How does the one-sen coins rounding mechanism work?

The Malaysian Government has introduced a Rounding Mechanism to phase out one-sen coins for over-the-counter payments, which has been fully implemented since April 1, 2008. Under the mechanism, the total amount paid over-the-counter will be rounded up to the nearest multiple of five (5) sen.

The implementation of the Rounding Mechanism brings benefits to businesses, customers and the Government. Businesses will be able to save on handling costs; and for customers, payment will be faster and more convenient. The Government will be able to save production costs when demand for the one-sen coins declines with the implementation of the Rounding Mechanism.

The Rounding Mechanism only applies to the total bill amount (including goods and services subject to tax) and not on individual items. The total bill amount that ends in 1, 2, 6 and 7 sen will be rounded down while 3, 4, 8 and 9 sen will be rounded up to the nearest multiple of five (5) sen.

The table below illustrates how the Rounding Mechanism works:

BILL ENDS IN SEN ROUND OFF TO THE NEAREST 5 SEN TOTAL AMOUNT OF A BILL
TOTAL AMOUNT BEFORE ROUNDING (RM) TOTAL AMOUNT AFTER ROUNDING (RM)
1,2 Down 86.01
86.02
86.00
3,4 Up 86.03
86.04
86.05
6,7 Down 86.06
86.07
86.05
8,9 Up 86.08
86.09
86.10

All over-the-counter (OTC) payments, settled in cash or non-cash, will be subjected to the Rounding Mechanism. Over-the-counter payment is a business transaction, which occurs with the physical presence between a business entity and a customer, at the point of sale, with a receipt as a proof of transaction.

Non-cash payments include cheque, credit card, charge card or debit card payments. For example, if you pay for your petrol at the counter using credit card, it will be subjected to the Rounding Mechanism, since it is considered an OTC transaction. However, if you swipe your card at the payment terminal (pump machine at the petrol station), it is considered as an online payment and thus not subjected to the Rounding Mechanism.

All online payments are NOT subjected to the Rounding Mechanism. Online payment refers to payment via electronic channels such as internet banking, online credit card payment and Auto Teller Machine (ATM) payment. For example, utility bill payments via internet banking systems such as AmDirect, CIMB Clicks, Maybank2U and PBeBank.

The rounding adjustment and rounding total must be clearly shown on the customer's receipt. In addition, a Rounding Mechanism Table with KPDNHEP's logo must also be clearly displayed at the cashiers' counter to ensure public are well informed on the mechanism.

Despite the introduction of the Rounding Mechanism, the one-sen coin remains a legal tender and can be used as means of payment for any transaction as stipulated in Bank Negara Malaysia Act 1958 (Central Bank of Malaysia Act 1958). Coins issued by Bank Negara Malaysia (BNM) shall be legal tender in Malaysia at their face value as follows:

DENOMINATION MAXIMUM AMOUNT
50 sen Not exceeding RM10
20 sen, 10 sen, 5 sen and 1 sen Not exceeding RM2

One-sen coin is no longer being issued by Bank Negara Malaysia with the introduction of the new third series of Malaysian coins in January 2012. The new coins series is issued in the denominations of 5 sen, 10 sen, 20 sen and 50 sen only. The existing one-sen coins will continue to be legal tender until gradually phased out.


References
  1. Bank Negara Malaysia - Information on Rounding Mechanism
  2. KPDNHEP (currently known as KPDNKK) - Rounding Mechanism (Jimat dan Senang Kira)


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Knowledge Base ID :   1011
Last Reviewed :   January 30, 2016
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