Gus Carlson is a U.S.-based columnist for The Globe and Mail.
Some people call it “tip-flation.” Others refer to it as “guilt tipping.” Still others consider it retail extortion.
Whatever the label of choice, for anyone who has been on the losing end of a stickup by a server wielding a hand-held credit-card reader prompting a tip or a self-service kiosk giving you a not-so-subtle digital squeeze, the practice is, at the very least, annoying.
A more critical view, though, is that this phenomenon is a reflection of the continuing labour crunch and companies’ self-serving way of solving it: Instead of paying more to attract workers, they are off-loading that task to their customers.
Aggressive digital tip-trawling is becoming prevalent not only in full-service locations, such as restaurants and bars, but in self-service or minimal-service locations such as coffee shops, corner stores, gas station mini-marts, dry cleaners and even supermarket self-checkout areas.
In some cases, the exercise is so absurd, you might feel you are part of a hidden-camera prank. How much do I tip if I pour my own coffee, put the cream in the cup myself, stir it myself, slip the ribbed cardboard heat-protection sleeve onto the cup myself, snap the to-go sippy cap on myself, walk to the checkout myself and insert my debit card into the machine myself? The spinning card reader on the counter will happily help me with suggested options – anywhere from 10 per cent to 30 per cent. Cue Allen Funt.
Or, if I am feeling contrarian, I can choose the “no tip” option, which is sure to bring scornful looks from behind the counter and whispered suggestions that I am a shameful human.
The practice of auto-tipping proliferated during the pandemic, when employers and consumers were eager to support their local service workers and when digital payment options enabled compliance with social-distancing guidelines and buoyed no-contact service. But it never went away. And at this point, there is no known vaccine for it.
If anything, the practice has picked up steam. Square, the payment-processing company, says that for establishments with only counter service tips have increased 17 per cent, largely because of the use of point-of-sale card readers, which Square sells by the way.
Predictably, the boom in digital tip solicitation has caught the attention of the U.S. Internal Revenue Service, which watches employers and workers closely to ensure tips are properly accounted for and declared. Consumer protection groups are also watching the uptick, warning the practice may run afoul of laws governing so-called junk fees.
Does the practice work? According to the Forbes 2023 Digital Tipping Culture Survey, while 95 per cent of respondents said they tipped at least sometimes, one in three said they felt pressured to tip, and 18 per cent said they felt uncomfortable tipping.
Despite the upward trend, many consumers worry their digital tips don’t go to the workers who deserve them and are just another way companies generate revenue and keep low-wage earners down.
For their part, employers say prompting tips digitally across a broader spectrum of service options helps employee retention. It’s a plain acknowledgment that customers are being guilt-tripped into solving the labour crunch for companies. At least they are honest.