It has almost become a near universal experience — you step into a coffee shop, order a latte and are met with a glaring screen asking for a tip. Whether it’s $1, $5 or an extra 20%, more and more businesses are leveraging point-of-sale technologies that encourage customers to tip their staff.
For some, this shift seemed to happen overnight. One day that iPad screen was put in front of you, and it seems it hasn’t gone away since. But, in reality, this shift has been happening for some time now. Point-of-sale technology brands like Toast and Square, both introduced over a decade ago, have been increasingly implemented in retail establishments, restaurants and small businesses worldwide. These point-of-sale systems give businesses the opportunity to simplify operations and manage payments, while also introducing the digital tipping system thriving today.
While tipping isn’t a new concept in these retail spaces, the tip jar has been a mainstay in retail establishments for far longer, digital tipping has seemingly caused a shift in expectations. Rather than voluntarily pulling out a dollar or sharing their extra change, customers are being asked directly to support the staff member in front of them. The result is a higher stakes interaction — hitting the ‘no tip’ button feels impolite and ungracious to some, forcing them to tip in situations they wouldn’t typically consider. It is this added pressure that has caused some backlash against new tipping norms.
Why New Tipping Standards are a Problem (For Some)
When considering the rise of criticism against new tipping standards, it seems this stems from a deviation from traditional tipping environments. Customers were used to tipping waiters in a seated restaurant, taxi drivers and nail technicians, but baristas and retail workers fell outside of that realm.
Tipping used to be standard; we had reasonable guidelines set for different spaces and occasions. And although not every customer abides by them, there was a certain set of social contracts that most were aware of when it came to tipping. These standards were, and still are, in place to ensure that service workers are adequately compensated. Currently, federal law only requires employers to pay $2.13 per hour in direct wages for tipped employees. Meaning that the majority of their income comes from tips.
However, at its core, tipping is a way to show appreciation and reward individuals for exceptional service. Tipping is meant to be personal; it’s a signal of gratitude for a job well done and it's meant to make the person on the receiving end feel appreciated.
Now that we are asked to tip in places that we never have before, we’ve created confusion over what it actually means. The direct request on the screen makes some customers feel forced into giving a tip, going against the true nature of the gesture. When taking the personal aspect out of tipping, it begins to feel like an added charge rather than a thoughtful act.
What Tipping Means to Employees
On the other end of the exchange, service workers also have complaints. Employees that are making minimum wage don’t necessarily feel that they are adequately compensated with just their paychecks. According to new research by Cornell, fewer than 40% of New Yorkers earn at or above a living wage; accommodation and food services were found to be the least likely to pay a living wage.
Without an acceptable salary, workers survive on the extra money they receive through added tips. And, many believe that they aren’t asking too much. When customers are willing to pay as much as $7 for a coffee, it seems much more likely that they can afford to tip. But affording it, and actively choosing to give it are two different things for some.
This leaves a messy and unresolved argument — employees feel that they deserve to be compensated, and customers believe that their employers should be footing the bill. The end result is a chronic disconnect and increasing resentment toward tipping.
Reddit users shared this sentiment in a thread. One commenter lamented, ”I can’t be the only one frustrated with the increasing expectation to tip everywhere. I feel like it's just another way for CEO's/Owners to make more money and pay workers less.” The lack of transparency and forced nature of digital tipping has made some customers question the validity of the payment structure. When handing someone a dollar, customers feel they know how the tip is being distributed, but technology has blurred some of those lines.
Writer Charlie Warzel shares similar thoughts in ‘Tipping is Weird Now’, he states “Ultimately, these tablets accomplish what so much tech-enabled automation does: adding another layer of abstraction between a business’s decisions and its customers. And when customers feel like they’re being taken advantage of by a business’s choice (say, a sneaky 30 percent tip default), they tend to lash out at the workers in front of them—the people least responsible for the decision. It’s another way that technology, when poorly or cynically implemented, can pit consumers against lower-wage employees.”
Tipping and CX?
This shift is much more expensive than just your local coffee shop, requests for tips have emerged in the eCommerce environment and within customer service interactions — which isn’t necessarily surprising. Service workers outside of the traditional food and beverage and hospitality space are working with customers just as much, but with less visibility.
In the contact center, agents are assisting customers, answering questions and providing empathetic support. When considering all of the other tip-inclusive settings, it doesn’t seem out of the norm to question whether this level of care and attention could warrant a tip as well.
And, some brands have already implemented it. BitStarz, an online Bitcoin Casino, recently prompted one of our colleagues to tip their chat assistant after their case was resolved. Upon closing their chat, they were prompted to donate a Bitcoin tip to their employee coffee fund.
While this might currently be implemented in more digital forward, smaller brands, there may come a day where larger corporations encourage customers to tip their agents. With turnover and attrition becoming an ongoing problem, extra monetary support could keep agents firm in their roles. Further, as we continue to place more emphasis on the experience than ever before, tips might motivate contact center staff to continually strive for CX excellence.
Whether or not this same discussion would be had if contact center agents requested tips is unclear. If customers are prompted to tip in the comfort of their homes without having to make eye contact with the employee in front of them, they might feel less obligated to give a tip and reserve it for exceptional interactions only. However, it is still an industry that is largely seen as separate from traditional tipping environments.
In Conclusion: Tip What You Want
At the end of the day, tipping isn’t going anywhere. It’s a personal decision that really should be left up to each individual customer. Technology has certainly made the process easier, but with everything, it has opened up opportunities for complaints. As we continue to see tipping become normalized across different industries, these debates will likely die down.
But, regardless of the discourse surrounding tipping culture, customers should do what seems right to them. If tipping a barista seems unnecessary, nobody needs to feel intimidated by the iPad screen in front of them. Hitting the ‘no-tip’ button doesn’t need to incite feelings of shame. But, adding an extra dollar to support your favorite retail employee is also sometimes just a nice thank you.