To Tip or Not to Tip

Considering whether or not to accept credit card tips is very different from choosing to tip or not to tip. The latter is a consumer decision, but it is often driven by the retailer or the business owner’s policy and this choice can have serious impact on both customer and employee loyalty.

If you do not allow tipping on credit cards in your business, take a step back and think like a customer. Ask yourself these simple questions:

  • Do you expect to pay for your lunch, service or product on credit card?
  • What do you do when a business doesn’t accept credit cards: Do you leave? Run to the nearest ATM and (maybe) pay a fee for a cash withdrawal? Or, do you spend less to match the amount of cash you have on hand?
  • Do you consider the ability to pay on credit card a convenience, or is it an expected payment option?

If any one of these questions were answered with a “yes” then consider your loyalty to those businesses with payment policies you prefer.

Now, think of your business; are you creating loyalty by:

1. Making it easier for your customers to pay for their purchase – including a tip?


2. Creating staff benefit – from the income they earn from tips?

Service employees are attracted to a business where they will be rewarded for providing better customer service.  Consider how accepting credit card tips can help improve employee loyalty and create a win-win for customers and the business as well:

  • Transaction value and the percentage of tip typically increases between 12% and 18%1 – Customers often make impulse purchases if they are not limited to spending the cash in their wallet.
  • A $20 tip paid on credit, rather than a $10 cash tip costs less than a dollar per client transaction – this means a lot to the service worker who goes home with $50 more at the end of the night – or $250 at the end of a typical week.
  • Visa and MasterCard now have 500 million credit cards in circulation and few people leave home without one or the other; at the same time, in the last 5 years, the percentage of people who carry cash for every day spending has dropped by 50%.

Think about your business, customers and staff: allowing tips on credit card meets the demands of all three at the same time.  We know these decisions are not easy; but we are here to help by advising our clients, reminding you that the fees are typically a tax-deductible expense and keeping overall costs as low as possible to assist you in adding significant loyalty.

~ Mary Ann

1 Want to learn more about this statistic? Contact me for your industry info.