In the fast-paced hospitality industry, where convenience and quick access to funds are of utmost importance to workers, the popularity of instant tip payouts is on the rise.
In “Generation Instant: Hospitality and Tips,” PYMNTS Intelligence draws on a survey of more than 2,600 consumers across the United States to examine consumers’ satisfaction with the disbursements they receive from government and nongovernment entities.
According to the study, which was produced in collaboration with Ingo Money, more than 30% of hospitality workers received tips through instant methods at least once in the last year, and 85% of workers who receive tips via instant digital payments reported being highly satisfied, compared to 83% who receive tips in cash.
With just a few taps on their smartphones, workers can receive their tips directly into their bank accounts or digital wallets, eliminating the need for physical cash and the associated inconveniences of handling and storing it.
It comes as no surprise then that convenience and quick access to funds were cited as the top reasons why hospitality workers prefer instant tip payouts. In fact, a staggering 81% of workers chose instant payments for their convenience, while 74% opted for instant payouts to secure their funds and receive them quickly. Additionally, nearly half of the workers surveyed stated that instant payouts make it easier to track when funds are received and available for spending.
Another significant benefit of instant tip payouts is the ability to avoid check-cashing fees, which is a compelling factor for nearly 30% of employees who opt for instant tip payouts.
In fact, many workers in the hospitality industry rely on cash tips, which often require them to visit check-cashing establishments to access their funds. These establishments often charge fees for their services, which can eat into the hard-earned tips of workers. By opting for instant tip payouts, workers can bypass these fees and have immediate access to their funds, saving them both time and money.
For employers in the hospitality industry, offering instant tip payouts can be a win-win situation. Not only does it cater to the preferences of their workers, but it also streamlines the payment process and reduces the administrative burden. By adopting digital payment platforms that support instant tip payouts, employers can enhance the overall employee experience and improve job satisfaction.
Despite the interest and preference for instant tip payouts among hospitality workers and the benefits they offer to employers, employers are not offering this option to their workforce.
As the study noted, only 48% of hospitality workers are offered instant payments, and 44% are not given any choice in payout methods. However, when offered the option, 82% of hospitality workers selected instant payments to receive their tips.
Some employers like 7shifts, a cloud-based restaurant team management platform, are starting to embrace the trend, providing a digital tip payout solution powered by Ingo Money’s instant digital tip payout capability. This solution enables employers to instantly send tips directly to employees’ personal debit accounts, eliminating the need for last-minute bank runs or handling large amounts of cash.
In a conversation between PYMNTS’ Karen Webster, Ingo Money CEO Drew Edwards and 7shifts CEO Jordan Boesch last year, Boesch spoke about the partnership and how it adopting Ingo Money’s tipping solution has simplified the process of distributing gratuities, making it easy to ditch the “complex spreadsheets” previous used.