Living with credit

The tip jar goes digital, and it’s costing you

Jenny Hoff

In case you haven’t noticed yet, there is a new tip jar popping up at coffee shops and food trucks, and it’s in the shape of a shiny tablet. If you use your credit card to pay for small purchases, which many of us do because of the convenience and those coveted rewards points, then you might have noticed yourself spending more than you have in the past. At least 15 percent more.

Smoothly integrated into the newest tablet payment terminals at these small businesses are gratuity prompts that are so in your face that not tipping now requires more thought and effort than just choosing an extra percentage to tack onto your bill. This comes even as some restaurants have launched no-tip policies, opting to pay the wait staff a decent wage instead.

Now, I believe in tipping — and tipping well when it comes to restaurants and bars; it’s pretty much a moral obligation considering servers at most restaurants still depend almost completely on tips for their wages.

But, at coffee shops and the like, I always considered the tip jar an option, a place where you maybe throw in an extra buck or some change if you have it on hand. No longer. At the cafes I’ve been going to, paying with a card means interacting with a digital tip jar that automatically asks me to choose how much I want to tip and conveniently offers three percentages as options.

Of course, below the percentage options, there is a “no tip” tab sitting on the fringes of the screen. But, studies show social pressure encourages many people to tip, especially if they are standing at the cash register, facing the barista.

While this new tipping culture isn’t necessarily a bad trend, it’s certainly one to pay attention to, especially if you’re trying to stick to a strict budget. You might be surprised to find out how much more you are spending every time you swing by a coffee house with friends or pick up food to go for your family. I certainly was.

Tip tracking
As someone who works from home, I often find myself stopping by these types of establishments during the day. Knowing that I’m one of those people easily guilt-tripped by the digital tip jar, I decided to listen to the advice of financial experts and track my spending for a week. I wanted to see just how much extra I’m blowing on my daily coffee fix by using my card at tablet payment devices that prompt you for a tip with every purchase.

Between coffees for the family, prepackaged breakfast tacos and the usual grab-and-go goodies, I bought $112 (including tax) worth of items in one week. However, that is not the amount that actually went on my card, since I chose the 15 percent tip option for every transaction (which, I still felt guilty about since 20 and 25 percent were also listed as choices). With the tips, my total cost for the week on these items added up to $129 — $17 in tips. If I continue doing this, over the course of a year, those little nibbles, teas and coffees for myself and the family will cost $884 more than I mentally calculate when I look at the menu and choose my items.

Card or cash
The question now is, how do I pay for these purchases? Do I avoid the awkward situation of having to decide whether to tip every single time by simply paying with cash? Or do I continue to follow the advice of points pros and pay for everything with a card in order to rack up rewards points? Given that the average value of rewards points is 1-2 percent, in most cases that 15 percent tip will far outweigh any points advantage.

Still, the result will probably be a mix of the two payment methods, with gradual adjustment to this change in price and an acceptance of the new normal. Or perhaps, I’ll go rogue and choose the “custom tip” option, treating it like the tip jar of the past and making a conscious decision to leave a tip I feel comfortable with. No matter the choice, it might be well worth the effort to start calculating ahead of time a 15 percent increase on the advertised price before ordering my latte. It will help sharpen my math skills and it will certainly help shape up my wallet.

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