Cash or card in Iceland: Which is the best way to pay?

Do you have a trip to Iceland on the horizon? If the answer is yes, you’re probably already planning your itinerary and setting up a travel budget. Regardless of how much you plan to spend, it’s important to understand the financial habits of people in Iceland compared to those in the UK.

Icelanders primarily use cards for paying, both for everyday shopping and for bigger expenses. Digital wallets are also rather popular, so the future will likely be completely cashless. However, before that happens, cash is still present. Since it can be tricky to decide what you should rely on during your trip, we’re here to help. We’ll dive into the details to answer the question - is it better to use cash or card in Iceland?

We’ll also show you a cost-effective way to manage your spending in Iceland. For any international purchases, whether online or in person, you can rely on the Wise card. You can even withdraw cash like a local for low fees* at the mid-market exchange rate.

How cash-centric is Iceland?¹

Iceland is far from being cash-centric and it will become even more cashless in the years to come. Cards are the most popular payment method and they’re accepted nearly everywhere. In fact, Iceland is much closer to becoming a completely cashless society than it is to being focused on cash.

Digital wallets are also becoming increasingly popular, so you’ll likely be able to switch between your card and phone for paying. However, it’s a good idea to have at least some local currency on you, so that you’ll be covered in all situations.

Cash etiquette in Iceland²

Tipping isn’t mandatory or at all expected in Iceland. This is mostly due to the fact that service workers are fairly compensated for their work and they don’t live off of tips. However, tipping is not considered offensive, so you can do it to show you’re happy with your experience.

You might sometimes notice tipping jars near the registers at small bars or restaurants. The money from those jars is used for employee social gatherings outside of work, so you might want to contribute. However, don’t feel pressured to do so, since it’s entirely voluntary.

There’s no fixed amount for tips, so it comes down to your decision. You could also leave some leftover change from the bill instead of calculating percentages. This is another way of letting your server know you’re satisfied with the service and the overall experience.

Cash or card in Iceland - the comparison

We’ve listed some situations where you’ll be paying for things in Iceland. Here’s whether you’ll be able to pay by card, in cash or both:

Paying for…	Card	Cash
Taxis³	Usually, yes	Yes
Convenience stores	Usually, yes	Yes
Public transport⁴	Only through the Klapp ticketing system	Yes
Restaurants	Usually, yes	Yes
Northern lights tour⁵	Usually, yes	Yes

Using your card in Iceland at an ATM⁶

There are around 200 ATMs in Iceland and they’re mainly owned by 3 major banks. They can be located rather easily in shopping malls, main streets, town squares and, of course, banks.

The withdrawal limits at Icelandic ATMs varies from 50,000 to 500,000 ISK, but you can typically expect between 150,000 and 300,000 ISK per transaction. Make sure you check with the bank operating the ATM you're using.

All ATMs in Iceland charge fees. This can be a percentage of the transaction or a fixed amount.

Will my UK debit card work in Iceland?

Yes, you should be able to use your UK debit card without issues in Iceland. However, keep in mind that additional fees may apply for using your card abroad.

Can I use my UK credit card in Iceland?

Yes, you can use your UK-issued credit card in Iceland.

Reasons to use cash in Iceland

Cash is not at all popular in Iceland, but it’s often the safest payment method. In case technology fails, which is always an option, it’s good to have some physical money on you. Also, some things, such as public transport, can only be paid with cash if you don’t buy a ticket in advance.

However, cash isn’t used as much by the locals. You can still carry some for tips, street vendors or just in case.

Reasons to use credit or debit cards in Iceland

Cards and cashless payments in general make up the majority of all transactions in Iceland. They are accepted everywhere and often preferred, particularly for their convenience. All major cards can be used in Iceland, so you’ll probably be able to use your regular card while you’re there. However, you could always get a travel money card and use it for all your expenses in Iceland.

Cards are also a good choice because of safety. Iceland is an expensive country and carrying large amounts of money with you can be risky. Also, if you use your card to pay, you won’t have to deal with bringing foreign currency back home.

Are contactless card payments common in Iceland?⁷

Yes, contactless payments are very popular in Iceland. The contactless limit is 7,500 ISK per transaction, after which you’ll need to enter your PIN.

Your Wise card can also be used for contactless payments in Iceland. If you don’t want to carry cards with you, you can get the Wise virtual card with the same features.

Check out the latest GBP to ISK conversion rates below:

Other payment methods in Iceland

Besides traditional credit and debit cards, other payment methods are also available in Iceland.

Mobile payment⁸

Digital wallets are another contribution to a cashless society. The Icelandic government supports the use of these payment methods, so they’re constantly on the rise. Some statistics even show that around 60% of Icelanders use e-wallets in their everyday spending.

Some of the most popular digital wallet apps are also available in Iceland, such as Apple Pay, Google Wallet and PayPal. There are some other options as well, like Neteller, Skrill and Luxon. If you plan on using any of these wallet apps during your trip, make sure you update them before you leave to avoid any issues.

For an additional layer of security, you could add your Wise virtual card to your wallet. It has all the benefits of a regular Wise card, but it exists in your phone only. You can freeze your Wise virtual card after every transaction, so top-notch security is guaranteed.

What is the best way to pay in Iceland: cash or card?

If you’re still unsure whether you should use cash or card in Iceland, the answer is definitely your card. You can use it both directly and in digital form, since both methods are frequently used.

Iceland is very digitally advanced, and strong government support is making it even more cashless. People prefer using cards and e-wallets, while cash is only used in some situations. Before you leave on vacation, make sure your digital wallet apps are up-to-date.

However, the best solution for spending in Iceland is having a little bit of cash on you in case you end up needing it. This is especially important if you plan on going off the beaten path or if you want to buy souvenirs from local street vendors. This combination of the safety and popularity of cards and the traditional reliability of cash will ensure you’re ready for every situation.

Spend like a local in Iceland with the Wise card

Want to spend like a local in Iceland without worrying about exchange rates and hidden fees? The Wise card might be just the option you were looking for.

You can use your Wise card for international payments, from your accommodation costs to daily expenses. It automatically converts your pounds at the mid-market exchange rate with only a small, transparent currency conversion fee*.

Spend like a local with Wise

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Cash or card in Iceland - FAQs

Here are some of the most frequent questions about using cash or cards in Iceland:

Is Iceland cashless?

Yes, Icelanders mostly use cards and other cashless methods for paying.

Can I use contactless in Iceland?

Yes, you can tap to pay in Iceland.

How much money should I take to Iceland for 4 days?

That largely depends on your spending habits and travel style. However, you can always withdraw more money if you end up needing it.

Should I tip in Iceland?

Tipping is uncommon and completely optional in Iceland, but it’s always appreciated.

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Sources used:

1. GJ Travel - money in Iceland
2. Reykjavik Tourist Info - tipping in Iceland
3. Reykjavik Rent a Car - taxis in Iceland
4. Strætó - public transport in Iceland
5. Salty Tours - Northern lights tour
6. ATM Fee Saver - ATMs in Iceland
7. Íslandsbanki - contactless payments
8. eWallets Review - digital wallets in Iceland

Sources last checked on date: 21-Oct-2024