Hospitality Workers Choose Digital Instant Tip Payouts, Yet Only Half of Employers Deliver

Cash is still the way that many hospitality workers receive tips. Customers’ increasing penchant for using contactless cards and digital wallets means they are also using credit and debit cards more. This usage causes payout frictions for hospitality employees and employers.

To facilitate instant tip payout without risks of robbery or fraud, hospitality employers must deliver the same payout experience as cash using advanced payment technology and instant rails. Yet, employers offer instant tip payouts to approximately half of their workforce, even as 82% would choose instant if offered.

These are some of the findings in “Generation Instant: Hospitality and Tips,” a PYMNTS Intelligence and Ingo Money collaboration. The report is based on a census-balanced survey of 2,606 consumers across the United States conducted between Aug. 28 and Oct. 4, examining consumers’ satisfaction with the disbursements they receive from government and nongovernment entities.

Other findings from the report include:

Hospitality workers earn an average of $10,000 in tips annually. Fewer than one-quarter receive the money through instant digital methods.

Three in 10 hospitality workers received tips from their employers outside of payroll in the last 12 months. Seventy-seven percent of hospitality workers received most of their tips from their employers through non-digital methods. Fifty-eight percent of these workers most often received tips via cash in the last year. In that same span, 31% of hospitality workers received tips through instant methods at least once. Just 23% of hospitality workers most often received tips via instant payment methods.

These employees want the digital tip experiences to replicate the cash experience — instant, irrevocable and funds in hand.

Hospitality workers are highly satisfied with receiving tips via cash. This satisfaction can translate into interest in receiving tips via instant digital methods. While 83% of workers receiving tips via cash are highly satisfied with this payout method, 85% said the same about digital instant payments. That both payment methods take place in real time suggests hospitality workers expect the same tip payout experience experienced with cash when receiving payouts via digital methods: They should be instant and guarantee good funds.

Workers prefer instant tip payouts because of the convenience and quick access to funds.

While 81% of hospitality workers choose instant payments for the convenience, 74% choose instant because they want their funds and want them fast. Nearly half of hospitality workers said that instant payouts make knowing when they receive and can spend funds easier. Such a high interest in convenience and guarantee of good funds also implies that hospitality workers find instant to be viable payout option.

As more consumers pay for hospitality services via contactless card or digital wallet, the need for an alternative to cash tip payouts will continue to gain importance. Download the report to learn more about how hospitality employers can benefit from using instant payment methods to distribute tips in the timely fashion their employees expect.