The Pain of Paying: How Technology Tricks You Into Tipping More

finance.yahoo.com...

The next time you use a credit card to order a cup of coffee from your favorite cafe, you might find it comes with an unexpected side order: guilt. Businesses are doing everything they can to ensure that credit-using customers who don't carry cash aren't getting a free pass at the tip jar.

Starbucks announced Wednesday it will release an update to its popular payment app that will prompt customers to tip their baristas when they pay with credit via their smartphone. Suggested tips start at 50 cents and go up to $2.

Seamless defaults to $2 tips on orders under $20.
And now that ordering meals online has become de facto in big cities, sites like Seamless do more than suggest a tip — they calculate it in real time as customers fill up their cart. For Seamless, tips default to 10% of the final bill (post-tax) and $2 on orders under $20.
Don't feel like tipping? You have to physically click on the tip box in order to be a cheapskate.
Thanks to the advent of new payment technologies, it's become even easier for small businesses to nudge consumers into tipping more than they would have normally.

East Coast coffee chain Joe Coffee only started accepting credit cards last year after it adopted a program called Square Stand, a device that turns iPads into mobile cash registers and prompts customers to tip before they can finish their transaction.

In 2007, New York City cabs were forced to start accepting credit cards. Customers ended up giving a higher tip through an option of 15%, 20%, and 25% tips over what they would have paid with cash transactions. Within two years, taxi revenue jumped 13%.

When you use a credit card to pay on a device equipped with a program like Square, you’ll see a few tip options. It may begin with 15%, then 18% and 20%. Tipping these higher rates may not feel as painful as if you were paying with cash, because you are not going through the physical act of reaching into your wallet and handing over cash. The machine makes the process feel financially painless, setting the perfect “trap” for customers.

I agree that tips should be paid in restaurants, and certain other businesses because this is how the staff earn most of their pay. But what I don't agree with is being tricked into paying a higher tip than you normally would if you used cash.

When I go to a restaurant to eat, even if I pay with a debit/credit card, I always pay the tip in cash. I hand it to the server personally. This allows the server to be paid immediately without having to wait weeks on their paycheck. And, also, no taxes are deducted, which puts all the tip in their pocket instead of just a percentage. Sure, they may have to pay tax on it at the end of the year, but not unless they earn a certain amount.
When I was a waitress, I appreciated every dollar I could put in my pocket at the end of the day/night to help pay for gas, food, etc. until the paycheck arrived. I'm sure they appreciate it too.

Pretty soon, it seems we won’t be able to go anywhere without being confronted with a “tip trap.” Last month, Square announced a major addition to its line of what has typically consisted of small-time clients — Whole Foods. The grocery giant is the first national grocer to adopt Square technology, which it will use for sales at its in-store vendors, like juice stands, pizzerias, and, of course, the coffee bar.

Oh well... someone always has their hand out to take more money from us at the end of the day, right? Sigh...

simple solution, carry some cash. and/or...when you walk into a place, take a few seconds to ask about the options of paying your bill...credit card, debit card, cash. geez....figure it out, do people need their hand held for everything?

Any company that uses a machine that attempts to force me to tip doesn't deserve any tip at all. I tip what i feel the service is worth. I don't give a rats arse that 15% is standard, if I don't feel they deserve that much, they may get 5% or 10% or nothing.

So you have to manually Opt Out on something that's not compulsory in the first place? I think that sucks. Lots of folks will not notice this Opt Out option, and I doubt they will tell you about it up front before you use your card. They may be counting on that very thing, which is dishonest and seems more like theft to me.

I wouldn't say it's a "trap", as the article suggested. All you have to do is pay attention to what you are doing, just as if you were signing a receipt and adding a tip after a meal.

The sad thing is, servers in the food and beverage industry are paid very low wages and most people are cheap when it comes to tipping.....even if they received great service. If something like this makes people focus a bit more on tipping their servers, I'm all for it.

reply to post by JohnPhoenix


I felt the same way when I discovered that a tip had been included automatically even though I left a tip at the table. It was the last time I used a credit card and have not looked back since.

People are to quick to pay with creditcards and electronic gadgets anyways.. That is how most people rack up debt to begin with

I haven't had a creditcard until this year..and I still don't use it for anything more then (debit at one store because I know the owners) and for the atm

if I buy something online I usually go get a disposable non reloadable card.

reply to post by sled735


You think the server (I won't use their nifty term for "server") really put together those sandwiches or pulled them from a fridge? How much service went along with those two EXPENSIVE sandwiches? Goodness!

Of course, that Starbucks' app is entirely designed to save the company money by not having to increase the wages of their employees and intended to let tips offset the difference. Since the average sheeple likes, if not loves Starbucks, has more cash in their wallets than the average person and MUST go there frequently, I don't care if the company makes it a mandatory shakedown. I don't go there.

sled735
I agree that tips should be paid in restaurants, and certain other businesses because this is how the staff earn most of their pay.

Actually i would say this is the exact reason we should not tip. This business model is wrong and the only way it could change is if not enough people are tipping which will lead to not enough people willing to work almost for free...

reply to post by sled735


Poor waiters. Tips used to be free and clear wages in their pocket.

You have to physically click on the tip box in order to be a cheapskate.

Is there a cookie option?

reply to post by Aliensun


That's why I pay with cash. That way I can pay what I feel their service was worth. Sometimes, they don't get a tip at all from me.
Have you ever came across a server that seemed like they just hated being there, letting "bad attitude" take over?

Nope! They don't get a tip from me, I don't care how good the food was, or how many trips they made to my table!!

mkpetrov

sled735
I agree that tips should be paid in restaurants, and certain other businesses because this is how the staff earn most of their pay.

Actually i would say this is the exact reason we should not tip. This business model is wrong and the only way it could change is if not enough people are tipping which will lead to not enough people willing to work almost for free...

I agree it is a wrong business model, but I think there will always be people willing to work for "crumbs" when the job market is as low as it is now. People need money to buy food, gas, etc. If that's all that's available, then that position will always be filled by someone. Not tipping won't change how businesses pay their employees.

I think some of you may be forgetting that you still have the option to change the tip amount on this app. You can select 0 if you like.

Also, you have to realize that many servers share tips with the chefs and bust their asses to serve you.

I find this entire conversation to be somewhat pretentious, but that's just me.

reply to post by sheepslayer247


Paying 0, if you have no cash on you, is where the article mentions that guilt comes into play. Then you pay the higher amounts listed on the app. This is where the trap is.

I order food from the online site grubhub once or twice a week.
www.grubhub.com...
The site offers a couple of different options, as it is a network of many different eateries linked together. Some of the places offer delivery for a fee. Some offer a minimum purchase before delivery. Some only offer takeout. My gratuity is based on these things, as well as actual delivery service performance. If there is a delivery fee involved I always indicate upon billing that I will pay gratuity in person. I have actually not tipped at times. When I am paying for delivery service on top of the meal and my food arrives cold or dishelved I will not tip. If my food is warm and appears in order I will offer $3 on top of the delivery costs. If there is no delivery fee I pre-pay 15% and then will add $2 to that in person if my meal is warm and satisfactorily intact. If I need to pick the meal up myself a tip is contingent on whether or not I have to wait for my meal when I arrive at the time I was given on the website. If I am told 45 minutes and after 50 minutes I am still waiting for my meal in the pick up area nobody is getting a tip. I really don't see an issue with any of this. The options are there.

reply to post by sheepslayer247


If restaurants didn't have tipped employees one of two things will happen, either food prices will go through the roof or your server will be the same people you see flipping burgers or shaking fries. If you think service is bad now wait til it's strictly a minimum wage job.
The real problem is that too many cheap businesses are letting employees put out tip jars for non-tipped positions. If you are making a sandwich or coffee while I stand there and wait wtf am I tipping you for? You are not waiting on me, I am waiting on you.
Starbucks charges ridiculous prices for coffee and their profit margin is huge it's downright insulting to the employees and customers to expect you to pay 1000% markup and then kick in on the labor cost as well.

sled735
When I go to a restaurant to eat, even if I pay with a debit/credit card, I always pay the tip in cash. I hand it to the server personally. This allows the server to be paid immediately without having to wait weeks on their paycheck. And, also, no taxes are deducted, which puts all the tip in their pocket instead of just a percentage. Sure, they may have to pay tax on it at the end of the year, but not unless they earn a certain amount.

This isn't accurate, from my experience.

When I was a server, you 'cashed out' at the end of the night. I would have maybe $500 in my apron from cash customers - the restaurant would calculate how much I needed to pay them, so that they got their money & I got my tips. I went home with my tips in cash every shift, regardless of how people had paid.

Whatever your sales were, 15% of that was assumed to be your tip income and reported to the IRS. When I checked out at the end of shift, a computer screen popup would say, for example "Your total meal sales were $1000. Your income for the evening will be reported as $150." You could change the reporting amount. If you reported less you could get audited. You could claim more, but no one did. This is why tipping

reply to post by Schkeptick


Apparently, the times have changed since I worked as a waitress.

Thanks for the correction.

I have always been a McDonalds guy when it came to fast food, but I went to Sonic for the first time in a long time the other day, and paying at the board with my debit card, I was surprised that there was not an option for leaving a tip. Having had no cash, I couldn't tip the car-hop, which I would've done. Although to be honest, I feel that this is just another way businesses get at consumers, because they should be paying their employees more. They are basically putting the job of paying their employees on the generosity of the consumer. I don't think that is right.

They should pay waiters and other tip-based occupations more, and still let them keep any tips they receive. These businesses really want you to tip, because it helps them. How? Because an employee who is getting paid almost nothing, and who relies on tips to make up the difference, could easily get discouraged and quit their job because they aren't making enough money. From a business perspective, this is tragic. Anything that could slow down business is bad for business. Plus, new employees who haven't learned the ropes yet can make certain customers angry through their lack of experience, which could actually hurt repeat business from that particular customer, as well as any other customer or potential customer that this consumer can convince not to do businesses with the particular establishment.

Some might say that isn't a big deal, but from a business perspective it really is. One cannot know exactly how much, or apply a tangible or quantitative value to such losses, but they exist nonetheless. I get so fed up, especially with right-leaning rhetoric, about how people need to take care of themselves, not depend on the government, etc., yet these same people are the ones who own such businesses, and who are not paying their employees enough to survive on. They want to catch a break anywhere they can, especially when it comes to taxes and government interference, but that motivation is driven solely on profit. They apparently don't realize that they are getting wealthy off of those they aren't paying an adequate wage to. But that is another argument and topic in itself.

People keep complaining about guilt. Whining that everyone else is trying to make them feel guilty about this, that or the other. The reality is that guilt is self imposed, a note, a news article, a book, a t-shirt, a class, a politician, a commercial or an app cannot change your morals and guilt is a direct result of your own self violating your own morals. You feel guilt because you did or were about to do something that you knew in your heart was wrong.

reply to post by sled735


I love this idea. I've always said "if you can't afford to tip well, you can't afford to go out to eat".

Having spend plenty of time in that industry in the past (as well as my wife), I can tell you that people can be cheap and horrible. Apps like this should be a norm.