How Tablet Cash Registers Squeeze Larger Tips from Customers

The tip jar is going the way of the dinosaur.
The tip jar is going the way of the dinosaur.

Walk into just about any coffee shop or other small business and there's a good chance there's an iPad or other tablet on the counter. They've replaced traditional cash registers in many restaurants, giving business owners flexible and inexpensive options to ring up tickets and process credit cards.

Customers may also get some benefits from the new systems. In addition to emailed receipts that reduce pocket trash, calculating a tip has gotten a lot easier for those too bothered to do the math. Instead of doubling the sales tax or attempting to calculate a fraction on the fly, customers can now simply choose a preselected percentage or dollar tip amount. The tablet then concludes the transaction quickly and neatly.

Compared to traditional cash machines, it's all really efficient. And it's costing you money.

Ask baristas how they feel about the glowing iPad they use to process sales, and many will claim that the devices have doubled their tips compared to traditional sales systems. "Sellers have told us that using Square Register results in significant tipping increases for their employees when compared to their previous systems, or even traditional tip jars," says a spokesperson for Square, one of the leading platforms used by businesses.

I asked because I noticed my own tipping practices changed when I started patronizing coffee shops that use a tablet for a register. Before tablets, I was a miser when it came to tipping baristas. If I was paying for my coffee in cash, the barista that frothed my latte usually only got the change left from the sale that I didn't want jangling in my pockets. And if I was paying for my coffee with a credit card, my tip often decreased to nothing. I reasoned that employees at coffee shops were paid a regular hourly wage, unlike bartenders and servers who make $2.13 and hour and depend on tips (I usually give around 20 percent) to make up the difference.

If my coffee shop tipping sounds selfish to you, you're probably a barista, and you should note my behavior isn't uncommon. Large companies like Starbucks don't even give customers a chance to leave a tip with a credit card.

But coins and paper bills continue to go the way of wampum and bartered mittens as more small business make credit and debit card transactions sleek and more convenient. And in the age of tablets, customers are presented with a screen displaying tipping options before they're asked for a signature and handed back their card. Without mental calculation, or even much consideration, customers can tip employees with a tap of a finger. And they are tipping more (myself included) than they ever have before because companies like Square are subtly urging them to do so.

Merchants that use Square's products report a 35 to 100 percent increase in tips, which Square attributes to what the company calls their "smart tipping" feature. The product allows merchants to configure their registers based on their business model to maximize tips. "Square Register gives sellers every tool they need to grow sales and increases tips in a single, smart app," their spokesperson says.

For example, merchants are able to set up their register to allow customers to choose a tip and leave a signature all in one screen. This option speeds up transactions and potentially reduces lines, but some customers miss the option to leave a tip. However, if tips are more of a priority, these steps can be split between two separate screens, forcing a customer to choose a tip (even if it's zero) before they see the screen that asks for a signature. Sometimes while an employee watches with judging eyes.

Merchants have other customization options that allow them to gently urge customers to tip more generously. Preselected tip amounts are highly customizable, offering control over how their transactions are presented to the customer.

A common configuration affords a customer choices of 15, 20 and 25 percent tips, but those amounts can change based on the amount of the sale. Let's say a customer orders a $3 coffee and selects a 15 percent tip, which is commonly the lowest, preselected option. This sale will result in a $.45 tip. To urge the customer to give a little more, Square allows merchants to change tip options for sales below a certain threshold. In many stores, customers spending less than $10, will be given tip options in dollar amounts ($1, $2, or $3) rather then percentage values. If that same customer selects $1, the new lowest option, they will have left a 33 percent tip -- more than double the original amount.

The preselected percentages are customizable, too. At Qariah on Greenville Avenue, tip options are preset to 20, 25 and 30 percent, urging customers to tip well above the national average of 18 percent. Merchants have also been able to collect tips on sales that typically don't warrant tipping. Pick up a pound of coffee beans to take home from your favorite coffee shop that uses a tablet for a register, and chances are, you'll be asked for gratuity.

Customers aren't powerless, though. Square allows for custom tip amounts, but it requires navigating to a second screen to carefully enter a dollar amount before they move on to leave a signature. Shopkeep, a rival point-of-sales system, also lets customers enter their own custom tip, but the interface is confusing, especially if a customer has gotten used to other systems. A customer's best bet is to ask how the system works until they get the hang of it, which can be humbling.

It's a subtle shift from the days when a customer could simply mark a slip with an "x" and leave the tip line blank if they wanted to stiff an employee, but it's one that's adding up to significant value at businesses that use Square or other tablets to process sales. Small business owners are likely thankful that there is technology that will help them grow their businesses and keep their employees well compensated, especially in a wobbly economy.

Customers, on the other hand, should slow down and think about the decisions they can quickly make with a fingertip. What they are initially presented on a tablet screen isn't usually the only option. Or they could just get a few rolls of quarters and a coin-changing belt.

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