elimination of the
penny
A penny is a coin ( pennies) or a unit of currency (pl. pence) in various countries. Borrowed from the Carolingian denarius (hence its former abbreviation d.), it is usually the smallest denomination within a currency system. Presently, it is t ...
in 2013 is also called ''penny rounding''.
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.
Practice
Rounding is applied to the total of a bill, not to the line items on the bill. Typically, the total is rounded to the nearest multiple of the smallest denomination, which may be higher or lower than the unrounded total. Where the unrounded total is an equal distance from two multiples, practice varies: merchants may be required or encouraged to round down rather than up, giving the benefit to the buyer. An equal distance is possible when the rounding interval is an even number.
The introduction of cash rounding is typically accompanied by publicity campaigns for awareness among both consumers and implementing merchants; smaller campaigns will accompany the extension of an existing rounding system to a higher rounding interval.
Rounding with 0.05 or 5 intervals
* Prices are rounded down to the nearest multiple of 5 cents for sales ending in: 1¢ & 2¢ (rounded to 0¢); and 6¢ & 7¢ (rounded to 5¢). This is done, for example, in Canada.
* Prices are rounded up to the nearest multiple of 5 cents for sales ending in: 3¢ & 4¢ (round to 5¢); and 8¢ & 9¢ (round to 10¢). This is also done in Canada, for example.
* Values ending in 0¢ or 5¢ remain unchanged.
Rounding with 0.10 or 10 intervals
![Chinese Swedish rounding](https://upload.wikimedia.org/wikipedia/commons/9/9d/Chinese_Swedish_rounding.jpg)
This is currently used in New Zealand, which eliminated its 5 cent coin in 2006, and in Hong Kong, which eliminated its 5 cent coin in 1989 and 1 cent coin in 1995. In practice only utility bills, petrol stations and banks still keep the cent. All other businesses use only ten cent intervals.
* round down to the nearest 10 cent value for sales ending in 1 to 4 cents;
* round up to the nearest 10 cent value for sales ending in 5 to 9 cents;
* it is up to the business to decide if it will round 5¢ intervals up or down. The majority of retailers follow government advice and round it down.
In Sweden between 1985 and 1992, prices were rounded up for sales ending in 5 öre.
In
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, coins smaller than 1
jiao
Jiao may refer to:
*Horn (Chinese constellation), or Jiao (角宿), a Chinese constellation
*Jiaolong, or Jiao (蛟), a Chinese dragon
*Jiao (currency) (角), a unit of currency in China, one-tenth of a Chinese yuan or dollar
*Jiao (surname) ( ...
(
¥0.1 or 10
fen
A fen is a type of peat-accumulating wetland fed by mineral-rich ground or surface water. It is one of the main types of wetlands along with marshes, swamps, and bogs. Bogs and fens, both peat-forming ecosystems, are also known as mires. T ...
) are now rare though still valid. As a result, many shops simply truncate their bills down to the next 1-jiao increment, giving the customer a discount of up to 9 fen; however, many other stores round sales to the nearest jiao values, and 5 fen is usually rounded up.
In
Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
, the 1 and 5
peso
The peso is the monetary unit of several countries in the Americas, and the Philippines. Originating in the Spanish Empire, the word translates to "weight". In most countries the peso uses the Dollar sign, same sign, "$", as many currencies na ...
coins were withdrawn on November 1, 2017 (but still legal tender), and rounding for cash transactions was implemented, prices are rounded down to the nearest 10 pesos if the value is $1–5, and rounded up if the value is $6–9. Most prices are already rounded to the nearest 10 pesos, and many small businesses round to 50 or 100 pesos due to the low value and availability of lower denominations.
In Israel, 5 agorot coins were removed from circulation on 1 January 2008, after 1 agora coins had already been removed in 1991. Transaction amounts can still be specified to the nearest agora. Cash purchase totals are rounded to the nearest 10 agorot. A 5 agorot total is rounded up to 10 agorot.
In
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
, the 1- and 5-won coins are not used (but still legal tender). Prices are generally rounded to the nearest 10 won (though generally to the nearest 50 or 100 won in many stores apart from supermarkets), and cash payments are rounded to the same.
In
Ukraine
Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...
, from 1 October 2019, the 1-, 2- & 5-
kopiyka
The or ( ; uk, wikt:гривня, гривня , : ''hrn''; currency sign, sign: ₴; ISO 4217, code: UAH) has been the national currency of Ukraine since 2 September 1996. The hryvnia is divided into 100 . It is named after Grivna, a measure ...
coins were demonetized and withdrawn from circulation, with the 25-kopiyok coin softly withdrawn. From then all cash payments would be rounded to the nearest 10 kopiyok.
Rounding with 0.25 intervals
The system used in Denmark from 1989 to 2008 is the following:
*Sales ending in 1–12
øre
Øre (plural ''øre'', ) is the centesimal subdivision of the Danish and Norwegian krones. The Faroese division is called the ''oyra'', but is equal in value to the Danish coin. Before their discontinuation, the corresponding divisions of the Swe ...
round down to 0 øre.
*Sales ending in 13–37 øre round to 25 øre.
*Sales ending in 38–62 øre round to 50 øre.
*Sales ending in 63–87 øre round to 75 øre.
*Sales ending in 88–99 øre round up to the next whole
krone.
Rounding with 0.50 intervals
The system used in Sweden from 1992 to 2010, in Norway from 1993 to 2012, and in Denmark since 1 October 2008 is the following:
*Sales ending in 1–24
öre
Öre () is the centesimal subdivision of the Swedish krona. In the Swedish language, the plural of ''öre'' is either ''öre'' or ''ören''.
The name ''öre'' derives from the Latin word ''aereus/aurum'', meaning gold. The corresponding subdivisio ...
/
øre
Øre (plural ''øre'', ) is the centesimal subdivision of the Danish and Norwegian krones. The Faroese division is called the ''oyra'', but is equal in value to the Danish coin. Before their discontinuation, the corresponding divisions of the Swe ...
round down to 0 öre.
*Sales ending in 25–49 öre/øre round up to 50 öre.
*Sales ending in 51–74 öre/øre round down to 50 öre.
*Sales ending in 75–99 öre/øre round up to the next whole
krona.
In practice, the proportion of transactions rounded upwards is greater, due to
psychological pricing
Psychological pricing (also price ending, charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. In this pricing method, retail prices are often expressed as just-below numbers: ...
of items ending in 90–99 öre. Rounding is only done on the total sum of a purchase, which makes that effect smaller. In some shops, all prices are already rounded to the whole krone, so that no rounding takes place.
Rounding with 1.00 intervals
The system used in Sweden since 30 September 2010 and used in Norway since 1 May 2012.
*Sales ending in 1–49
öre
Öre () is the centesimal subdivision of the Swedish krona. In the Swedish language, the plural of ''öre'' is either ''öre'' or ''ören''.
The name ''öre'' derives from the Latin word ''aereus/aurum'', meaning gold. The corresponding subdivisio ...
/
øre
Øre (plural ''øre'', ) is the centesimal subdivision of the Danish and Norwegian krones. The Faroese division is called the ''oyra'', but is equal in value to the Danish coin. Before their discontinuation, the corresponding divisions of the Swe ...
round down to 0 öre/øre.
*Sales ending in 50–99 öre/øre round up to the next whole
krona/
krone.
This is also the system similarly used in
Jamaica
Jamaica (; ) is an island country situated in the Caribbean Sea. Spanning in area, it is the third-largest island of the Greater Antilles and the Caribbean (after Cuba and Hispaniola). Jamaica lies about south of Cuba, and west of His ...
since 15 February 2018, when the 1c, 10c, and 25c coins of the dollar were demonetised.
*Sales ending in 1–49 cents round down to zero cents.
*Sales ending in 50–99 cents round up to the next whole
dollar
Dollar is the name of more than 20 currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore dollar, U ...
.
See also
*
Mil (currency)
*
Penny debate in the United States
A debate exists within the United States government and American society at large over whether the one-cent coin, the penny, should be eliminated as a unit of currency in the United States. The penny costs more to produce than the one cent it i ...
*
Take a penny, leave a penny
"Take a penny, leave a penny" (sometimes "Give a penny, take a penny", penny tray, or penny pool) refers to a type of tray, dish or cup meant for convenience in cash transactions. They are often found in the United States in gas stations, conveni ...
References
{{reflist
Cash