Tipping: increasingly complicated, increasingly expensive

Frank Sinatra was known for giving waitstaff hefty $100 tips (€86.10 in today's exchange rate). That was a long time ago, and back then, $100 was still quite a lot of money. What tipping rules apply today, and why are customers confused?

Many people wouldn't hesitate to tip a waiter, a hairdresser, a bartender, or a porter carrying a heavy suitcase through a hotel. In many countries, there are clear, long-standing norms for this.

But what about the barista at Starbucks ? Or the person taking your order at the fast-food counter? What about at a self-service kiosk? To tip or not to tip?

The history of the Tip

Most historians agree that tipping began in medieval Europe, when aristocrats gave tips to their servants or farmworkers. By the 19th century, the idea had disappeared in Europe, but by then it had arrived in the United States . From there, the "tipping wave" swept back across the pond.

Today, people tip for a variety of reasons: to feel better, to impress others, to compensate for the low wages of waitstaff, or because they are asked to. Tipping is primarily driven by the motivation to help the server or to reward good service, says Michael Lynn, a professor of services marketing at Cornell University in the US who studies tipping.

Others tip to fulfill a perceived obligation, Lynn told DW. Still others are more self-serving. These people tip to receive preferential service in the future or to gain or retain social recognition, according to Lynn, who is currently writing a book on the subject titled "The Psychology of Tipping: Insights for Service Employees, Managers, and Customers."

Tip Digital

New technologies are also changing tipping culture. In the past, people would leave a few coins or bills on the restaurant table or drop their tip into a jar next to the cash register. The increasing use of cards, apps, and touchscreen payment systems has created additional tipping options—and confused customers.

"We've seen an explosion in tip requests, even though the amount of tips hasn't changed drastically," says Ismail Karabas, associate professor of marketing at Murray State University in Kentucky. During the COVID-19 pandemic, many businesses have moved even further away from cash and switched to contactless and online payments.

POS providers that offer digital payment devices have decided to integrate a tip request. "The tip request is already integrated into the process, so businesses have to decline this option. Many didn't do this for various reasons, and then there was an inflation of tip requests across the board," Karabas, who specializes in service marketing, tipping, and advertising, told DW.

Customers under pressure

What should customers do when offered pre-calculated tips of 15 percent, 20 percent, or 25 percent? Simply press a button and be done, take their time adding their own amount, or give nothing at all while looking the cashier straight in the eye?

Customers often choose a preset tipping option rather than waiting in line. This gives tech designers significant influence over tipping. Lynn argues that the question of how user interface design affects tipping is a "hot new area of ​​research." "A larger tipping option increases the amount given—even if it may decrease the proportion of those who tip," he said.

Designers have an incentive to make tipping the default option. This makes it difficult for customers not to tip. Those who want to opt out have to fumble around or ask how to do it. "More tips mean better income for the employees, but also for the tech designers, since they charge a fee for each transaction that goes through their systems," Karabas added.

What do tippers actually think?

A May 2023 YouGov survey of the US, UK, France, Germany, Denmark, Sweden, Spain, and Italy found that the vast majority of restaurant diners in these countries would tip between five and ten percent and not much more. The US was an outlier: two-thirds of tippers added 15 percent or more.

The survey also found that many Americans would tip in a restaurant despite poor service. Another Pew Research Center survey on American tipping culture, published in November 2023, examined tipping and so-called tip inflation in the United States.

The Pew report found that 72 percent of adults say tipping is actually more expected from service workers than it was five years ago. Furthermore, only 34 percent of adults surveyed said they can easily recognize when tipping is actually appropriate.

Tips for tips

How do you deal with the new tipping culture? First, you should find out what the situation is like locally and how employees are paid. Do they earn minimum wage, to which tips are added? Or is the wage significantly below minimum wage, and tips are necessary to supplement take-home pay? In some places in the US, being paid below minimum wage can mean that employees earn only around two dollars an hour.

The tipper should also understand the system. For example, what does the 25 percent button in the app mean in dollars and cents?

Nor should anyone put pressure on the person waiting behind them or the group at the table - although admittedly, that's probably the hardest part, especially on a date.

A guilty conscience shouldn't be a reason for tipping either. "Tipping out of a guilty conscience leaves a bad impression on customers, makes them angry, and discourages them from returning to the same establishment," says Karabas.

To avoid confusing or unexpected tip requests, Karabas advises customers to simply pay in cash. This way, they have everything in hand—even if it's in the form of a brand-new $100 bill.

This article has been adapted from English.