How betting in the US got out of control
When was the last time you bought something and you weren’t asked for a tip?
Not only are requests to tip about purchased goods and services increasingly common, but the amount of traditional tipping has also been increasing for decades.
During the 1950s, people usually tipped 10% of the bill. By the 1970s and 1980s, this percentage had jumped to 15%.
In 2023, people typically tip anywhere from 15% to 25%. On average, consumers said they tipped more than 21%, according to a May 2022 Creditcards.com survey.
“What we’re seeing now across the country is something known as ‘tip inflation’ … at every opportunity we get a tablet that asks us how much we want to tip,” says etiquette expert Thomas Farley, also known as ‘Mister Manners.’
The coronavirus pandemic put more upward pressure on betting. At the height of those days, consumers started tipping service workers for things they never had before.
In February 2020, just before the pandemic began, especially for food and drink, the percentage of external transactions when tips were offered was 43.4%, according to Square. In February 2023, the proportion was 74.5%.
Meanwhile, if people were willing to give the person who delivers food to their home a 30% tip for service, why not ask if they will tip when they come to pick up? Restaurants started doing it more often – and that practice hasn’t abated.
Another reason people are tipping more is because of newer and cooler technologies – kiosks and tablets with three big tip suggestions that pop up on the screen in front of you. Business owners usually select these options and they can also disable the feature if they want.
To that point, 22% of respondents said that when presented with different suggested tip amounts, they feel pressured to tip more than they normally would, according to Creditcards.com.
“They use these options as an indication of what the normative range is and feel compelled to bet within that range. So the more you ask, the more you get,” said Mike Lynn, a professor of consumer behavior and marketing at Cornell University’s School of from the hotel administration.
The three prominent companies with the trendy and elegant look are Square, Toast and Clover. The companies were launched about a decade ago to help businesses run smarter, faster and easier.
In some cases, they charge fewer fees, so accepting multiple credit cards is less of a burden, don’t require long-term contracts, and offer several other useful tools, including inventory and employee management.
“They got credit card processing into the hands of individuals and very small merchants,” said Dave Koning, senior analyst at Baird. “Square did a great job … it’s been a huge growth story. It’s half the business today,” he added.
But with customers giving more, where is the tipping point?
“I have to believe that tips are going to increase from where they are today. 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.
