The sneaky trick American businesses are using to get extra tips: Square payment expert reveals how suggested amounts on gratuity screens are being increased

An expert in the Square ‘tipping screen’ payment system claims that American businesses are using them to get employees extra tips in a world where many believe they experience ‘tipflation.’

It was revealed in September that almost three quarters of Americans leave a higher tip when they are presented with a digital screen at check out, a new report has found. 

Many base their tips on the pre-tax or post-tax subtotal based on local sales taxes, with pre-tax tipping not factoring those high rates into what servers take home.

That also factors in to what Square, the most prominent makers of the tipping screen, offer clients.  

‘Sellers decide whether tips are calculated before or after taxes,’ a spokesperson for the company said, noting that they also allow custom tips.

Post-tax tippers may pay the highest in the five states with the highest average state and local sales tax rates – led by Tennessee and Louisiana at 9.55 percent, followed by Arkansas (9.44 percent), Washington (9.40) and Alabama (9.24)

Post-tax tippers may pay the highest in the five states with the highest average state and local sales tax rates – led by Tennessee and Louisiana at 9.55 percent, followed by Arkansas (9.44 percent), Washington (9.40) and Alabama (9.24). 

Alaska, Oregon, New Hampshire, Montana, and Delaware, on the other hand, have no sales tax. 

The diner involved may make their policy either the pre-tax total or the entire bill if they want their employees to take home more, according to the Fort Worth Star-Telegram.

Emily Post Institute – a group of etiquette experts – say that wait-staff should receive a pre-tax tip of 10 to 20 percent, while 10 percent to-go orders or curb delivery is appropriate but not required.

Some 73 percent of people said they gave a gratuity at least 11 percent higher when tipping digitally, as opposed to with cash. 

The study by Forbes Advisor also found that 31 percent of people admitted feeling ‘pressured’ to tip for a range of services ranging from sit-down meals and coffees to taxis. 

An expert in the Square 'tipping screen' payment system claims that American businesses are using them to get employees extra tips in a world where many believe they experience 'tipflation'

An expert in the Square ‘tipping screen’ payment system claims that American businesses are using them to get employees extra tips in a world where many believe they experience ‘tipflation’

It comes as more than half of Americans believe we are living in an era of ‘tipflation’ – with two in five people blaming popular iPad check-out screens for the trend, according to an exclusive poll by DailyMail.com earlier this year. 

Americans are increasingly being presented with requests for a tip – with prompts spilling out from bars and restaurants and into stores, take-out chains and even self-service machines.

So-called ‘tipflation’ has been in part sparked by the mass-adoption of iPad checkout screens which offer customers the chance to add gratuity. 

Such systems boomed in popularity during the pandemic when retailers stopped accepting cash due to fears notes could spread Covid-19.

And according to the latest study by Forbes Advisor, the constant prompts are causing people to tip more. 

It found that 22 percent of people were tipping between 11 and 15 percent more, while 21 percent of people were tipping between 16 and 20 percent more. 

Some 14 percent were adding 21 to 25 percent more on top to purchases as a result of being presented with a digital screen, according to the findings. 

One in three people feel pressured to tip, the study found, while 18 percent admitted it makes them feel ‘uncomfortable.’

Many base their tips on the pre-tax or post-tax subtotal based on local sales taxes, with pre-tax tipping not factoring those high rates into what servers take home

Many base their tips on the pre-tax or post-tax subtotal based on local sales taxes, with pre-tax tipping not factoring those high rates into what servers take home

Nearly a quarter of people also said it makes them feel ’embarrassed’ or ‘guilty.’

However not all respondents felt negatively towards adding gratuity, the study found, with 36 percent saying it made them feel ‘happy’, and 33 percent saying they felt ‘grateful’. 

When it comes to which services people are most likely to tip for, servers at sit-down restaurants topped the list – with 58 percent of respondents saying they would tip after a meal. 

Some 46 percent said they would tip food delivery drivers, and 39 percent said they would typically offer gratuity at a bar. 

Only 20 percent, however, said they would tip for child care, and just 17 percent said they would offer extra to movers. 

A separate survey earlier this year found Americans were becoming ‘stingier’ with their tipping habits 

The study by Bankrate found the number of people who always tip for servers at a sit-down restaurant has declined by 12 percent in the last four years – from 77 percent in 2019 to 65 percent in 2023.

Ted Rossman, Bankrate senior industry analyst, told Dailymail.com at the time: ‘Inflation and general economic unease seem to be making Americans stingier with their tipping habits, yet we’re confronted with more invitations to tip than ever.

‘While a lot of people said they would tip more generously during the pandemic, as there was a groundswell of support for service industry workers who kept showing up at work, that enthusiasm hasn’t lasted.

‘There has also been a lot of tip creep – being asked to tip for things that haven’t historically warranted a tip. I’ve seen tip requests at self-checkout machines and when booking travel online. These are blatant revenue grabs.’

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