If pennies ceased being the smallest coin denomination how would that work?
Do you think that existing cash registers and systems would keep calculating in cents and merchants would just round up (or maybe down) when it came to charging the customer?
Can you envision any other unusual circumstances or problems?
No problem for merchants. Raise the $1.99 to $2.00 and let the nickels roll.
BTW Who ever heard of a merchant rounding down and loose $0.04?
The system that has been proposed is to only round the final total, so the only difference would be a few cents per transaction. The more frugal businesses would target amounts that added up to something ending in 3, 4, 8 or 9 so they could round up more often than not.
IIRC, Australia has done away with the penny, and rounds everything to the nearest five cents. Their economy seems not to have imploded in fiery chaos in the years since they adopted it, so I’d say it was pretty workable. No doubt one of the south-side Dopers will be along soon to elucidate.
Australia and New Zealand have both got rid of their 1- and 2-cent coins. In virtual balances (like bank balances) you can still have cents like normal (this exists in North America too, when was the last time you saw a mill coin?) and when it comes time to paying for your purchases everything is totalled up and then rounded (often down, in fact, by businesses who want to seem generous instead of taking extra) to an easy total divisible by 5¢.
I have wondered about the anti-inflationary effect of keeping the penny.
That’s it for now.
The general system in Australia is that in shops, when you pay with cash, the total is rounded to the nearest number ending in 0 or 5. There was a story about a person buying a single grape, which came in at 2 cents on the register, so the customer got it free. Most peoiple don’t try to keep track of the lasst digit wen they go to the supermarket, so for everything that’s rounded up 2 cents, there’s going to be another purchase that’s rounded down 2 cents. But credit cards are still charged in the exact cents.
And when Australia did it, it got rid of two coins, because they ad 1c and 2c coins.
Australia has a VAT (called the GST, for “Goods and Services Tax”), but that’s included in the price marked on the item or on the supermarket shelf. So I assume that when the shop pays its GST bill, it just works out the total money collected from customers, and sends a percentage of that to the taxman (less the GST they have paid on inputs, of course). (But receipts do have a line saying what the GST is, so that businesses which purchase items can deduct that from the GST which they pay.) Both those deductions are done because it is a VAT, not a sales tax.
That is how the military bases (which use American currency) do it over here. Round up with 3+ cents, down for 1 and 2 cents. It pretty much evens out. I like it.
New Zealand just got rid of its five cent coins too, since they’re too expensive to make for what they’re worth - but yeah, same system: if a purchase would be over five cents, round it up to ten; under, and round it down to zero.
It’s called the Swedish System, where I assume it was developed, and most of the larger businesses who deal in odd figures of change, like supermarkets, use and advertise this so you know you aren’t arbitrarily being overcharged. There were fears when the ones and twos were done away with that pensioners would be starving in the streets, but it never happened - it pretty much evens out over time anyway.
I’ve heard a few people use that term, although I don’t recall its ever being used here when the one and two cent pieces were eliminated. The Wiki article seems to throw some doubt on the idea that this form of rounding originated in Sweden.
Now that is curious - more on Swedish Rounding, but the term itself was apparently coined {ahem} in New Zealand in 1990, when the 1’s and 2’s were phased out - all the Google references I can find show that the Swedes themselves have never apparently never heard the term, and don’t even use the system. Odd.
Simulpost. More research is indicated - I’ll try the Reserve Bank.
No joy on their website; I’ve e-mailed them with the question. If that doesn’t work, I’ll try the Retailers Federation.
If, based on local market conditions, the merchant could conclude that the profit on a particular item would be greater if the price is rounded down, then that’s what would happen. We all know that "([*X-1*).95 sounds less expensive than X, so more customers might buy the article on impulse.
In Sicily, the grocery stores, instead of rounding up or down, just throw in a few penny (lira) candies.
Just to be clear we are already doing something like this at the peny level. In San Diego where I live the sales tax is 7.75% If I buy something for $1.41 I pay $1.52 not 1 dollar 51.9275 cents. Ultimatly the merchant will pay 7.75% on the total of his sales not the total of the sales tax he collected. Those numbers should be pretty close but they will not be exactally the same.
I frequently hear this stated as an objection to eliminating the penny (i.e. customers would be cheated by unscrupulous businesses), but I don’t think this is mathematically possible. Furthermore, it’s the customer that has the most control in this situation. If the customer is buying multiple items s/he can arrange the purchases to mostly add up to a number that rounds down.
Wikipedia says this was just announced today – bah! How was I supposed to know! :o
The Reserve Bank Of New Zealand confess themselves baffled. These are deep waters, Watson…
Why not revalue the currency? The U.S. dollar could be replaced with a new dollar. I’d suggest that one new dollar be equal to twenty-five old dollars. That would eliminate several hundred years worth of inflation.