Why cash is still king when saying ‘thanks’ for good service
In April, barely a month into lockdown, the Central Bank reported that ATM withdrawals were down by 40pc; it’s safe to assume that the trend will have continued. And while experts agree that the risk of contracting Covid-19 from handling money is low, many prefer not to take it.
Those of us working from home, getting our groceries delivered, going to the shops only when absolutely necessary and using contactless payment wherever possible may find that the notes in our wallets are the same ones that we took out of the wall back at the beginning of March, before the sky fell in.
So, as well as the other seismic changes that the pandemic has and continues to wreak upon us, it has fast-forwarded us into being a largely cashless society.
We pay for parking and taxis via an app, and tolls via a tag. Some retailers, coffee shops and cafés now require all transactions to be contactless and have no facility to take cash, while many others express a preference for payment by card. For most of us, paying by card is convenient; we consider it oldfashioned to deal in cash and write cheques.
But where does that leave the practice of tipping? Until there is a cultural shift towards incorporating a service charge into restaurant and salon prices (which means that those prices will have to go up), and paying the people who work in those places a higher wage — something that exists in other countries but is not necessarily something that employees here want — tipping is going nowhere. (In New York, restaurateur Danny Meyer, once at the forefront of the anti-tipping movement, has recently reintroduced tipping in his restaurants.)
During lockdown, we did not find ourselves in many tipping situations, other than for meal delivery. We weren’t eating in restaurants or going to the hairdresser, so we weren’t tipping. But now that we are venturing out again, we need to think about how we handle tipping during a pandemic.
Most restaurants offer customers the opportunity to add a tip to their bill at the end of a meal, and hairdressers do the same. It seems simple and straightforward, a way of getting the €10 or 15pc to the person who looked after you as an acknowledgement of good service.
But there are a number of issues involved that make a tip given in this way anything other than straightforward.
For one thing, there’s the question of whether the establishment actually hands the tips over to the staff for whom they were intended. We have all heard stories about well-known restaurants in Ireland where the integrity of the system of distribution of tips leaves much to be desired, but unfortunately, it’s very difficult for a customer to make a judgement on whether any particular establishment has a fair and transparent system to distribute card tips fairly.
The other issue with card tips is the tax implications for both the employer and employee. Some restaurateurs who paid out card tips to staff as if they were cash in the past were hit with tax and PRSI bills
The other issue with bank card tips is the tax implications for both the employer and employee
because those tips are supposed to be treated as wages.
If you — like me — have ever worked in hospitality, you are probably a good tipper and carry cash for that purpose. But the first time I went to a restaurant postlockdown I was so over-excited and out of practice that I broke my own rule by forgetting to carry cash and having to add the tip on the card, as there was no cash machine nearby.
After this incident I tweeted to ask what those in the industry thought about tipping in the time of Covid and the resounding response was that cash (though still susceptible to inequitable distribution by unethical business owners and managers) was the — by far — preferred method. And if you don’t have cash on you, you can ask for cash back at the time that you pay the bill, which you can then leave as a tip.
So inasmuch as everything has changed, everything remains the same. Cash is still king.