Could Your Credit Card Tip Be Hurting Your Server?
According to an article on Creditcard.com, “servers’ credit card gratuities may be reduced to offset the cost of interchange fees the restaurant pays to process credit transactions.” Interchange is a large part of the cost that businesses incur for accepting a credit or debit card. It’s charged as a percentage of the total sale, including a tip. That means the larger the tip, the larger the fee.
Some businesses are reportedly offsetting the costs against the waitstaff’s income, a practice that may seem unfair, but may also be necessary. Take this case for example: One of our contributors is actually great friends with a bartender. Known for being the “cute blonde” behind the bar, her loyal patrons shower her with overly generous tips. A $30 tab is often bolstered by a $20 gratuity, for a total of $50. In one instance a $20 drink order came back with $100 written in for her, along with a personal note and phone number. She thought it was a sweet way for stranger to ask her out but the owner was furious at the end of the night. He kept going on and on about how he was glad the customers loved her, but that the charges on her enormous tips were starting to hurt the bottom line. Though we’re told it’s never gotten to the point where it comes out of her end, she pretends the credit card machine is broken from time to time to encourage cash.
The author at creditcards.com recommends tipping in cash whenever possible. It saves time for the server, allows them to cash out quicker at the end of the night, and is less likely to be recorded as income with the IRS. But if cash isn’t your thing, “when in doubt, just tip well.” It’s always appreciated regardless.
We covered this topic back in December. Full article: Consumers Can Help Businesses Save Money on Their Credit Card Processing
Image Copyrighted by 123RF.comLast modified: February 21, 2013
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.