Swedish rounding
From Wikipedia, the free encyclopedia
Swedish rounding is a method by which the total monetary cost of a purchase is rounded to the closest unit of physical currency. The term is used mostly in Australia and New Zealand. Most other English-language countries do not round. Many countries with other languages have similar rounding, but use other terms.
Rounding may become necessary due to the lack of, or elimination of, low denomination coins. Since it may not be possible to make exact change for a purchase, rounding to the lowest denomination of coinage is required.
Rounding is applied to the total of all purchases, and only if a consumer is paying by cash. If payment is being tendered using credit card, debit card, EFTPOS or cheque no rounding is necessary.
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[edit] History
The term came to popular use in New Zealand in 1990, when the 1 and 2 cent coins were removed from circulation. The method adopted by the Reserve Bank of New Zealand for rounding was one based on a system then commonly used in Sweden, following the removal of 1 and 2 öre coins from circulation in 1962. It is called "öresavrundning" in Sweden, meaning "öre rounding".
The Reserve Bank of Australia followed New Zealand's lead, and usage of the term, when 1 and 2 cent coins were removed from circulation in Australia in 1993. This method of 5c rounding has not been used in Sweden since 1977, when the 5 and 25 öre coins were canceled.
In November 2006, New Zealand eliminated the 5 cent piece; rounding now takes place to the nearest ten cents.
[edit] The mechanics of Swedish rounding
[edit] Rounding with 5c intervals
This is the historical algorithm used in New Zealand, but is still in standard use in Australia. It involves rounding to the nearest 5 cents:
- 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.
[edit] Rounding with 10c intervals
- 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;
- for values at a 5c interval, do a coin flip (round up/round down)[citation needed]
In New Zealand, after the 5¢ coins were withdrawn from circulation on September 30, 2006, the majority of retailers adopted a policy of rounding 5¢ down to the nearest 10¢ value. No new 5c coins had been minted since 2004.
[edit] Rounding with 50 öre intervals
The system used in Sweden since 1992 is the following:[1]
- 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.
[edit] Eurozone issues
Finland and the Netherlands practice Swedish rounding (by 5c) officially. The method is also commonly, though unofficially, used throughout many other parts of the Eurozone. Often shops avoid rounding by having all prices already rounded.
[edit] See also
[edit] Related currencies
- Swedish krona
- Australian dollar
- New Zealand dollar
- Malaysian ringgit (from April 1, 2008 onwards)
- Hungarian forint (from March 1, 2008 onwards)
[edit] Rounding related social issues
[edit] References
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