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Comment by lotsofpulp | Hacker News Reader

> which seems to have started at Starbucks (edit: at least that's where I first saw it occurring for counter services)

In my experience, it existed before in the form of tip jars (in NYC area), but really blew up when tablet point of sale systems like Clover came into the picture.

They earn a percent of the transaction, so adding a simple option to increase the amount of the transaction is a no brainer for increasing profits. And the act of actually having to press no tip is better at guilting people than simply being able to ignore a tip jar.

And then the point of sale providers got even more greedy and removed the no tip option, and started making it so users had to press “custom tip” in order to tip zero or otherwise increase the friction of not tipping.

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Pre-Covid, wife and I went and tried a Grilled Cheese place in town that had been open for at least a year. As we were checking out on the tablet they had, my wife asked something about the Tip prompt on it. The cashier said, "Don't worry about it, the tips just go to management."

So, makes me wonder at every other place, how well the tips are distributed.

The other area I have an issue with (although I still tip here) is with my barber. She owns the business and she's the only one I go to. Technically speaking, she's keeping all the profit, so is a tip still warranted?

My water delivery company added the ability to add a tip for the delivery driver. I'm waiting for the county trash collection to offer the same option.

> The cashier said, "Don't worry about it, the tips just go to management."

This happens, but it IS illegal in most jurisdictions.

There is obviously social pressure against pressing "No Tip". I feel it.

But then I remember that a tip is for good customer service. Starbucks didn't provide me any customer service, they simply transferred the coffee from their vat into my cup. At which point I can feel justified in declining.

I guess they're taking advantage of people who aren't familiar with this view of tipping, which I'd argue is the standard view in the U.S.

> They [Clover] earn a percent of the transaction, so adding a simple option to increase the amount of the transaction is a no brainer for increasing profits. And the act of actually having to press no tip is better at guilting people than simply being able to ignore a tip jar.

I have wondered about this as a possible motive. I assumed that shops paid a monthly fee, or perhaps a per-transaction fee. But they're paying based on gross revenue? Do all POS systems work this way?

I would assume all POS systems have to take a percent cut, given that they clear credit card transactions. They have to at least take 2-3% to cover the cc transaction fee.

Oh sure, I figured they pass that charge through. But even that charge is not a straight percentage, is it? I always thought it was a percentage plus a constant.

The CC transaction fee is generally about half of that. A normal sized restaurant will have their own merchant accounts for CC transactions and not pay the POS provider any percentage.

According to https://www.clover.com/pricing/quick-service-restaurant

Clover's fees are:

Card-present transactions 2.3% + 10¢

Keyed‑in transactions 3.5% + 10¢

So if you have a merchant acct, you'd have to negotiate rates with Clover et al. directly?

That's just one POS system, with a very unfavorable price. Most restaurants of medium size and up will not pay high rates like that on their transactions. If you have a merchant account you negotiate rates with your bank (or other account provider). The POS just connects with that. And yes, these POS systems are an expensive one-time purchase, with some yearly or monthly fees. However much more economical than paying on transactions.

If you're a smaller actor, there are POS systems that make their money on your transactions, but even among those Clover is a really bad deal. Compare to Zettle for example, that comes with a POS system, has no monthly costs and a flat 1.75% fee: https://www.zettle.com/gb/pricing

Every payment processor that I know of takes a percentage. The structure might vary (e.g. percentage cliffs based on revenue), but it’s never fixed on a monthly basis.

(So yes, they’re incentivized to introduce friction to the tipping flow — it always means more money for them.)

Were tip jars common in NYC before Starbucks popularized them? I don't remember them at all but maybe it depended on the type of place?

I would say they were common enough per my memory of 2000s, certainly not ubiquitous like the POS tipping options today.

It was common enough to be part of Seinfeld, at 1m10s:

https://youtu.be/OOZn95g2RDE

However, I do not feel like there was any cultural expectation of tips for counter service. Or I did not notice because I never used cash anyway.

Oh that's a great catch, and that episode was 1996, so wouldn't have been a response to Starbucks.

Now it's really got me wondering how far back those plastic tip buckets at mom and pop shops like pizzerias and deli counters go.

No. People would have stolen them.

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