Rounding up and down – the missing coins in NZD and AUD

I still can’t get used to the fact that rounding up or down is not only common in NZ and in Australia, but a necessity. While Australia lacks 1 and 2 cent coins, NZ further lacks a 5 cent coin. Meaning that all cash transactions have to be rounded up or down. If you pay in cash in an Australian supermarket for a bill of 10,02 AUD it will be rounded down to 10 AUD. If you have to pay 10,03 AUD you’d have to really pay 10,05 AUD. This is due to the withdrawal of the 1 and 2 cent coins in the 1980/90s (and later withdrawal of the NZD 5 cent coin). However, if payment is made by credit card, no rounding is necessary.

I’ve now learned that this practice is called swedish rounding, as it was first  introduced in Sweden following the removal of 1 and 2 öre coins from circulation in 1972. Surprisingly, coins at the denomination of 0,01, 0,02 and 0,05 have been removed in many countries and although I’ve definitely visited some of these I cannot recall it. The Swiss Reserve Bank, for example, removed the 2 Rappen coin in 1978 and the 1 Rappen coin in 2007 (because it cost 11 Rappen to produce it).

I find it strange, though, that shops in NZ and Australia do not simply avoid the need to round up or down by having all prices divisible by 0,05 or 0,10. However,it seems that it works well and that its balanced out.

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