After tapping or swiping a credit card at the local pizzeria or corner coffee shop, customers are often faced with a split-second decision: whether to leave a 10%, 15% or 20% tip — or no tip at all.
As paying via tablet has become the norm around the city, the final touch-screen step asking patrons if they want to leave a gratuity has become a familiar sight.
But the transaction can lead to awkward situations if there's a line of people waiting who can easily see one’s tip choice. It can also leave customers feeling uncertain what amount is appropriate.
For many, like Talya Berenholz, a student at Touro University, they’ve found themselves “guilt tipping.” It means she’s found herself tipping more since the transactions have become so public, especially if she’s around new friends.
“I don't want them to think anything about me, so I'm usually more likely to tip,” Berenholz said.
And while patrons expect to tip at places like restaurants and hair salons, the ubiquity of touch-screen checkout tablets means that places they wouldn’t normally expect to tip, like a self-serve frozen yogurt shop, now suggest they do so.
“I love 16 Handles — we'll be going back —but I thought it was weird that they asked me to tip for something that I literally filled. I literally made it myself,” Hannah Koffsky, a resident of the East Village, said.
But in the years since, as more businesses have adopted digital payment methods requiring customers to make a tipping choice before they can complete their transactions, many New Yorkers say they are feeling “tipping fatigue.”
As inflation pushes the price of groceries up, some New Yorkers are also feeling their dollars stretched thin — and service industry workers are witnessing patrons’ frustration with touch-screen tipping culture firsthand.
Jason Kim, a server at a ramen restaurant in the city, said he understands customers’ frustration with “tip creep,” the feeling that you have to tip every time you’re asked on screen.
“It's almost like, ‘Oh, this is mandatory,’” he said.
Glendale resident Ashley Doralis, who has been working in service for about five years, is currently employed as a barista at a coffee shop in the East Village.
She said a customer recently sat down after skipping the tipping prompt altogether — and she understood the exhaustion.
Customers are not only barraged with touch-screen tip suggestions, but are often asked to enter their contact information to sign up for rewards and other offers, she said.
“All the screens on the things — it's just sometimes too much. Like, you just want to go out, have fun, live in the moment and get out,” she said.
While chains like 16 Handles may not need to worry about tipping fatigue due to loyal customers like Koffsky, experts say smaller businesses could lose customers to the phenomenon.
“I do think that people are going to start to vote with their feet a little more,” said Ted Rossman, senior industry analyst at Bankrate, a consumer financial services company based in New York City. “I talked to somebody the other day who said that they don't go to food trucks anymore because they find that this whole tipping thing is kind of intrusive, and they feel bad saying no to the tip, so they'd rather just not go there at all. That's a risk to businesses if more people feel that way.”
Many New Yorkers say that an overreliance on tips emphasizes the need for higher wages.
Income inequality has been a growing issue over the years, and the COVID-19 pandemic exacerbated the divide, according to the World Economic Forum.
In 2021, income at the top of the income distribution in the U.S. was 13.53 times higher than income at the bottom, a nearly 5% increase from 2020, the U.S. Census Bureau found.
“We need to get wages right so people don’t need to survive off of tips,” said Olivia Resto, who works at a cafe in the East Village.
Small business owners who rely on digital point of sale, or POS, systems — the touch screens used for transactions — also face financial challenges, as there is a fee associated with each transaction.
Bank terminals, the traditional POS system without the touch-screen tablet where customers simply swipe a credit card, started losing their monopoly on the market with the increasing rise in popularity of the digital POS systems.
Companies like Square and Toast, which operate digital point of sale systems, made appealing offers to business owners to not only serve as the point of sale for their business, but to streamline a host of other services, including payroll and booking.
When Kim Gueldner founded a hair extensions company, she used bank-to-bank transfers or the Venmo app for all of her transactions. When she opened a brick-and-mortar location, Voel Hair Studios, in the Garment District a year ago, she opted to use Square, which operates the digital POS touch screens, as the platform seemed like the easiest one to use.
But while using the platform seemed like a great deal at first, fees and costs slowly began to creep up, reminding her of business practices used by companies like Netflix and Uber.
“Netflix in the beginning was like, ‘Oh, our services are $5.99, come and watch. Come and stream our stuff,’” she said. “And then as they get bigger and bigger and bigger, they raise the price because more people want it. Now that you've gotten sucked in, they can raise the price.”
These systems take a percentage from each transaction, but Gueldner said the fees have only gotten higher and more convoluted.
She said she ends up paying about $6,000 per year in fees to Square for running her business’ POS system. She’s now considering going to the traditional bank terminal method, where fees on each transaction can be much lower.
“The bank terminals don't charge nearly as much for debit swipes, because you're not using a third-party credit card to process your payment,” she said.
Relying on these digital payment methods also means that the tips are automatically taxed, a major gripe among service industry workers. Taxes on cash tips can be paid out at a later date, which many people prefer.
This was also exacerbated by the pandemic, as people became reluctant to handle cash.
“I used to go shopping for no reason with my tips,” said a barista at Boris & Horton who identified himself as “Q.” “Now it's like, ‘Alright, let me chill.’ It's a big difference in the change of lifestyle.”
Despite all these changes, however, servers and baristas like Q maintain that the fundamental rule of service still applies: If you give good service, you’ll get a good tip.
“I get great tips because I have great conversations,” Q said. “If you're not doing your job already to give the person the customer service, they're not going to tip you.”
It’s a sentiment Kim, the server at a ramen restaurant, echoed as well.
“People that are going to tip, they're going to tip regardless,” he said. “People that's not going to tip, they're not going to tip, so they're going to come up with all kinds of excuses.”