Tipping has a fascinating history in American culture, dating back to the years following the Civil War. Though the practice comes from medieval Europe, the US has one of the strongest tipping cultures in the world today. In 2024, though, a growing number of Americans are finding gratuities, well, gratuitous.
The Dreaded Question
A woman orders a vanilla latte. The barista takes the order and spins a sleek white tablet around to face the customer. “You can swipe your card and then the machine’s just gonna ask you a quick question”. We all know what that quick question is, and for many of us, it’s our least favorite question of the day.
A page with suggested tip amounts, with 15% often the lowest available option, is the new not-so-subtle method for soliciting tips. To avoid tipping, the customer has to actively press “No Tip”, instead of taking no action at all.
The new approach is now common in businesses of all types, including many that would have been laughable a few years ago. While sit-down service used to be the most expected place for tips, that list has expanded to include convenience stores, coffee shops, and even self-checkout kiosks!
The New Normal?
This shift toward tipping for everything is relatively new and is compounding a sense of sticker shock for Americans already dealing with high inflation. So where did it come from?
As is the case for many abrupt but enduring changes in the past few years, the COVID-19 pandemic was the springboard for the tipping revolution. During this time, people felt a sense of solidarity in the face of an unprecedented economic and health challenge and wanted to support each other.
“Tipping during COVID was like a donation that recognized that frontline service employees were out there doing difficult, dangerous work. And we all appreciated it, so we all contributed a little bit extra to that charity,” explained Brian Warrener, a professor at Johnson and Wales University.
However, the pandemic is over, and inflation has brought prices, especially for food and services, to levels that would have shocked Americans before 2020. It is no wonder that in an era of ubiquitous tipping and high prices, roughly three-quarters of Americans think tipping has “gotten out of control”.
Even though many Americans resent it, they mostly keep on tipping. Experts say guilt and social pressure are the reason why.
Guilt-Tipping: An Epidemic
LendingTree recently surveyed Americans to find out how they feel about tipping culture today. The survey found that many Americans bristle at the tip request, yet they feel compelled to grant it. Their finding may not surprise you if you’ve gone into a coffee shop or even a convenience store in the past couple of years.
“If seeing the tip options pop up on the payment terminals gives you anxiety or stresses you out, you may be wrestling with guilt tipping issues,” said chief credit analyst Matt Schultz. He explains that “people don’t want to look like a cheapskate”.
When that barista spins the tablet around and watches you expectantly for your answer to that “quick question”, it does create a sense of social obligation to comply. When the minimum suggestion is 15%, that also creates pressure to tip more than you may feel comfortable tipping.
The challenge for customers in this new environment is clear, but businesses have to grapple with unclear expectations as well.
Grappling with Changing Tastes
As a business owner, how do you adapt to this controversial new method of soliciting tips? The question is made harder by the fact that it works. Putting a tip option on your POS system, especially if customers have to answer the question to complete the transaction, will naturally increase tips.
While your employees likely aren’t as upset about this as the customers, it could lead to challenges down the line. We recommend carefully considering whether your industry has historically been a common space for tipping, such as a restaurant or bar. Customers tend to be more upset about the tipping request where customer service is less of a focus, such as in a convenience store.
The best way to know how your customers feel is to ask! A survey on tipping practices, perhaps incentivized by a free or discounted product, can help maintain a healthy relationship with your client base while keeping your employees happy. It can also help guide you to an ideal minimum tip amount if you decide to spin that tablet for a quick question.
COCARD: Leading Through Change
The last twenty-five years have been some of the most dynamic that this country has seen, with culture and technology transforming everyday life at dizzying speed. COCARD has earned its success by carefully following those changes, and by leaning into tomorrow’s economy. We can’t tell you what tipping system is best for your business, but we can give you the tools to decide.
Our technology offers merchants the ability to decide how they present tipping to the customer, no matter their industry. We also offer easy CRM tracking, from tips to revenue and product costs. Not to mention we have some of the industry’s lowest transaction fees, so your business can track and distribute tips without losing them to expenses.
Get in touch today to learn how COCARD leads the payments processing industry by leaning into change, and by offering the best technology in the game.