On tipping and credit/debit cards

In My Humble Opinion
1

I’ve been reading another thread discussing tipping and it’s got me to wondering…

How do you manage tipping when paying by credit/debit card?

I find that some restaurants we go to, the handset gives you the option to add a tip before you enter your PIN, but more often than not, by the time the server passes you the handset, it’s got the amount up there on the screen and you’re just being prompted to enter your PIN.

Given that tipping in the UK is less prevalent than in the US, do the machines in US all tend to have the ‘add a tip’ option? Or do you leave a tip in cash on your table?

2

Typically in the US, when paying by credit card at a restaurant, they run the card then print out a slip for you to sign, which has a blank for the signature. (There’s also a duplicate copy for your own record.) The signature isn’t required for the credit card charge, but it’s extra protection for the restaurant in case you, say, claim “that wasn’t me” the day after running up a huge alcohol bill and regretting the big tip you left in your drunken happiness.

Anyway, there’s a printout of the total, with a blank for tip and then a blank below that for the new total. So if you’re paying by card, you may well put the tip on it too. Other people may pay the tip portion in cash, like if they want the waiter to have their tip right away, or if they’re worried that the management may be the type to skim tips from the waiters. Sometimes, someone at the table insists on at least paying for the tip when the bill is being paid by someone else on their card. In the instances when that’s happening, I tend to write “on table” in the tip line of the receipt.

We do have machines that don’t require physically signed slips, but they don’t use PINs for real credit cards; they do for bank cards (with MasterCard or Visa logos) that are tied directly to your checking account. These machines tend to be used at regular stores, gas stations, and fast food restaurants. There may be an electronic signature pad for you to sign.

3

Thanks for that very in-depth reply!

With regards adding the tip to the receipt, does the tip then go through as a seperate charge? Because surely they’ve already put the original charge through in order to get you that receipt?

4

In my experience they put the charge through as a preliminary thing, then put through the adjusted “with tip” charge when running the balances for the day. When I use my debit card, I often see the initial charge hits my bank account immediately, then the charge is rescinded and the total with the tip hits up to 48 hours later.

5

No it doesn’t. There’s only one charge. I think when they process your card the first time they only reserve the amount but not actually charge anything. After you’ve left they presumably finalize the transaction with the exact amount.

I don’t know how much they reserve the first time. Is it the amount of the bill or is it plus a reasonable tip? If it’s just the basic bill then I’m surprised that they can go back and finalize it for more. If they reserve a tip the first time then how do they know how much to reserve? I’m guessing that they only reserve the bill amount because that’s all you legally have to pay. If they successfully reserve $30 and then it fails when they try for $35 then there’s not much they could do about it especially if you’ve left by then. I guess they can try 34, 33 , 32 …

Another option you can do is pay the bill by credit card and leave cash on the table for the tip.

6

What’s this handset business all about? Like a portable card reader thing?

7

Yeah, portable card reader, they put your card in, you punch in the numbers, it prompts you if you want to add a tip, and then produces two receipts, right then. One for the the server, one for the customer. Done.

8

Had a great answer, but I pushed the wrong button and it went poof. Anyways…

Canadian “Interac” debit cards are realitme, online and immediate; when you approve the transaction and put in your PIN, the money is deducted right then from your account. There’s none of this faffing about with holds and posting later. You choose whether to add a tip and how much before you okay the transaction; then it goes off to your bank and gets approved (or not).

One semi-exception is paying at the pump. You put in your card and enter your PIN; the pump does a debit transaction to pre-approve a certain amount, then unlocks the nozzle. You fill up. The transaction that gets posted is the final amount, though. In any case, the transaction is done when you leave the pump.

Canadian debit cards have always used PINs. This differs sharply from the traditional Visa/MC credit cards, which were signature-based and not realtime. In restaurants, you would present your credit card, the server would take it and run it and bring back a slip, where you would enter the tip amount and sign. Then the charge showed up in your credit card account a few days later.

Most credit-card transactions are handled electronically these days, even if they aren’t real-time; the imprinting machines are pretty rare. Though I saw one in Bancroft a couple of months ago.

A debit card user at a Canadian restaurant would usually have to go to a central cash desk where the terminal was, while the servers would bring the slip and a pen to the credit-card users. This convenience favoured credit users.

Recently, however, both credit cards and debit cards in Canada have been changing to a chip-and-PIN system. A PIN was introduced for use with credit cards.

This change meant that merchants have to replace or upgrade their terminals, and many restaurants have been changing to portable terminals that take both debit and credit cards and operate almost identically for both debit and credit. The server brings the terminal to the table and the whole transaction takes place there, both debit and credit. (Swiss Chalet, notably, was an early adopter of these.) You put in the tip amount at this time.

Canada has never has Visa/MC-branded debit cards. There has been some noise about introducing them here recently, but their biggest disadvantage is that the transactions take time to go through the Visa/MC system rather than being immediate, so it’s possible to put in a whole bunch of charges quickly and overdraw your account in a way that you can’t with Interac.

9

They do have these in Canada, I currently use one regularly and it’s use doesn’t count towards my list of transactions. Confuses people sometimes it seems.

10

Interesting. It was finally released? What bank/credit union?

11

You are forgetting how primitive the US banking system is: no chip and pin here, they give you a slip and you sign it.

pdts

12

I had a bartender friend who used to tell his customers he preferred cash tips on credit card bills. He said that his bar only required him to declare a percentage of his sales. Credit card tips on the slip had to be declared, but not cash.

Seems like this was a bit dishonest, and potentially taking money out of his own pocket. I would probably be more generous with a tip if I could just write a number rather than fish into my wallet to find an appropriate bill. Or worse, asking him to break a larger bill and appear stingy with the tip.

13

If I have cash, I tip in cash, even when paying on a card and even if the machine or the slip give the opportunity to add a tip to the carded amount.

I don’t necessarily know how the management is going to handle the payments they take in on cards, but I’m pretty sure the waitress working my table is going to be the one to pick up the cash.

14

In the UK, there is no set policy on how to manage card-based tips. Some establishments use card-based tips to offset the mandated minimum wage paid to servers. Cash tips must be distributed as per company policy (usually by being distributed equally among wait and kitchen staff). There is a move to require companies to treat card-based tips the same as cash, or at least inform customers of how tips are handled.

In general, if I tip, I prefer to tip with cash even if I pay by card - that way, I know the tip get distributed to the waiter or chef who has done a praiseworthy job.

Si

15

As a bartender I do get some customers who ask me whether I prefer a cash tip vs a CC tip; I’m being truthful when I say it honestly doesn’t matter to me. If you tip me on your credit card I immediately pull the cash out of my register and it goes straight into my tip jar, just like if you’d handed it to me.

And I’ve never once had a CC tip (once I adjust it on our CC machine) show up declined; most credit card companies automatically factor in a 20% tip from bars/restaurants when the initial transaction is approved. Or so I’ve been told by a couple of people in that biz. All I know is that it’s never been a problem.

Some bars do automatically “pre-authorize” your card when you open a tab, for an amount up to like sixty bucks, to make sure you have the money to cover whatever your final tab is; that money isn’t credited back to your account for sometimes several days. I’ve never worked for a bar that does this but I imagine they get some angry phone calls about it when people check their card balance the next day. If you only have sixty bucks on that card, and you only spent $15 of it at Bar X, but you can’t access that money for a couple of days til it’s credited back to your card…I can imagine that upsets a few people… :smiley:

16

I’ve worked in hotels and what you have to understand is there are various means to process payments depending on the merchant agreement.

For instance, when you put through a charge, it’s not really put through till the close of the business day. What the resturant gets is an “approval.” This says that the credit card company (or debit processor) says that they will OK the charge, regardless of the outcome.

Then when the resturant closes for the day and the charges for all credit cards are processed in one lump sum.

Now the approval or “OK” depends on your merchant agreement and history. If you have a high level of fraud the bank that processes the credit cards or debit cards, is going to require a higher level. Sometimes in some places when you run a debit card it is automatically checked against the bank account in real time. This isn’t common as it is the most expensive way to process a charge, but it’s the most secure.

Normally your establishment gets an upper limit. Usually like $300 per charge. So if I run a credit card or debit card through and the end result is less than $300, the processor gives you an immediate charge ASAP.

Merchant agreements also permit downtime authorizations. For instance, in my hotel, if we lost power and couldn’t process transactions, we’d notifiy our bank (Bank Of America) and we were issued a code. That meant from that time on, till the time we called saying the power was back on, we were automatically covered for any charge less than $150.00. Those over that amount had to have phone authorization or had to wait.

As for tips, as I said, the actual charge is sent through at the end of the business day, so it is only one charge. If I had a big tip, I would process it seperately (usuing manual corrections) because that way if the customer disputed it, they would only dispute the tip part.

As for paying the server. With a credit card it depends on local laws and company policy. Some companies paid out servers nightly on tips. Other did not. They tips from credit cards appeared on the weekly paychecks.

17

I’ve never seen one of these used in the United States. I remember reading an article about 6 months ago or so that was bragging (absolutely bragging!) about the fact that one was going to be deployed for the first time in an American restaurant (I think, in Las Vegas). In the meantime, I was already used to them from working in Ontario, which was the first place I’d seen them, back in 2006 or '07. They were great: they bring the machine at the table, hit one of the buttons for a quick, exact percentage tip (or an option to type your own, discrete amount), get you’re receipt, and you never lose sight of your card. There were only a few places that we went to that had them, though.

Here in the Mexico City area (but not Mexico in general), these machines are in wide-spread use at restaurants and gas stations (no tip option as the gas station, though, and also all gas stations are full service with no self-serve option). No worrying about someone skimming your card, and it’s faster and more convenient. I hope they’ve caught on in Michigan by time I get back there.

18

The only place I see them is on airplanes. A couple of the airlines have gone cashless and they use these to ring up drinks.

19

Although I don’t see them often, I know they’ve been used in the US for at least 2 years now. I used one for the first time at a Legal Seafoods in Boston in April of 2008. They definitely still are not common though.

20

It seems I remember wrong. It was the first in Nevada, not the USA: Linky

Still, October 2009? With sooooo many restaurants in Nevada? While here in “third world” Mexico they were already all over the place.