Sunday, August 6, 2017

More on cashless tipping

In my last post I talked about proposals for a cashless society and asked how some traditional cash transactions would be affected, in particular tipping. It's easy to slip the bellhop, parking valet, or skycap a couple dollars cash. How does this work in a cashless society?

We are seeing hints of how a cashless society might handle tips in restaurants today. Restaurants are moving to fully electronic credit card transactions. Rather than print a receipt with a line for tip the restaurant uses a tablet which asks for a tip and then has you sign the charge. The receipt is then emailed or can be printed.

Something like this could be extended to other traditional tipping situations, though they are complicated by not having an open transaction to work off of. But I'll assume the technical issues can be solved.

I still see two issues with electronic tipping:

First, when I tip today I often find the recipient (parking valet, skycap, etc) does not wait for a tip. I've never had the movie scene of the bellhop stopping with a hand out for a tip. Instead, people do their job and you need to have the tip ready to hand to them "on the fly". This isn't going to work if we have to get out phones, credit cards, or other devices to tip. And having the valet or bellhop go back to holding a hand out (or perhaps a hand with a credit card reader in it) for a tip is not going to be popular.

I see the second issue in the way current electronic tip systems are designed. With a paper credit card receipt there are blank spaces for a tip and a total. Suggested tip amounts (often 15, 18, and 20 percent) might be printed at the bottom of the slip for those who can't do percentages in their head.

The electronic tablet systems I've seen instead pop up one or more suggested tip amounts along with an "enter a different amount" button. Giving one of the suggested tips is easiest, just tap the proper button. Giving a different tip is much more difficult. The result is the amount of a tip is now under the control of the person receiving the tip rather than the person giving it. Imagine a tablet / phone system to tip a valet. You might currently tip a couple dollars for a valet. What happens if the valet's tip screen has "$5", "$10", and "other". Do you select "other" to do your usual $2 tip or do you just hit the $5 button?

Fifty years ago I was told that a restaurant tip is 10-15% (more for higher class restaurants). Over time tip amounts seem to have grown, with 15% being a universal norm and many restaurants pushing 20% or even 25%. Precomputed electronic tips will make it easy for the industry to raise the socially acceptable tip amount.

Tipping is, of course, a difficult issue. On the one hand it's supposed to be a gift for good service. But on the other hand many workers depend on tips, only being paid a small wage or even no wage other than tips.

Or perhaps with the $15.00 minimum wage and other "living wage" moves it's time we abolish the idea of tipping and just pay a fixed wage with no tipping allowed.

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