How to Pay and Tip in Iceland

It’s a familiar travel moment: you’ve just finished a great meal abroad, the bill arrives and suddenly you’re wondering, am I supposed to tip? How much is right? Or do locals even tip at all?

When visiting a new country, these small questions about money can quickly pile up. What’s the local currency? Should you bring cash? Can you pay with your card everywhere, or are there places that only take cash? And what about exchange rates: are they worth worrying about?

Getting these details right can make your trip smoother and save you a few headaches along the way. Iceland is no exception, though the good news is that handling money here is easier than you might think.

So if you’re wondering how to pay, tip, and manage your spending while travelling around Iceland, we’ve got you covered. Here’s everything you need to know: from currency and card payments to tipping etiquette and a few local insights to make your trip effortless.

What Is the Currency in Iceland?

The Icelandic currency is “krona.” You’ll see similar “krona”-like currencies in other Scandinavian countries (for example, the Danish kroner, Swedish kronor and Norwegian krone, with only Finland adopting the euro). When looking up Icelandic pricing, you’ll see the letter “ISK,” which indicates the Icelandic krona currency. 

The króna is issued and regulated by the Central Bank of Iceland (Seðlabanki Íslands). Iceland is not part of the eurozone, so even though prices can sometimes be shown in euros online, all payments are charged in ISK once you’re here.

The króna comes in both coins and banknotes, featuring Icelandic landmarks and wildlife:

• Coins: 1, 5, 10, 50, and 100 krónur
• Banknotes: 500, 1000, 2000, 5000, and 10,000 krónur

Exchange rates fluctuate (as a rough guide in late 2025: 1 EUR ≈ 140–150 ISK; 1 USD ≈ 130–140 ISK).

Icelandic businesses will not accept cash krona from other Scandinavian countries and will also not accept euros or U.S. dollars. When you are in Iceland, you need to pay in Icelandic krona currency. 

photo by Kjell Jøran Hansen on Flickr

How Do You Pay for Things in Iceland? 

If you’ve travelled to a range of different countries, you may have encountered certain restaurants and businesses that only accept cash, not cards. You may have even experienced businesses that only accept card payments if you spend a certain amount of money. However, this isn’t the case in Iceland.

Card Payments in Iceland 

Cards Rule the Country! Credit and debit cards are accepted everywhere — from Reykjavík cafés to petrol stations in the middle of nowhere. Most locals only use card payments instead of cash, and you likely won’t run into any small businesses in any of the small Icelandic towns that only take cash, no matter how small your purchase is. Visa and Mastercard are the most widely used, but other credit cards are also accepted, we will cover this part later in the article. Just make sure your card has a PIN, as you’ll need it at self-service fuel stations.

Contactless payments are widely accepted across Iceland, even at small petrol stations, parking meters, and food trucks. Apple Pay, Google Pay, and mobile banking apps work seamlessly.

But what if you really want to pay cash? Sometimes, travellers like the novelty of paying with a foreign currency, and if you count yourself among them, you can pay with cash in most places, so long as you have Icelandic krona.

Cash in Iceland 

Cash is rarely necessary. You can withdraw Icelandic krónur at ATMs in towns or petrol stations if needed, but most travellers never use cash at all. ATMs dispense ISK only and always offer English instructions.

If you happen to have some Icelandic krónur left at the end of your trip, you’ve got a few good options:

• Keep the coins as souvenirs — Icelandic króna coins feature local wildlife and make lovely keepsakes.
• Donate them — Icelandair flights and some airports collect spare change for local charities.
• Exchange them back into your home currency, though keep in mind that banks or exchange offices will charge a small fee for the conversion.

Since cash is used so little in Iceland, it’s often simplest to withdraw only a small amount — just enough for minor expenses or emergencies.

Which Cards Work Best in Iceland? 

Wondering if your particular credit card can be used in Iceland? Chances are, yes. 

The two major credit card providers in Iceland are Visa and Mastercard. If you have a card provided by either of these, you’ll be able to use it anywhere in Iceland where credit or debit cards are accepted. You’ll also be able to use any JCB or Diners Club cards, as Mastercard is the provider for both JCB and Diners Club-branded cards. Electron and Maestro debit cards are also accepted throughout Iceland.

Travelling to Iceland from the United States? If you still use a “swipe and sign” credit card, you may need to talk to your bank or provider about getting a new, chipped card. Iceland only uses cards that are chipped and that require a 4-digit PIN number. 

 

Bank Fees and Smart Payment Tips in Iceland 

Avoid Extra Cost 

Most international banks charge foreign transaction fees when you use your card in Iceland. These are typically around 2–3% per transaction, plus a possible fixed fee for ATM withdrawals. Some cards also apply unfavourable exchange rates, which can quietly increase costs even more.

To save money:

• Check with your bank before travelling about their fees for Iceland.
• Avoid withdrawing small amounts of cash multiple times — use your card for payments instead.
• If offered a choice between paying in your home currency or in Icelandic króna (ISK), always choose ISK. It ensures a better exchange rate and avoids hidden conversion fees.

Best Digital Banks for Travellers in Iceland

Digital or “neo” banks (like Wise, N26, or Revolut) are a brilliant option for Iceland. They typically offer:

• No foreign transaction fees
• Real exchange rates (no hidden mark-ups)
• Instant spending notifications
• Virtual cards for added security
  

These banks work perfectly in Iceland, and contactless payments are accepted almost everywhere — even in small coastal villages and national parks.

When You Absolutely Need a Credit or Debit Card in Iceland 

1. Hotels, Guesthouses & Campsites

Most accommodation providers only take card payments, even small family-run guesthouses. You might also need a card to secure your booking online or to pay on arrival.

2. Restaurants, Shops & Attractions

From Reykjavík cafés to remote hot spring cafés, card readers are everywhere. Even toilets, parking machines, and souvenir stalls are equipped for card payments.

3. To Rent and Refuel Your Car in Iceland

If you’re keen on using cash, there is one instance in which you’ll want to have a credit card or debit card while in Iceland: when you’re renting a car for a self-drive trip across the country.

Most car rental companies in Iceland ask for a card payment when you pick up your car or a card to keep on file. In Lava Car Rental’s case, you’re able to pre-book and prepay for your rental car on our website or pay the rental when you pick up your vehicle. At that time, you’ll be asked to pay with your credit card. No credit card? You can also rent a car with debit card. 

Renting a vehicle for an Iceland trip? Remember to book your rental car as soon as possible, as many vehicles sell out or are booked up in advance. This is especially the case if you’re visiting Iceland during the summer months, May through August, as summer is the peak travel season in Iceland. The high demand means fewer options (and maybe no options at all!) unless you book in advance. You can learn more about renting a car in Iceland and driving around Iceland in our complete guides. 

You also need a card to take fuel at gas stations especially in rural areas where there are only self-service gas stations, which require payment via a credit card or debit card.

How to use the credit card at self-service gas stations:

You enter your credit card into the filling machine before you pump your fuel (you’ll need a credit or debit card that works with a 4-digit PIN in order to do this). Then, the machine will charge you a “prepay” fee that tests that your card is working before it allows you to pump the fuel. This fee will be anywhere between 15,000 ISK and 30,000 ISK. 

Once the machine has confirmed your card works, it will allow you to pump the fuel. Once that’s done, the machine will either return the fee back to you minus the amount of money needed to pay for your fuel or the machine will return the entire fee back to you and then charge you the fuel fee separately. Refunds for pre-authorised fuel holds usually clear in 2–10 business days (depending on the traveller’s bank), but some foreign banks can take up to 30 days.

In order to keep track of what refunds you’re due, it’s advised that you keep all of the receipts for all of your fuel purchases so that you can contact the fuel station if you don't receive your refund within a month. 

While Icelanders are accustomed to this process, we do understand that it’s not ideal for some travellers. You can work around it by purchasing a prepaid fuel card from an Iceland chain fuel station (N1, Olis and OB are all fuel stations that offer these cards, so long as they're staffed and not self-service stations). You pay for the card and can add more funds to it as needed throughout your trip, and then just use that card at any self-service fuel station you come across.

One perk that you’ll enjoy when you rent your vehicle with Lava Car Rental? We offer fuel discount cards to all of our renters so that you can receive fuel discounts at any N1 and Olís/OB gas stations. Just be sure to ask about this perk when picking up your rental car!

4. Road Tolls, Parking & EV Charging

Some tunnels and parking areas require payment through online systems or mobile apps, which take card payments only.

For electric vehicles, most charging stations also require payment via app or website using a credit or debit card — so make sure you have mobile data access while on the road.

Why Do You Need a Card to Rent a Car in Iceland? 

As mentioned, if you rent a vehicle with a rental car company in Iceland, you’ll be able to pay for that rental car with either a credit card or a debit card. However, we’ll still need some credit card information at the time that you pick up the vehicle. This is to cover costs such as car damages that occur during your trip or police fines that you incur while in the car.

Every car rental company in Iceland has different policies regarding putting a credit card on file and what they’ll charge your card, but if you rent a vehicle with Lava Car Rental, you can expect fines in the following instances:

If You Do Not Follow the Fuel Policy Or Get Some Fines 

The Lava Car fuel policy requires that you return your vehicle with a full tank of fuel. If you didn’t return the car without a full tank, your card on file will be charged for the missing fuel, along with a small service fee.

If you receive any parking tickets or traffic fines during your trip, these will also be charged automatically to the card on file after your rental, once the fine notice has been processed.

If You Damage the Vehicle During Your Trip and Your Insurance Does Not Cover the Damage

Lava Car Rental offers a range of insurance options to keep you protected throughout your trip. Essential insurance is automatically included in every booking, giving you solid basic coverage and peace of mind.

With Essential Protection, you’ll still have a level of financial liability in case of damage. If you’d prefer complete peace of mind, you can upgrade to our Full Protection Package, which provides zero liability for covered damages meaning that if anything happens to the vehicle during your rental, you won’t have to pay a thing.

Please note that damages caused by negligence or illegal activities, such as driving under the influence, are not covered by any insurance plan and must be paid for at drop-off.

Learn more about our insurance options and choose the level of protection that best suits your trip before confirming your booking.

When Cash Might Still Be Handy in Iceland 

Cash is rarely essential, but having a small amount (10,000 ISK, which is about equivalent to 70 USD or EUR) can be useful for:

• Public toilets in older facilities
• Rural craft markets or donation boxes
• Tipping tour guides (though not required)

If you want cash to carry on you while in Iceland, even though it’s not necessary, you can exchange many currencies for Icelandic krona at the airport or any Icelandic local bank. These banks will accept USD, EUR, GBP, CAD, and all forms of other Scandinavian “krona.” 

photo by A.Currell on Flickr

What Is the Best Place to Exchange Currency in Iceland?

If you have decided to pay with cash in Iceland, there are many options available. First things first, ATMs are the most practical and reliable way to get cash currency at fair exchange rates.

When you land at Keflavik International Airport, there is a bank and an ATM where you can exchange currency for Icelandic krona. Keflavik Airport is relatively small so it is easy to find the ATM. When you exit the baggage claim area, you will be in a reception area where you can pick up your rental car or take the shuttle bus to Reykjavik. Here, you will find the ATM. If you want to get cash at fair rates upon arrival, this is the best place to exchange currency in Iceland. Just keep in mind that you might be charged an international fee for ATM withdrawal, so don’t forget to check with your home bank beforehand.

Otherwise, all banks and most hotels in Iceland can exchange currency but you will likely get a better rate at the bank. The main banks in Iceland are Landsbanki, Íslandsbanki and Arion Banki.

If you are planning to pay with cash in Iceland, it is recommended to exchange the currency at Keflavik Airport or Reykjavik city. Iceland is pretty remote in spots, the distances between the towns are long and there are not many banks or ATMs spread around the country. Having said that, if you are going outside of the city and want cash currency in Iceland, you will need to prepare and withdraw money before starting your self-drive route.

Do We Tip in Iceland? 

Service charges are always included in Iceland, so tipping isn’t expected. That said, rounding up your bill or leaving a small extra for great service is always appreciated.

Service workers in Iceland, such as waiters, taxi drivers, hairstylists and other customarily tipped individuals, are paid what’s considered a reasonable wage. So they don’t rely on tips for their income like they might need to in other countries. However, that said, it’s not considered rude to tip in Iceland, like it might be considered rude elsewhere. 

So, if you feel like you’ve received great service, go ahead and tip. That tip will be much appreciated. This is especially the case when it comes to tipping Iceland tour guides, as they often work very long hours and tipping your Iceland tour guide is a generous way to show you appreciate the work they do for travellers like yourself. 

However, note that some Icelandic services (such as food services) come with a gratuity built-in. You’ll see a 15% gratuity fee added to your bill in some restaurants, and that will then go to the waiter or waitress after you pay.

How much should you tip in Iceland? When you do tip in Iceland, it’s customary to either round up your service fee to the next even amount and tip the difference or to tip 10% of your total fee.

Handy Money Tips for Travellers in Iceland 

• If a payment terminal offers to charge you in euros or dollars, always choose Icelandic króna (ISK) — it’s cheaper and more accurate.
• ATMs dispense ISK only and offer English menus.
• Don’t stress about carrying large notes — Iceland is incredibly safe.
• Expect higher prices; they reflect Iceland’s strong wages, sustainability standards, and excellent infrastructure.
• Keep your receipts for refunds (especially for fuel purchases).
• Use mobile payments where possible — they’re quick, secure, and widely accepted.

Money in Iceland Made Easy

Paying in Iceland is as smooth as the drive along the Ring Road. Cards and contactless payments make everything hassle-free, and tipping is simple — it’s all about appreciation, not obligation. With a little preparation, managing your money in Iceland is effortless.

So pack your card, download your travel bank app, and get ready to explore Iceland without worrying about cash or customs.

Ready to hit the road? Find your car with Lava Car Rental and start your Icelandic adventure stress-free.

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