Estonian govt approves bill aiming to reduce need for one, two-cent coins

TALLINN – The Estonian government at its sitting on Thursday approved a bill that aims to reduce the need to use one and two-cent coins, since small cents are rarely used in stores, but the impact of their production and handling on the environment is high.

Mandatory rounding rules will be introduced for one and two-cent euro coins, which means that in the case of cash payment, the cost of the shopping basket, and not of each product separately, is rounded to the nearest five cents. Final purchase amounts ending in one, two, six or seven euro cents will be rounded down, and amounts ending in three, four, eight or nine euro cents will be rounded up, government spokespeople said.

When paying with a card, nothing changes and the price of the purchase will still be drawn from the account to the nearest one cent. Also, rounding will not change paying with one and two-cent coins, if the shopper wants to pay with them, the store has to accept them. However, they will not be returned as change from 2025 and five-cent coins will then be the smallest that can be returned from a store.

In recent years, the Bank of Estonia has put into circulation an average of 40 tons of one and two-cent euro coins per year, of which a minuscule share is used to pay for purchases, and about 3 percent of the issued one and two-cent coins are returned to the central bank each year. Small cents falling out of circulation in large numbers leads to their overproduction and large footprint on the environment. Given the costs and benefits associated with small cents, it is not practical to continue producing these coins.

With each cash transaction, the consumer can win or lose up to two cents. Since rounding is done up or down according to the rules of mathematics, its effect evens out over time. In addition, the consumer always has the option to opt out of rounding by choosing to pay for the purchase by card. There is no point in merchants changing the prices of the products, because the shopping cart is created by the customer and only the total cost of the shopping cart is rounded.

The problem of circulation of small coins is similar throughout the euro area, but there is no common agreement to round prices. However, six countries have already implemented rounding: Finland, Ireland, the Netherlands, Belgium, Slovakia and Italy, while Lithuania is also planning to do so.

The law is scheduled to enter into force on Jan. 1, 2025.