The amount of tip money people in the service industry take home relies on a remarkable number of variables, like perceived quality of the service provided, a customer’s tipping preferences, the service’s cost and the payment method.
That last part — how the actual transaction happens — is having an increasingly significant impact on how customers tip. Electronic payments generally offer more flexibility, because you’re not limited by the amount of cash in your wallet, but the growth of mobile payments has changed the dynamics of settling a bill.
Software Advice, a software review company, surveyed a small number of consumers familiar with completing transactions on iPad point-of-sale systems and found that the software often influences customers’ tipping behavior. The survey was conducted online over a seven-day period and fielded 382 responses — it’s by no means a scientific study or representative of U.S. consumer behavior, but it gives a bit of insight into how new technology is changing the centuries-old process of paying for goods and services.
Two findings that stood out from Software Advice’s survey focus on customers’ likelihood to tip. The closer the server or cashier is to the customer when it comes time to add a tip, 41% of respondents said they’re more likely to tip (41% said they’d tip either way, and 18% are less likely to tip under the watchful eye of the employee). Perhaps more notable is the impact of the “no tip” option. As opposed to the passive decision to leave a tip line blank on a receipt, some iPad POS systems require the patron to hit a “no tip” button, actively denying employees extra compensation for their work. When forced to tip or hit a “no tip” button, 29% of respondents said they’re more likely to tip than had the option not been available.
Both scenarios allow servers to capitalize on the social pressures that sometimes come with tipping: If the server can see how much you’re adding to the check, you might feel compelled to leave more than usual, in order to appear generous (or at least not appear cheap). For some people, it’s a bit guilt-inducing to actively say, “No, I don’t want to leave you a tip,” rather than ignore the tip jar or tip line on a receipt.
In the past few years, there’s been a lot of conversation around the impact of technology on tipping, like analyzing the choices people make when confronted with tip suggestions and whether bills paid in cash or with cards are more likely to include a bigger tip for the servers. Then there’s the way apps are eliminating tipping from situations that usually require it, like taking a cab ride or eating at a restaurant.
These shifts in technology and behavior can be significant for businesses and their employees, but it means a lot for your bottom line, too. Tips can add up and take a bite out of your budget, and that’s fine if you’re keeping track of things. If you’re not, however, you might find yourself living beyond your means, which often leads to high credit card balances or debt. Keep track of your spending and how it affects your bigger financial picture — you can see how by reviewing two of your credit scores for free each month on Credit.com.
As a consumer, it’s important to remember you have choices: If you don’t like the idea of services that take away your influence on tipping (for instance, Uber), you can choose to not use them. If you don’t want to be duped into overtipping, make sure you’re familiar with what’s generally an appropriate tip for certain industries — most sale systems allow you to enter your own amount.
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