| gross | 223.20 | 324.88 | 65.40 |
| net | 223.00 | 324.88 | 65.50 |
| rounded down | unrounded (debit card) | rounded up |
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.
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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Rounding becomes necessary where low denomination coins in a currency are withdrawn or otherwise made unavailable, but the currency's subdivisions remain the same.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, Switzerland, Finland, The Netherlands, Brazil and sometimes Turkey(even though 1 kuruş coin can still be used).
- round down to the nearest multiple of 5 cents for sales ending in 1c, 2c, 6c, 7c;
- round 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 withdrawn from circulation in 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 is the following:[2]
- Sales ending in 1–24 öre round down to 0 öre.
- Sales ending in 25–49 öre round up to 50 öre.
- Sales ending in 51–74 öre round down to 50 öre.
- Sales ending in 75–99 öre round up to the next whole krona.
This means that upward rounding is more likely (50/48) than downward rounding. If a sale ending 25 öre were rounded downward, there would be no theoretical bias. In reality, however, the amount of transactions rounded upward is far greater, due to psychological pricing, usually ending in 90 öre.
See also
Related currencies
- Euro
- Swiss franc
- Swedish krona
- Estonian kroon
- Australian dollar
- New Zealand dollar
- Malaysian ringgit (from 1 April 2008 onwards)
- Hungarian forint (from 1 March 2008 onwards)
- South African rand (from 1 April 2002), rounding is done to the nearest 5c[3]
- Libyan dinar
- Chinese renminbi
- Brazilian Real (production of 1 centavo coins discontinued November 2005)
References
- ^ "Change for the Better: Questions and Answers". Reserve Bank of New Zealand. http://www.newcoins.govt.nz/1570749.html. Retrieved 2009-01-28.
- ^ "Svensk författningssamling (SFS) — Lag (1970:1029) om avrundning av vissa öresbelopp". Parliament of Sweden. http://www.riksdagen.se/webbnav/index.aspx?nid=3911&bet=1970:1029. Retrieved 2007-12-31.
- ^ "CESSATION OF MINTING OF 1 CENT AND 2 CENT COINS". South African Government Information. 2002-03-22. http://www.info.gov.za/speeches/2002/020402946a1001.htm. Retrieved 2008-08-14.
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