Why Tipping Prompts Are Suddenly Everywhere

Article originally posted to The Wall Street Jounal.

Tacking a 20% tip on top of a $4 croissant is one thing, but now tip requests are showing up for locksmiths, baby formula and wedding dresses.

A range of business owners adding the option for gratuity to transactions say these nontraditional tips help them stay afloat in a competitive job market. Moreover, they say the revenue generated from gratuity can help them avoid raising prices further.

Consumers appear to be skeptical but are paying, for now.

Will Fischer took the same road trip from Salt Lake City home to Spring Lake, N.J., two years in a row. While he didn’t notice tip prompts at gas station mini marts last winter, he saw them in about a dozen places he popped into for power bars and chips this time around.

“I just wanted an energy drink, not a whole moral crisis,” says Fischer, who does underwriting for a financial tech company. He says he feels guilty saying no when the cashier is watching, so he tacks on an extra dollar about half the time.

“But this is a gas station off I-80 in the middle of nowhere, not a fancy restaurant in New York.”

Point-of-sale technology that lets businesses ask for a tip with just a tap is helping fuel the tip revolution, consumer-spending researchers and business owners say. The pandemic also meant that employees who left the house to work put themselves at risk, says William Michael Lynn, a professor who studies consumer behavior and tipping culture at Cornell University’s Nolan School of Hotel Administration.

“Employees were putting themselves at risk in order to service you, and so that may create a frame of mind and a habit that is going to carry forward,” Lynn says.

Business owners’ dilemma

Liz Vayda, who owns Baltimore plant store B.Willow, says the tipping option she added to transactions during the pandemic generates about $1,000 every two weeks. Five employees split the money. She acknowledges the requests aren’t perfect.

“It makes me feel uncomfortable as a business owner to know people are like, ‘Why doesn’t she just pay them more?’ It’s just not that simple,” Vayda says. Ultimately, she says retaining staff is more important than the possibility of annoying some customers.

And the tip prompt does annoy customers.

Rachel Waxman, a postdoctoral researcher in Baltimore, says she refuses to pay an extra $20 on a $100 fiddle-leaf fig when she visits B.Willow a few times a year.

“I don’t want them to raise their prices. At the same time, tipping seems kind of like a lazy way to try to get more money,” Waxman says. “It’s not a charity.”

Samantha Cassandra, who owns a children’s boutique in Woodstock, Ga., says she understands the pressure small businesses are under, but that it’s the owner’s job to pay employees, not the customer’s.

She was especially surprised to encounter an option to leave an extra 5% to 15% while checking out at online retailer Xpluswear this spring. The request offended her enough that she passed on the $100 sparkly romper she was about to buy to wear to a Taylor Swift concert.

“I would expect them to build the costs into their prices and would rather pay for shipping than this phantom tip where you have no idea where it’s going,” Cassandra says.

Xpluswear says customers have the option to select “none” when paying, and respects their decision.

Tip of the iceberg

Organic Life Start, an online baby-formula retailer, says it will reduce order fulfillment time from 24 to 12 hours if a customer leaves a tip of 5% to 15% while checking out.

“Tipping offers a very real way for us to let our customers speak up and thank our warehouse team for processing their orders,” a spokesman says, adding that the money goes directly to warehouse staff.

One in four people who book flights through travel website Hopper volunteer to pay an extra $5 to $10 when checking out, the company says. Customers often have no interaction with Hopper customer service or other employees.

The money goes to support general operations and isn’t directed specifically to workers.

The company says the fee was mandatory until 2018. “Over the years, we’ve had many customers express to us that they’re happy to pay a small fee to thank Hopper for finding them an exceptional deal, so we’ve kept the feature,” a spokeswoman says.

If people reach out saying they didn’t intend to add a tip, Hopper gives them refunds, she says.

It’s not unusual for bridal shops to now ask brides-to-be to leave tips for the stylists who helped them find their dream gowns. At A Little Something White in Darien, Conn., brides-to-be are encouraged to leave between $50 to $200 on their purchases when checking out. Those who decline must hit “Custom Amount” and enter zero.

Cashiers are instructed to say that “tipping is neither mandatory nor expected” before customers swipe. Dresses at the store range from $2,500 to $12,000.

Owner Ashley Krauss says the tips go to the stylists who worked with the customer, and that “the tip feature has no influence on my decisions for their compensation.”

Med spas, repair services

Unlike a tip jar, where you can see if anyone else is tipping, screens can make consumers worry they’re the only stingy ones if they decline, Cornell’s Lynn says.

After spending $295 on a rehydrating IV treatment at Clean Market med spa in New York City, Micaela Mangot was surprised to see a prompt to tip the nurse practitioner who administered the drip.

Still, she left 10% because “you don’t want someone sticking needles in you to hate you,” she says, adding that she plans to return.

Clean Market co-founder Lily Doran says they don’t expect gratuity, “but appreciate it when you feel that your practitioner has provided outstanding service during your visit.”

Heather Waites was grateful a locksmith from QuickPro could come to her Atlanta home on a Saturday after her garage door malfunctioned. But she says she felt the $150 payment, including a rush fee, should have been compensation enough. She says she tipped 20% anyway, since the locksmith could see the payment screen.

“It just felt really icky and weird. I had never tipped a contractor or repair person in my life,” says Waites, who works in talent acquisition. QuickPro declined to comment.