4 ms·

Forgive my ignorance, but doesn't there need to be a minimum-value coin in circulation to facilitate transactions? For example, I go to a shop and buy something

by RossM 12y ago

Forgive my ignorance, but doesn't there need to be a minimum-value coin in circulation to facilitate transactions? For example, I go to a shop and buy something for £4.99 and pay with a £5.00 note - do I get any change in return?

YokoZar 12y ago
This is handled by rounding. In the US many businesses already opt out of pennies and just round things down to the nearest 5 cents. It's just an extension of the rounding they already do (for instance when an 8.5% sales tax is added to a 1 dollar purchase, the half cent will be rounded even when the business uses the penny). Interesting historical note is that when the US half penny was removed from circulation due to it being nearly useless, it was worth approximately 8 cents in today's money.
kps 12y ago
It depends. In Canada, legally, cash transactions may be rounded to the nearest 5 cents, so you wouldn't get change. In practice, many merchants round down, so you'd get 5 cents change.
nandhp 12y ago
Most places that have abolished low-denomination coins use Swedish rounding (or at least that's what Wikipedia calls it): when paying with cash, round to the nearest (sometimes this will be up, sometimes down) payable price. https://en.wikipedia.org/wiki/Swedish_rounding https://en.wikipedia.org/wiki/Swedish_rounding
dobbsbob 12y ago
Well there's GST+PST added in Canada depending on province so that $4.99 item would probably cost $5.58 then they round the price since the penny is gone, so $5.58 would be $5.60 Retailers are supposed to round up/down depending on amount but you will quickly find that everybody is rounding up unless you say something.
dhughes 12y ago
If you pay in cash it gets rounded up or down e.g. $1.03 becomes $1.05 if it's $1.02 it's $1.00 but if you pay via debit card or credit card it doesn't change. Here is the government's explanation http://www.cra-arc.gc.ca/gncy/lmntnpnny/menu-eng.html http://www.cra-arc.gc.ca/gncy/lmntnpnny/menu-eng.html
- deleted 12y ago
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raverbashing 12y ago
In Canada, no. Every transaction is rounded to 5 cents, so in your case, no change If it was 4.97 it would go for 4.95 though
- lstamour 12y ago
  Unless you pay by credit in which case it's exact. As to how it works, unlike VAT added into the price, we've HST (varies ~13%) or GST (5%) to round up or down by a few pennies on top of the stated price. I'm a bit surprised this is news. It's been well over a year.
vacri 12y ago
You are clearly too young to recall the Half New Penny piece. I visited the UK in '84 as a young'un, and recall the half-penny being useless, since you had to have two of them together to purchased the cheapest things (at a penny). Before decimalisation, what was the previous smallest coin? The farthing was pretty common, but at one stage it got down to the quarter-farthing (roughly one-four-thousandths of a pound sterling). We also see it in modern currencies, as Bitcoin gets traded in smaller and smaller amounts. Ultimately, the smallest useful transaction is the smallest value you need a coin (or token) for. Here in Australia, we abolished our 1c and 2c pieces decades ago, and apart from very temporary hand-wringing from some quarters, it's never been an issue. People just weren't purchasing things with a value of 1c and 2c, and getting that in change meant that you had to collect a bunch of them in order to purchase something else. http://en.wikipedia.org/wiki/Halfpenny_%28British_decimal_coin%29 http://en.wikipedia.org/wiki/Halfpenny_%28British_decimal_co...
CountHackulus 12y ago
You already round to the nearest penny on your transactions, rounding to the nearest 5c isn't that much different. Especially when it only applies to cash transactions.

by RossM 12y ago

YokoZar 12y ago

This is handled by rounding. In the US many businesses already opt out of pennies and just round things down to the nearest 5 cents. It's just an extension of the rounding they already do (for instance when an 8.5% sales tax is added to a 1 dollar purchase, the half cent will be rounded even when the business uses the penny). Interesting historical note is that when the US half penny was removed from circulation due to it being nearly useless, it was worth approximately 8 cents in today's money.

kps 12y ago

It depends. In Canada, legally, cash transactions may be rounded to the nearest 5 cents, so you wouldn't get change. In practice, many merchants round down, so you'd get 5 cents change.

nandhp 12y ago

Most places that have abolished low-denomination coins use Swedish rounding (or at least that's what Wikipedia calls it): when paying with cash, round to the nearest (sometimes this will be up, sometimes down) payable price. https://en.wikipedia.org/wiki/Swedish_rounding https://en.wikipedia.org/wiki/Swedish_rounding

dobbsbob 12y ago

Well there's GST+PST added in Canada depending on province so that $4.99 item would probably cost $5.58 then they round the price since the penny is gone, so $5.58 would be $5.60 Retailers are supposed to round up/down depending on amount but you will quickly find that everybody is rounding up unless you say something.

dhughes 12y ago

If you pay in cash it gets rounded up or down e.g. $1.03 becomes $1.05 if it's $1.02 it's $1.00 but if you pay via debit card or credit card it doesn't change. Here is the government's explanation http://www.cra-arc.gc.ca/gncy/lmntnpnny/menu-eng.html http://www.cra-arc.gc.ca/gncy/lmntnpnny/menu-eng.html

deleted 12y ago
[deleted]

raverbashing 12y ago

In Canada, no. Every transaction is rounded to 5 cents, so in your case, no change If it was 4.97 it would go for 4.95 though

lstamour 12y ago
Unless you pay by credit in which case it's exact. As to how it works, unlike VAT added into the price, we've HST (varies ~13%) or GST (5%) to round up or down by a few pennies on top of the stated price. I'm a bit surprised this is news. It's been well over a year.

vacri 12y ago

You are clearly too young to recall the Half New Penny piece. I visited the UK in '84 as a young'un, and recall the half-penny being useless, since you had to have two of them together to purchased the cheapest things (at a penny). Before decimalisation, what was the previous smallest coin? The farthing was pretty common, but at one stage it got down to the quarter-farthing (roughly one-four-thousandths of a pound sterling). We also see it in modern currencies, as Bitcoin gets traded in smaller and smaller amounts. Ultimately, the smallest useful transaction is the smallest value you need a coin (or token) for. Here in Australia, we abolished our 1c and 2c pieces decades ago, and apart from very temporary hand-wringing from some quarters, it's never been an issue. People just weren't purchasing things with a value of 1c and 2c, and getting that in change meant that you had to collect a bunch of them in order to purchase something else. http://en.wikipedia.org/wiki/Halfpenny_%28British_decimal_coin%29 http://en.wikipedia.org/wiki/Halfpenny_%28British_decimal_co...

CountHackulus 12y ago

You already round to the nearest penny on your transactions, rounding to the nearest 5c isn't that much different. Especially when it only applies to cash transactions.