If you leave a tip and no one knows — is it effective?
DipJar, which first hit the market in 2012, allows customers to use their credit card to leave gratuity. Now the company is gearing up to introduce a new model that lights up when a customer leaves a tip, alerting those around them.
The company says the new model was in response to customers not always knowing whether their tips were being received, but also wanting recognition for tipping.
“[Customers] want to make sure it worked, but also display to baristas that they are tipping, and to the other people behind them in line that they are being generous,” said CEO Ryder Kessler.
Fresco Gelateria Owner Ilias Iliopoulos in New York City, who has used a DipJar in his gelato and coffee shop since 2012, also said customers frequently ask if their card worked. “Our shop is pretty loud … you don’t want people always asking if it went through.”
Dipjar plans to release around 500 machines into the market place in June, mostly in New York City but has orders from across the country.
The etiquette of who to tip and how much has become murky as the practice becomes more widespread.
“It has become pretty ubiquitous,” said Richard Seltzer, a professor of Political Science at Howard University and author of Gratuity: A Contextual Understanding of Tipping Norms from the Perspective of Tipped Employees. “There’s a change box in every place you go … people are expecting a certain amount of tips to come in.”
But Kessler said his company isn’t trying to introduce tipping where it doesn’t conventionally happen. “Wherever people want to be generous there should be a DipJar. Our goal isn’t to force people into a tipping environment.”
While DipJar allows credit card users to show their appreciation, it’s not always replacing the old-school glass tip jar. At Fresco Gelateria, Iliopoulos said the majority of tips are still from cash left in the jar at an 80-20 split.
There’s also social pressure surrounding tipping, experts said, with people not wanting to look cheap.
Some sales systems used on tablets present customers with the decision to leave a tip when paying with a credit card, an option that Kessler said can make patrons and employees feel uncomfortable.
The DipJar is voluntary.
The second-generation machine also gives business owners the ability to change the amount customers can tip.
The original jar came with pre-determined tip totals of either a $1, $2, $5 or $20 tip, but now business owners can set their own amounts and display it on a LED screen.
According to Kessler, the machines are common in smaller food establishments like coffee and sandwich shops, but charities and museums also use them. “A museum might want to set the amount at $1 or $2 for visitors to donate casually, but if they have a gala, they many want to increase it to $20.”
Taking away the burden on customers to choose a tip amount is purposeful.
“Research shows the biggest barrier to generosity is decision-making friction,” said Kessler. “[Consumers] get anxious and don’t want to give too much or too little and that frictions leads them to opt out.”
Companies can set up the tip payouts to their employees in different ways, Kessler explained. Some businesses choose to pool their DipJar tips and share the total proportionally by hours worked, while others share their employees’ schedules and DipJar calculates who should get how much.
Workers usually get about 80-85 cents per dollar once credit-card and service fees, are taken out. Owners also pay a leasing fee for the machine. Kessler said there are a lot of variables with how much workers actually receive.
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