Columbus, OH: Credit-Card Technology Boosts tipping from Customers

ADAM CAIRNS | DISPATCH PHOTOS At the Angry Wiener food truck, Paige Endicott signs her name electronically after choosing a tip.

By Jeannie Nuss  |  The Columbus Dispatch

ADAM CAIRNS | DISPATCH PHOTOS At the Angry Wiener food truck, Paige Endicott signs her name electronically after choosing a tip.
ADAM CAIRNS | DISPATCH PHOTOS
At the Angry Wiener food truck, Paige Endicott signs her name electronically after choosing a tip.

After ordering a hot dog from a food truck Downtown on a recent weekday, Alaina   Herman offered a credit card, then faced a decision: to tip or not to tip?

Next to a makeshift tip jar, an iPad attached to the truck showed her subtotal and suggested a few options: $1, $2, $3 or “custom.”

Or, by tapping another button, the Grandview Heights resident could decline to tip altogether.

Herman, 24, chose to tack a $1 gratuity onto her bill, raising her total at the Angry Wiener from $4.25 to $5.25.

If not for the prompts on the iPad, she said afterward, she might not have tipped at all.

“When it’s suggested,” Herman said, “I’m more likely to tip — if it explicitly gives you the option.”

Other people apparently are, too.

The rise in debit- and credit-card use — at food trucks, at coffee shops, in taxis and elsewhere — is increasingly exposing customers to screens with tipping suggestions, which in turn are compelling them to add tips more and more often.

Research published last month in American Economic Journal: Applied Economics found that tipping recommendations hold sway.

The authors, economists Kareem Haggag and Giovanni Paci, analyzed tipping data from city cabs in New York and found that higher default suggestions — 20, 25 and 30 percent versus 15, 20 and 25 p ercent — spurred higher average tips.

“These technologies are changing the way people tip and are changing the social norm,” said Paci, who works as a researcher at the Laboratory for Neuroeconomics at New York University.

A button to be pressed when someone doesn’t want to give a tip has an effect, said Holona Ochs, a co-author of Gratuity: A Contextual Understanding of Tipping Norms From the Perspective of Tipped Employees.

“You have to hit a button that basically says, ‘I’m going to be a jerk right now,’  ” said Ochs, an assistant professor of political science at Lehigh University in Bethlehem, Pa.

Plus, she said, customers treat “plastic” differently from cash.

“People tend to tip more when it comes from credit than cash,” Ochs said. “Cash comes immediately out of your pocket.”

Dennis George, a pastor at Journey Church in Dublin, appreciates the distinction.

“I tip more, I think, with a card,” said George, who lives in Hilliard.

“You don’t feel the pain like you do with cash,” he added with a laugh.

Also, George said, you aren’t limited to the number of dollars in your wallet.

At bars and sit-down restaurants, the tipping “rules” are well-established regardless of the form of payment.

Gratuity guidelines at food trucks, however, seem to invite confusion.

Food trucks are like coffee shops and other places with counter service, according to Lizzie Post, co-author of the 18th edition of Emily Post’s Etiquette:

“You’re not being served in the traditional way, where a waitress comes over, takes your order.”

In such instances, she said, customers are under no obligation to tip — although the presence of a tip jar conveys that gratuities are obviously welcome.

Businesses that use the optional tipping feature from Square, a San Francisco company whose credit-card readers are found at the Angry Wiener and 25,000 other merchants in central Ohio, have seen an uptick in the percentage of tippers.

About 30 percent of Square users in the area have its tipping feature — and those businesses saw 52 percent of customers give tips in June, compared with 36.3 percent in June 2012, the company told The Dispatch.

The size of tips has grown as well: to an average of 17.5 percent of the tab in June, compared with 16.3 percent in June 2012.

Deliea Griffiths — who owns the Angry Wiener and the Cheesy Truck with her husband, Eric — has used Square for several years.

“We were a little hesitant to add that (tipping) feature on because we didn’t want to look like we’re asking for money,” Griffiths said at a recent Food Truck Food Court at Columbus Commons.

Yet the electronic tipping options mean a lot to food-truck workers.

About two-thirds of the Paddy Wagon tips stem from credit-card payments, said Nina Bennett, who works at the food truck.

“If we didn’t have the credit-card tips, we would not be making as much money,” said Bennett, of the Clintonville neighborhood.

The same holds true for taxi services and coffee shops.

“We are definitely getting higher tips with the credit-card machines than before the credit-card machines,” said Morgan Kauffman, owner of Yellow Cab of Columbus, which has had back-seat credit-card readers in place for several years.

Credit cards yield higher tips than cash does, added Andy Luck, who owns Luck Bros’ Coffee House in Grandview Heights — which has used the Square tipping feature since 2011.

Of course, Luck said, customers are always welcome to drop coins and dollars into the tip jar, but he wanted them to have an electronic option, too.

“My staff works hard, and I want to give people the opportunity to thank them.”

http://www.dispatch.com/content/stories/life_and_entertainment/2014/08/04/the-tipping-point.html