Tipping For Services Is On The Rise

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CBS News – It used to be that tips were reserved for sit-down restaurants, where the bills would include a line for customers to write in their tips for their waitstaff.

But with the advent of mobile payment services such as Apple Pay, the cash tip jar is getting shelved at restaurants where counter service is the norm. Customers are increasingly asked to choose a tip amount to add to their payment, which is driving up tipping at even bare-boned restaurants without table service. Eateries are also setting their own tipping choices, sometimes skipping 15 percent and instead suggesting a base tip of 20 percent.

The push to automate tipping comes at a time when restaurants are increasingly under pressure to pay their servers and workers higher wages. The tipped minimum wage, which has remained at $2.13 an hour for 24 years, has been criticized by labor advocates as disproportionately hurting women, who make up about two-thirds of all tipped workers. Mobile pay technology, though, is helping employers give a little extra to their waitstaff by presenting diners with the option to provide higher tip amounts.

NCR, a technology company that sells point-of-sale services to restaurants, has noticed more counter-service restaurants asking for tipping features, said Tony Diaz, a senior product manager. He said he was surprised recently when his bill at a Jersey Mike’s sandwich shop (which isn’t an NCR customer) included a tip line. Quick-service restaurants such as sandwich shops traditionally haven’t included tip options in their bills.

“We are seeing a lot more requests from that segment of the business to enable tipping,” Diaz said. The push is coming as employers are looking “to keep their staff happy, and looking to do that in ways that don’t involve raising the hourly wage they pay their staff.”

Aside from adding tip lines to receipts, mobile pay options present customers with pre-set gratuity suggestions that are often higher than what some customers would expect. NCR’s default options are to suggest tips of 18 percent, 20 percent and 22 percent, Diaz noted, but restaurant owners can configure those percentages to lower or higher amounts.

In New York City taxis, passengers are given the options of tipping their drivers 20 percent, 25 percent or 30 percent. Those preset buttons are influencing passengers, with data showing that 20 percent is now the most common tip amount in taxis.

If it seems as if 15 percent has disappeared as a tipping choice, that’s because 20 percent is considered by many to be the baseline gratuity for waiters and other tipped workers. Still, for patrons who believe 15 percent is the norm or who are disappointed with their service, mobile pay services usually allow an “other” option, where patrons can punch in the tip amount they’d like.

Simply introducing preset gratuities is helping to boost tipping, according to the San Francisco Chronicle. Payment processor Square told the newspaper that after it started suggesting tips, about half of diners left gratuities, up from 38 percent previously.

NCR has some data to suggest that mobile pay is helping to boost gratuities, as well. One client, a restaurant-and-performance chain called City Winery, found that average tips rose to 19.4 percent from 18.6 percent after introducing NCR Mobile Pay.

Of course, simply paying by credit card can induce consumers to spend more, with studies finding that consumers don’t view plastic with the same “realness” as cash. That same slightly magical thinking might be helping lift tip amounts that are added to bills through the press of a button.

There’s another reason why tipping may be on the rise, thanks to technology. Servers often stand at a table or at a counter and watch the customer swipe and then input the tip, setting up the type of pressure-filled situation that tends to lead to higher tips.

About four out of 10 consumers said they’d tip more if the server was nearby, a survey from Software Advice found. While diners might just feel more positively toward their waiter if he’s nearby, the society pressure is hard to discount.