Tipping becoming a quandary in cashless society

Consumers who pay with plastic for their coffee to go are increasingly finding themselves in a quandary as digital payment devices nudge them to add a tip of as much 30 per cent for counter service.

Digital payment systems now prompt customers for tips on all sorts of transactions, but people shouldn’t necessarily feel guilty for opting to tap “no tip” when ordering food or a beverage to take away.

Lisa Orr, a Toronto-based etiquette expert, is unsure that the cultural practice around tipping has changed. Whereas it’s still standard to leave a gratuity after a sit-down meal, manicure or haircut, it’s not as common to leave 15 per cent or more for food or drinks to go.

But technology seems to be attempting to change that by allowing any vendor to solicit gratuities no matter how little service is required.

“I’m seeing it everywhere now and I think part of it is because it’s so easily built into our payment gateways,” she said, referring to the rise of tip prompts in coffee shops and other places where patrons usually take their orders to go.

Square Inc., which provides digital point-of-sale systems, was founded nearly 10 years ago and allows any retailer with a smartphone or tablet to process credit card payments.

The San Francisco, Calif.-based company’s hardware and software is ubiquitous at small-scale operations including market booths, ice-cream shops and coffee spots, and allows proprietors to decide whether or not to prompt buyers for a tip.

Nearly 90 per cent of retailers that enable tipping rely on the company’s “smart tip amounts” feature, said spokesperson Leslie Jackson in an email. When consumers spend less than $10, they can choose between no tip, $1, $2, or $3. When they spend more than that, they can choose between no tip, 15 per cent, 20 per cent or 25 per cent.

When retailers choose to input custom options, the highest custom percentage a Canadian seller has set is 30 per cent, she said.

In 2018, Canadians tipped an average of 13.4 per cent using Square at food and drink sellers, according to the company’s data. That includes an average 13.7 at coffee and tea shops, 13.1 at food trucks, 12.9 at bakeries and 11.9 at quick service restaurants.

The use of digital payment terminals encourages consumers to be more generous than they would be if they were using cash, Orr said.

For a $2.75 cent coffee bill, for example, a patron may pay with $3 and leave behind the quarter in change as a tip. For the same bill paid digitally, a 15 per cent tip is more than 40 cents.

“If the cashless options were replicated ... you might feel less sort of upset about it,” she said, referencing the guilt and shame some people feel upon seeing auto prompts asking for tips.