When was the last time you shopped and were not asked for a tip?
Not only are requests to tip when purchasing goods and services increase, but the amount of a traditional tip has also increased over the decades.
During the 1950s, people typically tipped 10% of the bill. In the 1970s and 1980s, that percentage jumped to 15%.
In 2023, people typically tip anywhere from 15% to 25%. Consumers on average say they tip more than 21%, according to a May 2022 Creditcards.com survey.
“What we’re seeing now across the country is something known as ‘tipflation’ … every time we’re presented with a tablet that asks us what we want to tip,” said behavioral expert Thomas Farley, also known as “Mister Manners.”
The coronavirus pandemic has put extra pressure on tipping. During the height of those days, consumers began tipping for items they never had before to service workers in the industry.
In February 2020, before the start of the pandemic, particularly in food and drink, the share of remote transactions when tipping was offered was 43.4%, according to Square. In February 2023, that share was 74.5%.
Meanwhile, if people are willing to give the person who delivers food to their house a 30% tip for service, why not ask if they want to tip when they come to pick up? Restaurants are starting to do that more often — and that practice hasn’t gone away.
Another reason people are tipping more is because of newer and cooler-looking technologies — kiosks and tablets with three large tip suggestions that appear on the screen in front of you. Business owners usually choose the options, and they can also disable the feature if they want.
At that point, 22% of respondents said when they were presented with different suggested tip amounts, they felt pressured to tip more than they normally would, according to Creditcards.com.
“They use options as an indication of what the normative range is and feel compelled to tip within that range. So the more you ask, the more you get,” said Mike Lynn, is a professor of consumer behavior and marketing at Cornell University’s School of Hotel Administration.
Three popular companies with a trendy and sleek look are Square, Toast and Clover. The companies launched about a decade ago to help businesses run smarter, faster, and easier.
In some cases, they charge less to accept multiple credit cards, don’t require long-term contracts, and offer many other useful tools including inventory and employee management. .
“They get credit card processing out of the hands of individuals and very small merchants,” said Dave Koning, a senior research analyst at Baird. “Square has done a great job … it’s a huge growth story. That’s half the business now,” he added.
But, with customers tipping more, where is the tip point?
“I have to believe the tips will go up from where they are now. But I also think there has to be a logical ceiling somewhere. I just don’t know where it is,” Lynn said.
See the video above to learn more.
