To tip or not to tip? KSAT Explains

Those screens offering tip options are at countless checkout counters now, but should you always add a little extra?

Welcome to the age of digital tipping — the ability to add a tip to your total using a touchscreen at checkout.

We all know we should tip for good service, but some of these screens are popping up in places where there is minimal service or none at all.

So what do you do?

“That little tiny app — we are all very aware — is every place we go. So we don’t know what to do and we feel pressured,” said Diane Gottsman of the Protocol School of Texas.

Gottsman, a national etiquette expert who is based in San Antonio, says she is currently fielding tons of questions about tipping thanks to those digital kiosks located at just about every checkout these days.

Even though the technology is somewhat new, the tipping standard is still the same, Gottsman says.

“The standard is as it has always been,” she says. “The standard is going to be 15 to 20 percent.”

But there is good reason for the confusion, and yes, sometimes frustration currently when it comes to tipping.

“There are some opportunities that we don’t need to tip but we’re often asked if we want to tip,” Gottsman said.

Let’s say you go to a frozen yogurt shop. You fill your cup. You add the toppings. You go to pay.

And then you get the tip options.

In another example, perhaps you go to a favorite restaurant and buy a hat or t-shirt.

And you still get tip options.

“That’s not really tip-worthy. That is just an exchange of a product,” Gottsman said. “It’s just like you’re going to one of the department stores, you’re buying a piece of clothing and you’re out.”

Tipping comes down to one word for Gottsman — discretionary.

Think about the service provided to you.

Is it a black cup of coffee? Or a latte made to your liking? Or maybe your order wasn’t complicated but the service was great.

“We get to choose. We get to decide who gets a tip and who doesn’t,” she said. “A tip jar is the same thing as a tip app, and there was no obligation with this tip jar.”

So why does tipping seem more high stakes now?

The psychology of the app

“Now we think- we think- someone is watching us behind us,” Gottsman said. “We know the person in front of us potentially is watching us and is certainly going to know what we left when we walk away. So that app, it just feels more awkward.”

Lori Hernandez, owner of Oh Yeah Cakes in Southtown, has seen customers react to the pressure of the tip screen.

“People actually skip the tip part and they’ll be like, ‘Oh, my God.’ And I’m like, It’s okay. You just come back,” she laughed.

Hernandez knows she’s not in an industry where tips are expected, yet she says 80 percent of her customers leave a tip.

She added the tip option to her digital checkout system after customers started asking if they could leave a tip.

“We put it out there and let them decide for themselves,” Hernandez said.

The history of tipping

“It started actually in Tudor, England, when people would visit homes, they would give tips to the servants in the home that they were staying at,” said David MacPherson, professor of economics at Trinity University.

Tipping then spread to restaurants in other parts of Europe and was later imported to the United States.

While it’s considered a very American thing to do today, tipping wasn’t always widely accepted in the U.S.

There was once an anti-tipping movement.

“Six states passed laws banning tipping and that was in the early 1900s,” said MacPherson. “Then what happened was there were laws repealing it. And so by the 1920s, there were no states that were banning tipping.”

MacPherson has researched the effect of the tip minimum on employment. He found that raising the tip minimum lowers employment.

In Texas, there’s something called a tipped wage.

It’s $2.13 an hour.

“But you have to have enough tips to get to $7.25,” MacPherson said. “And if there’s a shortfall, then the employer is supposed to make up the difference.”

“That tipped wage is essentially an hourly rate that you receive that as long as you have tips that bring you at least above minimum wage,” said Emily Williams Knight, President & CEO of the Texas Restaurant Association.

“Right now, the average restaurant front-line waiter/wait-staff member is earning $27 an hour,” she said.

Tips have increased, in a couple of ways

Tips for full-service restaurants were up 16.5 percent in the fourth quarter of 2022 compared to 2021, according to Square.

The company reports tips increased by 15.86 percent for quick service restaurants for the same time period.

Square is one of the platforms used in digital point-of-sale systems.

It’s what Hernandez uses in her bakery.

Her company pays a 2.5 percent fee to Square for every transaction made through the app.

The fee is based on the total, including the tip.

“That little app does have some value because many people don’t carry cash,” said Gottsman. “And without that piece of technology, we couldn’t use our credit card.”

For Hernandez, it’s not just more money in the bank. It’s more money to offset rising costs.

“COVID’s kind of died down, but inflation is really killing us,” she said.

“The basic business model is rent is up 20 percent, food cost is up double digits and labor is up double digits,” said Williams Knight. “In a very narrow margin business, that’s tough.”

What also seems to be increasing are the percentages offered on some tipping screens.

“I was just at a coffee shop where they had it starting at 20, then they had 25 and 30 as your options,” said MacPherson.

There is a learning curve with new technology and digital tipping may be no exception.

“I think we’re definitely in a period where that is going to sort itself out and the consumer in the end will make the choice as this technology continues to evolve,” said Williams Knight.

That’s a word to remember, says Gottsman: choice.

“If they go above and beyond, they call you by name, they’re gracious, they’re friendly, they make your day better, and you want to tip, please do,” she said. “The word discretionary keeps coming up because that’s what this is.”

Read more KSAT Explains stories on KSAT.


About the Authors:

Myra Arthur is passionate about San Antonio and sharing its stories. She graduated high school in the Alamo City and always wanted to anchor and report in her hometown. Myra anchors KSAT News at 6:00 p.m. and hosts and reports for the streaming show, KSAT Explains. She joined KSAT in 2012 after anchoring and reporting in Waco and Corpus Christi.

Valerie Gomez is lead video editor and graphic artist for KSAT Explains. She began her career in 2014 and has been with KSAT since 2017. She helped create KSAT’s first digital-only newscast in 2018, and her work on KSAT Explains and various specials have earned her a Gracie Award from the Alliance for Women in Media and multiple Emmy nominations.