When was the last time you bought something and were not asked for a tip?
Not only are requests to tip on purchased goods and services becoming more common, but the cost of a traditional tip has also been increasing for decades.
In the 1950s, people typically tipped 10% of the bill. In the 1970s and 1980s, that percentage jumped to 15%.
In 2023, people typically tip anywhere from 15% to 25%. Shoppers on average said they tipped more than 21%, according to a Creditcards.com survey in May 2022.
“What we’re seeing now across the country is something known as ‘tipflation’ … every time we’re presented with a tablet asking us how much we want to tip,” said etiquette expert Thomas Farley, also known as “Mister Manners.”
The coronavirus pandemic is putting increased pressure on tipping. In the heyday of those days, customers began tipping for things they had never experienced before to service workers in the industry.
In February 2020, before the pandemic began, particularly in food and beverage, the share of remote transactions when tipping was offered was 43.4%, according to Square. In February 2023, that share was 74.5%.
Meanwhile, if people are willing to give their home delivery person a 30% tip for service, why not ask if they want to tip when they come to pick it up? Restaurants started doing that more often — and that practice hasn’t subsided.
Another reason people are tipping more is because of newer, cooler technology — kiosks and tablets with three big tipping suggestions that pop up on the screen in front of you. Business owners usually select those options, and they can also disable the feature if they want.
At that point, 22% of respondents said when they’re shown different suggested tip amounts, they feel pressured to tip more than they normally would, according to Creditcards.com.
“They use those options as an indication of what the normative range is and are forced to tip within that range. So the more you ask, the more you get,” says Mike Lynn, a professor of consumer behavior and marketing. at Cornell University’s School of Hotel Administration.
Three well-known companies that have such a trendy and sleek look are Square, Toast and Clover. The companies were launched about a decade ago to help businesses run smarter, faster, and easier.
In some cases, they charge fewer fees so it’s less of a burden to accept multiple credit cards, don’t require a long-term contract, and offer many other useful tools including inventory and employee management.
“They’ve gotten credit card processing out of the hands of individuals and very small merchants,” said Dave Koning, a senior research analyst at Baird. “Square has done a good job … it’s a tremendous growth story. That’s half the business now,” he added.
But, with customers tipping more, where is the tipping point?
“I have to believe that tips will go up from where they are now. But I also think there has to be a logical ceiling somewhere. I just don’t know where it is,” Lynn said.
watch the video above to learn more.
