What Happens to Tipping When Cash Disappears?

A trip to a restroom, even in a restaurant in which customers tend to wear slacks instead of shorts, is a relatively simple and even boring affair (stick with us here; we have a point). With the spread of digital payments, one of the luxuries of those restroom visits is in danger of disappearing – another mark of how the ongoing decline of cash is changing a host of once common activities.

Here’s the scoop: The New York Times, in an article published earlier this week (May 8), was the latest source to document the decline of the restroom attendant.

Surely you have encountered one – if not at an upscale eatery, then at a wedding or anniversary celebration, or in a club with bottle service, or perhaps even at a foreign hotel. A person does his or her business, and the attendant – in expectation of a cash tip – hands over towels, or perfume or cologne, or a mint. Perhaps the attendant even laughs at the customer’s joke, no matter how funny or lame it might be. Not to get too off-topic here, but the restroom attendant used to feature in a fair number of movies, sometimes fulfilling a role of someone akin to a bartender, dispensing timely advice to a main character or simply fulfilling another plot function.

The Role of Cash

But people aren’t carrying around as much (or any) cash these days, and that’s part of what’s causing the current woeful situation for restroom attendants – at least according to most stories about the topic, including the one this week from the Times. There are other factors reportedly involved, mostly cultural, but the cash angle seems to be among the bigger causes, and we here at PYMNTS are mostly concerned about, uh, payments, so let’s dig deeper into that.

Indeed, PYMNTS research has already documented the link between the carrying of cash and the need to provide tips in various situations. The newest PYMNTS How We Will Pay report found that almost half of the consumers studied for that document carried between $10 and $50 in cash in their wallets, largely reserved for tipping (39 percent) but also for buying things from small merchants that do not accept cards (24 percent).

The influence of tipping on the larger world of payments goes well beyond restaurant attendants and carrying around a modest reserve of cash, though.

A funny thing is going on in the wider U.S. economy in regard to tipping (the U.S. generally being more devoted to tipping than most other Western countries, for various economic, legal and cultural reasons). More merchants and service providers are nudging their customers for tips – think about the debate over how much extra to leave your barista, for instance, or the enduring controversy over whether to tip hotel housekeepers, and how much. At the same time, cash is becoming less popular, leaving consumers sometimes with empty pockets when the moment of truth – whether to tip, and how much – finally arrives.

Quicker Tips

Enter digital payment technology, along with reasonable doses of disruption and innovation. Pressure is building from restaurant workers, for instance, for quicker payouts of their daily tips – a drive that is creating demand for digital tools to solve that problem (which can make for happier and more loyal restaurant workers, of course).

According to the latest edition of the PYMNTS Disbursements Tracker, as customers’ payment preferences shift to paying with credit or debit cards, cash falls in short supply, creating a headache for restaurant workers and managers alike. Cash management solutions could alleviate these payout problems by batching cash transactions and instantly disbursing employee tips to their bank accounts or prepaid cards.

That’s not something to shake your head at – according to the Bureau of Labor Statistics, there are approximately 2.6 million individuals employed as waitstaff in the restaurant industry. For these workers, one of the perks of the job is to receive their tips instantly at the end of a shift, and often in cash. Not only that, but the quick, even instant disbursements of tips adds fuel to the larger trend of quicker, instant, digital disbursements of all types – a process that can only please workers, while polishing a brand’s reputation and increasing consumer loyalty for companies that can make the needed changes and shift to digital disbursements.

That’s not to lose sight of the restroom attendant, a job that, according to sources, has been around for at least 200 years. Cash habits are not the only reason for the decline of that job, but if it does indeed disappear, that may just be another signal of the growing world of digital payments.