After years of declining tips, Oren’s Daily Roast, a New York based coffeehouse chain, agreed to test-pilot DipJar at two of its locations last year.
After retailers make arrangements to receive a DipJar, they register it through Dipjar’s website and include the retail location along with a list of who’s working at the store. Then they plug the DipJar into a power outlet and they can start accepting tips.
Once the DipJar is on the countertop, customers can swipe their cards. The company takes a service fee for tips processed at no cost to retailers.
Customers interested in tipping swipe their credit cards into DipJar’s machine and are able leave a pre-set tip for baristas. An old-fashioned cash-register chime alerts them that the transaction has gone through. Counter workers later divvy up the proceeds.
According to the ATM/debit network PULSE, more than 30 percent of debit card receipts were for less than $10 in 2011, with the median amount of all debit transactions just $19. And as fewer customers leave behind loose change as tips, workers pay is impacted.
When Swork Coffee in Los Angeles began using an iPad checkout system at its three locations, tips dropped more than 25 percent overnight, says owner Patricia Neale. Neale commented that her baristas, who make between $9 and $12 per hour, could once count on $50 in tips per shift, but now sometimes make less than $5.
“Tip jars once upon a time could mean $2 or $3 more in hourly wages,” says Richard Seltzer, author of the 2010 book ‘Gratuity.’ “That’s a significant pay cut for the person behind the counter.”
“Employers have come to depend on wages being paid out of the tip pool,” says Shannon Liss-Riordan, a Boston-based attorney who has represented workers in tipping cases for a decade. “Workers depend on tips to pay for things like rent, tuition it’s real money for them.”
DipJar plans to expand across the United States and abroad. The company currently has 10-device pilot project in six locations, and covers all the debit and credit card fees.
Co-founder Ryder Kessler says the company hopes to ensure that at least 80 percent of each tip goes to workers. “Fees are a reality,” Kessler says. “But we’re negotiating with banks and credit card companies to keep them as low as possible.”
Reuters claims that Starbucks said next summer it would start letting customers who pay via mobile devices add a digital tip through Square, the San Francisco-based mobile payments system started by Twitter chairman Jack Dorsey.
Reuters adds that Ziptip, a startup based in Boston and Florida, is also experimenting with this concept. Tippers use the Ziptip smartphone app to scan unique QR codes, assigned to tip recipients and transmit their gratuities through PayPal.
“The money goes directly into the recipient’s account to be used that day,” says Lois Hamblet, Ziptip’s CEO. “And you can tip anyone you feel who deserves it, from a barista to a hotel doorman to your yoga teacher.” Ziptip service is available in 20 countries so far.