1. Currency

The Icelandic currency is Icelandic Kroner. The exchange rate changes all the time, so make sure you check up on exchange rates right before your trip.

Currently, the rates are 1000 ISK: USD 7.19.

Here are some more currency breakdowns to make shopping easier for you. By remembering a few of these conversions, you will have a better idea of how much you are paying for things when out and about in Iceland!

NB: These figures are rounded to the nearest 100 ISK, pound, or dollar, to make them easier to remember.

For an accurate and up to date currency conversion, you can check the XE website.

2. Credit and Debit Cards

The most common way to pay for things in Iceland is by credit or debit card,s which are also accepted for really small purchases, even bus tickets!

Major credit cards widely accepted in Iceland:

• Visa
• Mastercard
• Diner’s Club
• JCB

However, American Express is NOT widely accepted in Iceland. It is a good idea to bring along a backup card such as a Visa card, to make sure that you can pay. 

Don’t forget to notify your bank that you will be traveling abroad to avoid any security freezes on your card. Different banks will also have different card charges and exchange rates, so make sure you check with your bank to clarify the small print.

Insider Tip: Travelers’ cheques are accepted at the major banks in return for cash, but these can only be found in the major towns.

3. Chip and Pin

You should know that Icelandic vendors do not generally accept swipe and sign cards. If you are going to pay by card, it needs to be a chip and pin card. These come with a 4-digit pin that you have to type in when making a purchase or withdrawing cash.

If you do not already have a chip and pin card, you need to get in touch with your bank to organize this before you come to Iceland.

4. Getting out Cash

Nobody pays with cash in Iceland! Well, perhaps that an exaggeration. But cash is really rare.

The best thing to do is to bring your credit or debit card and get just a small amount of cash exchanged at the airport. If you do need to get some cash for any reason, you can find ATMs in the larger towns, but not in the smaller towns and villages.

You can also keep your eye open for ATMs at gas stations.

Cards widely accepted at ATMs in Iceland:

• Electron
• Maestro
• Cirrus (ATM only card)
• Euro Cheque (ATM only card)
• Diners Club (with Cirrus acceptance)
• JCB (with Cirrus acceptance)

5. Tax-Free Shopping in Iceland

Iceland is one of the most expensive countries in the world!

However, there is a wonderful loophole to get around the expensive shopping in Iceland.Tax-free shopping! If you don’t permanently reside in Iceland, you can get a tax refund whenever you spend more than 6000 IKR in retail shopping on a single receipt. You can expect a return of around 25% on most retail goods, or about 11% on music and books. This adds up quickly, so make sure you keep your receipts safe and ask your vendor for a tax-free refund form. You can then hand these in at the airport, cruise service desk, or port.

Where to claim your tax refund:

• Keflavík or Reykjavík airport
• Reykjavík Harbour
• Seyðisfjörður Port

To qualify for the tax refund, you must remember to declare your items before going through passport control. Also, it has to be done within three months of the item being purchased!

6. Paying for Alcohol in Iceland

Iceland is well known for its higher cost of living, but the price of alcohol is at a whole new level. Make sure you keep an eye open for happy hour when food and drinks are slashed to half the price! One way to keep track of all the different happy hours is through the app called Appy Hour. Pun intended; I presume! Alcohol is really expensive, so it’s a good idea to pick some up at the duty-free on arrival. Even the locals use the duty-free for alcohol and cigarettes! 

7. Paying tolls

There aren’t many road tolls to pay in Iceland, but watch out for the Vaðlaheiðargöng (Vadlaheidi tunnel) in the North. This can cut off 16km to your journey time and keeps you safely off the highlands in winter conditions! However, there isn’t a pay booth to use the tunnel. Instead, you need to pay online using this link.

You need to pay between 3 hours before and 3 hours after your journey. If you don’t pay the toll, then the bill will be made higher and sent to your car hire company. The car hire company will then charge you the higher bill, as well as a handling fee. So, make sure you get it right the first time!

The price to cross the tunnel is 1, 500 ISK (just under USD 11) per journey.

8. Paying for Fuel in Iceland

Fuel isn’t drastically more expensive than anywhere else in Western Europe. However, for travelers coming from the rest of the world, the cost of fuel could be a bit of a surprise.

It costs around 8000 ISK to fill up the tank of a small petrol car. This is just under USD 60. The cheapest place to fill up your car is Costco. But other options include ÓB, Orkan, Dælan, and Atlantsolía. Try to avoid refilling your fuel at N1 or Olís, because they tend to be more expensive.

9. Paying National Park Fees

You have to pay for parking at Þingvellir National Park and Skaftafell National Park. Per day, this costs around 750 ISK (just over USD 5) for a car of 5 people, and 1000 ISK (just over USD 7) for a car with six or more seats. Just like with the toll tunnel, your car hire company will be sent an inflated bill if you don’t pay for this when you should. Once again, you will be charged extra handling fees by the car company! So, try to get it right the first time.

You can pay for parking in Þingvellir National Park here, and in Skaftafell National Park here.  

10. Using dollars or euros

Although the official currency is Icelandic Kroner, some of the larger hotels and stores do accept euros or dollars. However, they set their exchange rate, so you would end up paying above the odds.

11. Tipping

There is no need to leave tips in Iceland. This may seem strange to visitors from some countries, but it is true! The people are paid fairly for their work, and a service fee is included in the price of the meals that you buy. If you really want to leave a tip, of course, you can. However, it is not necessary or expected. This comes with the exception of free walking tours, where the guides get paid on a pay-as-you-feel tips basis.

12. Bargaining

Although many European countries would accept bargaining as a part of the paying process, this isn’t the case in Iceland. You are expected to pay the amount that the vendor asks for, rather than haggling to reach an agreed price.

We hope you enjoyed this guide to paying in Iceland. The extraordinary beauty of Iceland’s volcanoes, glaciers, and Northern Lights are, of course, priceless. We look forward to welcoming you soon!