Most of us have been there before. We walk into a convenience store, finally ready to get rid of that mountain of coins that is in our wallet. These include 5-cent coins, which you can’t even use at the vending machine.
However, just before you pay, you notice a sign near the counter saying something like:
“We do not accept 5-cent coins.”
or
“Maximum 2 pieces of 5-cent coins per transaction.”
These notices are so common that most of us assume the shop has every right to set these limits. But this brings us back to the same question: Is this actually allowed?
To understand the answer, we need to look at how Singapore’s currency rules define “legal tender”.
What The Law Actually Says About Coins
In Singapore, coins are legal tender, but only up to certain limits. This is not widely known because most of us associate “legal tender” with “unlimited acceptance”.
However, the Currency Act states that different denominations have different acceptance limits.
In simple terms, for small denominations (including the 5-cent coin), you can use up to 20 coins per transaction. Once you go beyond that, the retailer is legally allowed to refuse.
Source: MAS
A cashier cannot simply claim that a 5-cent coin is not valid money. It is still legal tender in Singapore, and it remains part of the official currency system.
However, this is where many customers get confused. While the coin itself is valid, retailers have some room to decide how they accept payment, and this is where the grey area often arises.
Source: MAS
Shops are allowed to set their own payment policies.
As indicated above in the screenshot taken from the MAS website. As long as vendors provide written notice to customers (i.e. the sign that you see at the shop), they can state their preference on which notes or coins they will not accept as payment, and/or the quantity of any denomination of notes and coins they will accept in a transaction.
This is also the exact reason why shops are allowed to display signs saying they accept only cash or only cashless payments. They are simply the shop’s way of managing payment methods to keep their operations smooth.
Will The 5-Cent Coin Be Phased Out In The Future?
Around the world, many countries have already retired their smallest coins. Inflation makes these denominations less valuable, and in some places, the cost of minting a coin ends up being higher than the coin’s actual value. It is the classic case of spending a dollar to make fifty cents.
Singapore has taken a different approach. The 5-cent coin is still very much alive in our currency system, and MAS has not given any indication that it plans to remove it. In fact, many everyday prices — including the payment for plastic bags- still use 5-cent increments. As long as that continues, the coin remains a practical part of how we transact.
Read Also: 5 Ways Businesses Can Collect Payment More Effectively From Customers
Top Image: iStock/stigmatize
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