In today’s digital world,
non-cash payments currently constitute a vast majority of sales. This implies
that the majority of customers at a hotel or a restaurant are settling their
bills using credit cards or some type of digital payment method, while seeking
cashless an online tipping solution for tipping the staff.
The pandemic has only
hastened this trend, emphasizing the need for digital tipping platforms more
than ever.
The rise in electronic
tipping is also being driven by other types of businesses. Many brands now
offer online ordering, and we have witnessed a rapid expansion of mobile
applications in recent years.
Consequently, a greater
number of customers are making payments (and leaving tips) online.
Running with minimal funds
available has its advantages, but it poses a significant issue when it comes to
compensating staff.
Numerous eateries and pubs
have already transitioned to digital tipping solutions; however, for those that
have not, the present moment is undoubtedly opportune.
What
is the definition of digital tipping?
In the field of hospitality,
digital tipping, also known as digital tip transactions, refers to the
electronic transfer of tip payments from one individual to another. This
process can occur in two distinct manners:
- A customer digitally
gives a tip to a service provider. This exchange is made possible through the
use of tip acceptance software. For instance, a guest staying at a hotel may
scan a QR code or select a hyperlink to provide a cashless tip to their bellhop
immediately.
- An employer
electronically disburses gratuities to their staff. This is made possible
through the use of tip allocation or tip transfer software. This implies that
at the conclusion of a work shift, business day, or specified payment interval,
employees promptly receive their gratuities in a digital format. In simpler
terms, instead of providing cash tips to bartenders, servers, and other
personnel, it is a means of instantly and electronically distributing
gratuities.
What
is a digital tipping solution?
For the purposes of this
article, when we refer to digital tipping solutions, we are specifically
discussing software for electronic tipping.
Currently, there are two
main methods that employers can use to instantly and digitally disburse tips to
their staff:
Prepaid
cards
Also known as reloadable
cards or payroll cards, prepaid cards function similarly to debit cards. After
a shift, managers electronically transfer tips onto their employees' cards.
While they are technically
"instant," unfortunately, prepaid cards usually have associated fees,
they are not universally accepted by all merchants or at ATMs, and it may take
several days for funds to be transferred from the prepaid cards to employees'
bank accounts.
Instant
tip payment platforms
Similar to how Uber promptly
compensates its drivers, these types of tip payment platforms enable managers
to transfer tips to their workers' bank accounts instantly.
In this regard, TIPSY is a
modern platform designed for the current cashless society, which allows you to
show gratitude for an artist, applaud a comedian, inspire a musician, compensate
a server, or show backing for a social event.
Tipsy is also a quick and
user-friendly tip calculator that enables you to compute the tip amount and
total value rapidly.
What
are the benefits of digital tipping solutions?
There are numerous
advantages of adopting a digital solution for your business. Let’s examine a
few of them more thoroughly.
They encourage customers to tip more
When there is a simple
procedure regarding handling and receiving tips, customers tend to tip more.
For instance, when you have a customer-facing point of sale system, you are in
direct contact with the customer when they are asked how much to tip – this
creates an incentive for them to do so.
You can even propose
different percentages, such as 10%, 15%, and 20%, and it is probable that
customers will choose the middle range.
Not only are there higher
probabilities that a customer will actually give a tip, but also the actual
amount they give may be larger because they are not restricted by the amount of
cash they have in their wallet.
There is no need for cash
In today's world, many
individuals do not carry physical currency, so by enabling electronic tipping,
you ensure that guests can leave cashless tips.
Customers no longer have the
excuse of not having cash; by utilizing your digital platform to accept tips, customers
can utilize any form of payment to leave a tip, for different departments or
individuals.
You can receive a tip
through a QR code or at payment terminals located throughout the business
facilities. The greatest advantage is that customers can choose their preferred
payment method without the need to carry cash.
Workers have the ability to regain misplaced
income and enhance their capacity to earn money
Numerous individuals contend
that businesses should provide their employees with a greater salary, but the
act of giving tips has been a tradition in the hospitality industry for many
years in the United States and other regions of the globe.
While the discussion
persists, implementing a cashless tipping system is a feasible and low-risk
resolution that managers and owners can readily approve, enabling employees to
promptly begin augmenting their potential earnings.
For example, hotels that
utilize eTip have observed a substantial increase of up to 78% in tips received
by their staff.
Cashless tipping helps you to save time and
money
Electronic tipping is a
cost-effective solution for most businesses. By eliminating the need for manual
calculation, double-checking, and distribution of tips between employees,
managers can save numerous hours in a week.
Furthermore, the streamlined
process reduces administrative duties, resulting in quick checkouts at the end
of a work period and lowered labor costs.
Cashless tipping also
addresses the hidden expenses associated with cash tips. Managers may not
always have the exact change, and as a result, they round up to the nearest
dollar.
This practice can accumulate
significant costs if done for each employee, every shift, and every day.
Conversely, electronic tip allocations ensure that employees receive the exact
amount owed to them, without any discrepancies.
Read More: How to tip in European countries
Tipping
platforms reduce manual labor
By utilizing an online tipping
platform, you can eliminate the need for manual handling and allocation of tips
since you can gather and disburse tips all through the same system.
This also results in a
reduced risk of errors or miscalculations in tips because there is a
comprehensive record of the amount received, and you can verify this against
the employee schedule to determine who should receive the gratuities.
They are more trustworthy and equitable
Converting tips instills
confidence in workers since it is a more dependable method of monitoring them
and guaranteeing that the funds are not misappropriated.
This approach allows for a
more equal distribution among coworkers, and there is no debate about whether
the tips were received because there is a digital record.
They provide immediate availability
Many employees opt to work
in the hospitality sector because they are assured of receiving their wages on
a daily basis. However, due to a lack of physical currency, it has become
increasingly challenging to ensure that employees receive their payment at the
end of their shift.
As a result, some employers
have decreased the frequency of cash payments or have shifted to a more
organized system of distributing tips through payroll.
However, this can pose
difficulties for employees who cannot afford to wait days or even weeks to
receive their funds. Digital tipping resolves the issues associated with cash
management by providing employees with instant access to their earnings.
Moreover, the funds are
directly deposited into the workers' bank accounts, irrespective of the bank
they utilize, which encourages financial accountability.
Although the earnings are
readily accessible, employees are less inclined to make impulsive purchases
when their money is in the bank rather than in their possession.
e-tips
enhance employee contentment
In a fast-paced field such
as the hospitality industry, it is crucial to establish strategies that boost
employee tenure, and incorporating digital gratuities is an excellent method to
achieve this.
This provides employees with
a motivation to deliver exceptional service as they are aware they will receive
suitable compensation.
Digital solutions are favored by guests
businesses that update themselves
with digital systems are seen more positively by customers. Research
consistently demonstrates that a superb digital encounter is crucial to customers
of all generations.
A contactless tipping system
is one of the simplest answers to implement and is an excellent method to
enhance your business’s digital skills and recognition as a forward-thinking,
contemporary brand.
Electronic
systems provide an efficient payment process
Tap-and-go payments are the
future trend, and with tips being a crucial component of transactions at most
businesses, it is vital that the entire payment process be optimized from
purchasing on-site services to rewarding exceptional service.
This promotes convenient
transactions, and the smoother this procedure becomes, the higher the chances
of staff receiving tips for their outstanding performance.
Conclusion
Cash-free transactions are
the main method of payment in the hospitality industry, with credit cards and
digital payment methods being the preferred options for most customers who
choose not to pay with cash when giving tips to employees at restaurants or
hotels.
Electronic tipping
alternatives guarantee that tipped employees can still optimize their earnings
and receive them promptly.
They also streamline the
process for workers to accurately track and report their gratuity income for
tax purposes (which, in turn, ensures their eligibility for unemployment
benefits, mortgages, loans, credit cards, etc.).
From the employer's
perspective, implementing a system of cashless tipping in the business provides
a more seamless way to distribute tips among the staff, promoting greater
transparency, trust, and dedication from employees.
E-tips also allow for more
accurate monitoring transactions, both for tax purposes and to gain a more
comprehensive understanding of employees' job performance.
The pandemic has only sped
up this trend, highlighting the importance of having digital options for
tipping.
Choosing an online tipping
system is a sensible choice. The crucial part is finding the right digital
tipping platform for your business. If you need more information regarding
online tipping apps, feel free to contact us.