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Ask Money

The tip jar gets a digital makeover

Kaitlin Funaro Jun 6, 2014
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The humble tip jar is getting an upgrade. Gone are the days when you could just slip in a dollar or two without the cashier noticing how much you think their job is worth.

Instead, welcome to the brave new world of electronic tipping, where life is more complicated, interactions are awkward and the pressure is high. Electronic tipping is now sweeping into coffee shops, bars, bakeries and delis across the country as mobile payment apps grow in popularity.

San Francisco-based reporter Rachel Levin recently wrote about the interaction between technology and tipping for Pacific Standard magazine.

“Maybe there’s a tip jar next to the counter but increasingly you’re seeing an iPad swivel towards you prompting your finger to press either 15 percent, 20 percent, 25 percent or sometimes, in cautionary bright yellow: ‘No Tip’,” she says, “which no one wants to press because you’ll feel like a jerk.”

Jerkiness aside, consumers are being asked to tip more and more frequently these days and not everyone is happy about it.

“People like baristas and bakers and sandwich makers are seeing an upside. They’re getting more tips, which is great for them, but from the customer’s perspective it’s creating a stressful awkward moment up there at the counter.”

Even as mobile payment systems like Square, Shopkeep and Revel are growing in popularity, some companies are bucking the trend and eliminating the need for the snap-judgement tip.

“People are silently appreciating the technology where it’s used by, say, Uber taxi where you don’t have to pay a tip. Tip is included, 20 percent automatically deducted from your account,” Levin says.

“So you hop out of the Uber taxi without doing any mental math or figure out how much change to ask for and you just go on your way and say thank you.”

But the ‘automatic tip’ scenario comes with its own set of problems since conventional wisdom is that tipping is supposed to be used as a reward for good service.

But Levin says that’s not always the case.

“It turns out that our motivations for tipping are not for rewarding service necessarily,” she says. “Economist Michael Lynn at Cornell says it’s to win the approval of the server. So now when that server is standing before you, that creates the pressure for you to bestow a bigger tip.”

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