10

In 2012, the Canadian Mint abolished the 1¢ penny, and decided that all cash payments be rounded to the nearest 5¢ nickel, so that:

  • $0.98 to $1.02 → $1.00
  • $1.03 to $1.07 → $1.05
  • $1.08 to $1.10 → $1.10
  • And so on

But what happens when a total comes to $0.02? Is it rounded down to being free, or up to charge the lowest possible cash value of $0.05?


I need to know this because I'm programming a POS system that will be deployed in Canada, and I want to make sure it handles strange cases like this in a proper way. I know this is an extreme edge case, but it's still physically possible, and with potentially tens of thousands of transactions per day, this scenario is bound to come up eventually.

  • 3
    For the doubters there are cases in produce where this is possible. Imagine one of those tiny peppers (thai), even at $5/pound is still probably less than 1 cent. I used to deal with this issue in another way when scales rounded to 5g (and maybe still do) . Less than 2.5g would round to 0. I would give it away free. There were never any problems with people walking out with one pepper at a time. – brian May 25 '16 at 0:36
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    As far as I know, electronic transactions does keep pennies. The point of removing pennies was not to have all transactions rounded, but instead to stop wasting money as they cost more to produce than they actually worth, hence no reason to remove them from electronic transactions. – Jean-François Savard May 25 '16 at 1:47
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    I don't know about Canada, but generally lower denominations are abolished, it means there is nothing available at that price. Shop Owners would have stopped such items. To brian comment, well some owners may give things for free, or impose minimum buy quantity. So its irrelevant how to handle this condition, this is an invalid business scenario. – Dheer May 25 '16 at 4:22
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    In Australia, when the same thing happened, one grocery chain decided to round down. So the chancers out there decided to purchase one mushroom at a time. The chain quickly came up with procedures to stop it. – Peter K. May 26 '16 at 0:00
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    @Jean-FrançoisSavard That's why this question specifically references cash payments, not electronic. – Ben C. R. Leggiero May 26 '16 at 15:27
16

As someone who works for a company that deploys POS systems in Canada, I can tell you that your best bet would be to have a configuration option that lets the client decide what to do. If they have a business practice that would allow for a sale total to be $0.01 or $0.02, they should first evaluate their business practice.

If you're building a POS system to deploy in Canada, I'm sure you have access to resources (potential clients) who would already know how they would want to handle this. Ask them.

  • +1 good answer. IMO the POS system should follow rounding rules, and the company should not allow items priced that low knowing that they'd be giving away those items for free. – Chris May 25 '16 at 14:07
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    +1 for the configuration option. And to those who say this shouldn't be allowed to happen, what about coupons/vouchers/gift cards? (Say the final tally is $10.02 and I have a $10 gift card that I decide to use. How much remains to be paid?) – a CVn May 25 '16 at 20:48
  • What if the voucher is for 9.98 and the normal price is 10.00 is another edge case. Along with the case of $10 voucher 9.98 price. I would expect the rounding behaviour in all these situations should be the same. – BevynQ May 26 '16 at 2:49
1

The rounding should always follow the same rule. If the value ends in .01 or .02 then you round to .00. Doesn't matter if it's 10.01 rounding to 10.00 or 0.01 to 0.00.

The decision on what a company wants to do if an invoice total is $0.01 or $0.02 would be up to the company. The POS system should follow the rule and round to $0.00 if the method of payment is cash, but the company has the right to not give things away for free.

They can impose a minimum cash invoice amount of $0.05. But you would do this by requiring the customer to add more items to their purchase. You couldn't just round the invoice up to $0.05 and to charge them $0.05 for a $0.01 item

It would be similar to companies having a minimum purchase amount when paying by credit card. If their minimum amount is $10.00 and you want to buy something that's $5.00, you either pay cash or add something to your order. They don't just charge you $10.00 for your $5.00 item.

I think this would be a extreme edge case where you have an invoice with a total of $0.01 or $0.02, without any discounts, partial payments, etc.

If the customer's total was $10.01 and they paid with a $10.00 gift card, the final amount owing of $0.01 would round down to $0.00 and they wouldn't owe any more. If they had paid cash, the total would have rounded to $10.00 anyway.

Similarly, if the customer returned an item and bought a new item, or used coupons, and the total owing was $0.01 or $0.02, then you would round down to $0.00 and they wouldn't pay anything.

As BobbyScon said, you can implement some options to allow the company to decide how they want to handle this. You could have an option that doesn't allow a sale to be processed if the total amount is less than $0.03 and the sale doesn't include any discounts, returned items, coupons, etc. The option could be to completely block the sale, require a supervisor override, or just display a warning to the cashier.

Best bet is to talk to as many of your current or potential clients as you can to see how they would like this edge case handled. For many, it's probably a mute case since they wouldn't have items that have a unit price less than $0.03. Maybe a place like a hardware store that sells individual nuts, bolts, and washers.

-2

I'd imagine in this extreme edge case it would round down to $0. I can't fathom what makes $10.02 or $153.02 any different from $0.02.

  • I expect the answer is that you can't buy that except in packages of 5 units... – keshlam May 24 '16 at 22:32
  • It is an extreme edge case, but I'm programming this into a POS unit so I'd like to handle it properly :) - Do you have any sources? – Ben C. R. Leggiero May 24 '16 at 22:33
  • @Keshlam and I'm sure nothing will net to $0.02 after tax. – quid May 24 '16 at 22:42
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    The law says for totals ending in one or two the total is rounded down to zero. I can't fathom what makes $10.02 or $153.02 any different from $0.02. Perhaps you should be asking this question to a Canadian legal professional not a personal finance SE. – quid May 24 '16 at 22:56
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    "I can't fathom what makes $10.02 or $153.02 any different from $0.02." I can. In the first case, rounding error accounts for a 0.013% loss, in the second 0.2%, in the third 100%. – Superbest May 26 '16 at 3:18
-2

I think it should be free. Why? I had a coupon for 35, I bought something for 35.01 including taxes and total to pay was 0.01, rounded to 0.00. I think it's almost the same scenario.

  • This is a comment since it's such an opinion. Please leave it as a comment instead. – Ben C. R. Leggiero May 25 '16 at 21:04
  • @BenC.R.Leggiero it's not an opion, it's something that actually happened to me but someone edited my answer to make it look like an hypothetical situation. – bns May 26 '16 at 12:58
  • by the way, It was at Metro (supermarket) in case it is helpful to you. – bns May 26 '16 at 13:01
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    Your answer literally starts and ends with "I think" :P – Ben C. R. Leggiero May 26 '16 at 15:25

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