In 2013 the Central Bank conducted a trial in Wexford town which took place over a two month period. The trial involved getting rid of 1 and 2 cent coins by means of rounding final bills. 85% of consumers who took part in the Rounding Trial and 100% of retailers welcomed the national rounding scheme in Ireland.
Currently 19 countries use a rounding scheme of which many are EU members. The Central Bank, by request from the Department of Finance, has announced the implementation of a rounding scheme whereby the production of 1c and 2c coins will be scrapped. This change started on October 28 2015 but many people have not yet grasped the concept of the rounding scheme.
So what exactly is rounding?
It involves either rounding up or down the sum of a bill to the nearest 5 cent. This will only apply to cash payments, not electronic payments such as debit or credit card payments. You should round down to 0 if the total amount ends in 1 or 2 cent; you should round up to five if it ends in 3 or 4; you should round down to five if the total ends in 6 or 7; and you should round up to 10 if the amount ends in 8 or 9.
The following are some examples to make it clearer:
- a total of €50.21 or €50.22 would be rounded to €50.20
- a total of €50.23 or €50.24 would be rounded to €50.25
- a total of €50.26 or €50.27 would be rounded to €50.25
- a total of €50.28 or €50.29 would be rounded to €50.30
Will this rounding scheme affect my business?
The good news is it won’t affect your business too dramatically! Seeing as rounding only applies to the total amount of a transaction and not on each individual item, your business will not have to change the prices of your goods or services. This also means you will not have to update your POS system. These are the main concerns of business owners in regards to the rounding scheme.
The rounding scheme is voluntary so this means your business will still be allowed to receive and give out 1 and 2 cent coins as they remain legal tender. Businesses and consumers must accept the rounding scheme but each party are entitled to use exact change. In circumstances where the consumer complains that your business rounded up a total then you should hand them the exact change because the rounding scheme is entirely voluntary.
Your business is not required to ask consumers if they are participating in the rounding scheme, they should tell you themselves if they want to pay as normal. The rounding scheme will also not affect how you calculate VAT because it will be charged as usual on the unrounded cost of an item.
We have written a guide on VAT which can give further guidance on calculating VAT.
