Do e-Payments Lead to Bigger Tips?

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Have you noticed that you’re paying more for a latte or a sandwich these days? Not because the price of coffee or turkey sandwiches have spiked, but because you’re tipping more generously?

Technology may be responsible. A recent article in the San Francisco Chronicle indicates that electronic payment systems like Square, which allow a customer to swipe her credit card in a square box affixed to an iPad, might have completely changed the tipping game.

At to-go sandwich places and cafés alike, folks using Square (and its competitor, PayPal Here) are choosing to tip more—at least when they encounter a screen suggesting they do so. When people use Square, 45 to 50% of transactions include a tip (up from 38 percent last year). Tips comprise an average 17 percent of the bill.

For anyone who’s ever worked as a barista and prayed for a spare quarter to drop in the tip jar, this is fairly incredible. Even when customers pay for good using credit cards, the tip line is easy to ignore. But sites like Square put a screen involving how much you’ll tip between you and the signature page. And data suggests people are more embarrassed to select “No Tip.”

We reached out to Caroline Bell, co-owner of Café Grumpy (made famous in “Girls.”) Bell has been using Square since its beta stage several years ago: “They came by and asked if we were interested.” Although at first using one’s finger on an iPad “took a little bit of adjustment,” now 
"it tends to be pretty natural" among customers.

Although Bell didn’t have concrete data about tips, when we spoke to one of her managers, Shaak Shatursun, he said he’s seen “probably a 30% increase in tips” since Square was introduced. At Grumpy, said Shatursun, “anything under $10 the tips will be in dollar amount”: the screen will suggest $1, $2, $3, “Custom Amount” or “No Tip.” Anything over $10, and Grumpy suggests a percentage tip, from 15% to 25%. So if you buy $30 worth of muffins for your co-workers, you could easily throw down an extra $6 if you’re typically a generous tipper.

So while working the counter at cafés and sandwich shops probably has a ways to go before employees are making bank, a 30 increase in tips is nothing to sneeze at.

How much do you tip for your $2 coffee? A full buck? A quarter? Tell us on Twitter.