By Alexia Elejalde-Ruiz
WWR Article Summary (tl;dr) Digital payment systems, which ask customers if they wish to leave a gratuity, are pushing people to tip more frequently and more generously for services they may have skimped on before.
Working the register at Dollop Coffee Co. in the Loop one recent evening, Evelyn Rangel rang up a $4.39 almond croissant and stood by as her customer, having swiped her credit card, studied the tip screen that popped up.
Did the service merit a $1 tip? $2? $3? Those were the options prominently displayed across the top of the Square payment touch screen. Below there were additional buttons that gave the option of leaving a custom tip or “no tip” at all before signing to complete the purchase.
Rangel, 28, has seen customers freeze at this juncture in the payment process, unsure whether to tip for counter service.
“Sometimes I’ll notice someone is hesitating and I’ll find something else to do for a couple of seconds and walk away,” said Rangel, insisting that she was not miffed when the buyer of the almond croissant selected the “no tip” option. “Customers are way more worried about it than we are.”
Social norms around tipping are shifting in the U.S., thanks largely to the widespread adoption of technology that puts tipping front and center when paying for a coffee, a trip in a taxi or ride-share vehicle, or food delivery.
The payment systems, which ask customers if they wish to leave a gratuity, are pushing people to tip more frequently and more generously for services they may have skimped on before.
That’s good for the wallets of low-wage employees. But shifting tipping norms are causing headaches on the other side of the counter.
The default settings can make some people feel they are caught between two bad choices: leave 20 percent and feel stretched, or 15 percent and feel cheap, both unpleasant experiences, said Alexander Chernev, professor of marketing at Northwestern University’s Kellogg School of Management.
The third-party touch screens also have depersonalized tipping, making it less about the relationship with the worker providing the service and more of an automatic transaction, he said.
Some consumers say they feel implicit pressure punching the tip buttons as the cashier hovers nearby, and fear the judgmental gaze of customers lined up behind them.
Tanuka Raj, a 25-year-old consultant, recalls once tipping a dollar for a $2 pour of black coffee, a service she didn’t think warranted a tip, because she felt like people were watching her.
But she felt good about selecting the 15 percent tip button when ordering at Pub Royale in the Loop’s Revival Food Hall, a collection of counter-service outposts of local eateries that all use payment touch screens with tip prompts.
“Even though they aren’t serving it, they are making it,” Raj said.
Experts warn that the new approach to tipping could ultimately harm business if people feel forced to pay more than they’re comfortable with.
“I think the disservice will come when the tip starts factoring into people’s decisions, like gas prices did when they started to go up and suddenly we had staycations,” said Michael McCall, professor of hospitality business at Michigan State University. “If the place becomes prohibitive, you’re not going to go there.”
Tipping restaurant servers a standard 15 to 20 percent is firmly embedded in the nation’s cultural fabric, in part because it’s widely known that most servers get paid a subminimum hourly wage, $6.25 in Chicago, $4.95 in Illinois and $2.13 under federal law.
Worker advocates are pushing legislation in cities and states to require the restaurant industry to pay all its employees at least the full minimum wage.
Meanwhile, some sit-down restaurants have tried to nix tipping and instead charge a fixed service fee or raise prices to accommodate higher base wages, but many reversed course amid backlash from employees and customers, who like the right to tip.
Coffee shop baristas and other counter-service workers, on the other hand, get paid at least the regular minimum wage, currently $12 in Chicago, $8.25 in Illinois and $7.25 federally, and putting a dollar in a cutely decorated tip jar has traditionally been a voluntary gesture of extra thanks.
Now the nature of counter-service tipping is being transformed by the growing use of touch screen payment tablets, in part because the devices suggest how much gratuity people should leave, which tip jars do not.
“It changes what’s the norm, what’s expected,” Northwestern’s Chernev said.
The tip ranges that businesses choose to present as options on the payment screen influence how much people give, with most people trying to stay in the middle of the range and few taking the extra steps to enter a lower custom amount, he said.
The devices also take the math out of the exercise and require little thought beyond the push of a button, making it almost harder not to leave a tip, Chernev said.
Tips given through the touch screen devices, whether at the cash register or on tableside hand-held devices at sit-down restaurants, are almost always higher than tips left on credit card receipts, said Amber van Moessner, senior director of communications at Upserve, a platform that helps restaurants manage everything from reservations to payments and inventory. She thinks that’s in part because “technology makes the experience a little more elevated.”
Higher tips can lead to happier employees and lower turnover, which is why employers are investing in the touch screen systems, she said.
Van Moessner doesn’t think the tip prompts oblige anyone, as people have a range of percentages to choose from and there’s always the option to leave a custom tip or none at all. But at the request of counter-service clients, Upserve plans to introduce flat-dollar tips to its prompts next year to “better accommodate a ‘tip jar’ type of model in a digital age,” she said.
The push to facilitate electronic tipping comes as fewer people carry cash, a continued frustration for some workers, like hotel doormen and bellhops, who rely on guests slipping them a few bucks for their service.
“For everybody, myself included, the one thing technology has done is push tipping to the back of my mind,” said David Katcher, Midwest general manager and director of operations at ride-share company Lyft.
But businesses like Lyft are also using technology to encourage tipping.
Lyft, which has distinguished itself from competitors by offering tipping since its launch, is continually experimenting with its tipping system to make it “frictionless” for riders to tip their drivers and maximize the amount, Katcher said.
This month Lyft is rolling out a new feature that lets people set an automatic default tip percentage for every ride and another that prompts them to tip while the ride is still underway, “so that you don’t forget when you’re in a hurry to get out,” he said.
The company implemented a dynamic prompt system that gives riders flat-dollar options for shorter rides and percentage options for longer rides, which led to a 20 percent increase in tips. Lyft launched a redesign of its post-ride review screen in June that put the tipping prompt in a more prominent position than the driver rating.
“People are happy to tip if they get great service; they’re usually just not thinking about it,” Katcher said.
At Dollop, Rangel said gratuities are definitely higher as a result of the prompts for customers to tip on the Square payment system. At other coffee shops where she has worked that didn’t give the option to tip on credit cards, the regulars would make it a point to bring cash, but most customers just didn’t tip at all.
Rangel has noticed an increase in tips since Dollop changed the prompts on the Square system at her store to dollar figures rather than percentages, perhaps because people feel more comfortable tipping a buck or two in a coffee shop.