Mobile Payments May Be Inflating Tipping

We’ve heard this one before, but when the Washington Post starts talking about it, it bears a little further examination. With mobile payments increasingly becoming popular—especially at restaurants, where it slims down the time it takes to have a meal therein—are mobile payments also leading to greater tipping? New reports suggest that’s so.

The Post based its report around a NerdWallet report titled, starkly enough “Don’t Let Technology Bully You Into Tipping.” It reiterated points we’d seen before; those merchants who used Square and other such service can establish what are known as “recommended” tipping amounts for any business done therein, and the percentages “recommended” can be as high as 25 percent or more. This is also for places that haven’t often seen tipping before, like at food trucks, takeout counters, or even in bakeries.

Square even uses the “recommended” tip option as a selling point to businesses, noting that “It’s harder to physically press a button saying you aren’t going to leave anything.” Square further reportedly recommended that businesses be judicious about recommended tips lest they alienate customers.

It’s a balancing act of sorts for businesses. By establishing a tipping system, businesses can effectively reward top performers by letting them plead their case for raises directly to the customer. This allows the business to get more out of the employee for no extra pay, at least, no extra pay from the business. The extra pay comes direct from the customer, who likely isn’t happy about having the price of just about anything suddenly jacked up because someone’s now got his or her hand out directly for a tip. This encourages customers to shop elsewhere, unless, of course, the customer experience is sufficiently better that it merits a tip. We’ve seen before that customers will pay more for a quality customer experience.

So yes, mobile payments likely are “tricking” customers into tipping. The critical connection between cash in hand leaving the hand is gone—mobile payments are often just numbers on a screen, and have less psychological connection than paper strips in a wallet—and businesses are taking advantage. But savvy payments users will know to watch for such tricks, and respond accordingly, which may cost some places business.