Tipping soars with electronic payments – but not all customers are happy about it

tip jar

Traditionally, paying by cash meant leaving a discretionary tip on a table or a few coins in a jar by the till. The rise of cashless has brought with it a far more aggressive approach to gratuity.

Many customers that regularly pay by card are accustomed to the extra step that most restaurant POS devices now have, which asks the customer to manually or automatically add a tip to the bill. Often, this can be something of a relief, circumventing the increasingly common moment of panic when diners realise that no one around the table has any physical money on them to tip the waiting staff.

But some American outlets are taking digital tipping to a whole new level.  Writing in the New York Times, Hilary Stout describes how, while buying a $4 coffee at the counter, she was handed an iPad with the option of giving $1, $2 or $3 in gratuity – or, as she points out, adding 25%, 50% or even 75% to the bill, without even having table service.

American consumers are feeling a bit of tip creep,” she wrote.

According to Stout, service providers from taxis to spas have begun introducing manual tip buttons to their payment technology, with options ranging from 15% to over 30% – and many “standard” options set far higher than the typical tip amount.

Others have introduced interesting innovations such as a two-tier-tipping system in restaurants that allows the customer to direct one tip to their server and one to the kitchen staff, who are frequently badly paid without the benefit of gratuity to boost their wages.

With higher levels of tipping expected as standard, this raises the question of why policymakers or businesses themselves don’t just pay their staff more in the first place, and pay for it by raising their prices, asking for lower tips from customers in the process.

The US consistently rates favourably for the low cost of its services, but if customers know that they must add a third to the quoted costs, it’s simply an optical illusion – and one that is beginning to irritate many. If the automated “tip creep” continues, it may send many US customers reverting back to cash.

 

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