Consumer Finance

Gratuity Grows With E-Payments

Ever thought a place could get away with having customers tip 40 percent for a medium coffee just by using an iPad POS system? As POS devices increasingly become more digitized, and as payments increasingly shift to mobile and cards, tipping has also increased to the point where it is a built-in cost as much as a reward for service, according to New York Times writer Hilary Stout.

Stout reports that in stores, and online merchants, where electronic payment processing is used, tips are increasing as well as preset features. This is largely due to the combination of seeing the payments on a touchscreen, and being asked to tip as a percentage, sometimes as high as 30 percent for a small purchase, in front of the cashier. As a result, tips as a percentage of the total bill are increasing, and it’s not just limited to the food industry. New York City taxi cabs, for example, take e-payments in the cab, which comes with preset features that encourage riders to tip between 20 and 30 percent. Anything higher or lower must be manually entered.

Also, Internet sites are increasingly allowing users to tip the content developers in Bitcoin as a form of altruistic micropayments, according to Nick Sullivan, chief executive of ChangeTip, a startup that enables users to send Bitcoin through social media, email, or Skype to content creators as a tip. His company has already gained 60,000 users tipping $250,000, with an average tip of just under $1. The service has expanded by an average of 30 percent per month since launching.

The increase in tipping comes at a time when low-wage work is in the national spotlight, as calls to increase the minimum wage heat up on the state and federal level. Some businesses are taking matters into their own hands, such as banning tipping so they can pay their workers $15/hour, as new Washington, D.C. bar Public Option is doing. Helaine Olen, a personal finance blogger and author of the book “Pound Foolish: Exploring the Dark Side of the Personal Finance Industry,” stated to New York Times that she hopes America adopts a European-style of tipping that includes it in the bill, but it would be easier culturally for people in America to begin to think of tipping as a necessary expense rather than as an add-on, and budget accordingly.


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