The dark side of tilting the touchscreen

It was nice. It was lightly frosted with a light pink frosting and topped with some delicate edible flowers. I thought it would be a real surprise to take him home. The barista collected the cake. $60 (£49) was way more than I wanted to pay and I activated the touchscreen cash register to complete the transaction.

I went on autopilot, clicked the center box, selected a 20% tip, and tapped my credit card to pay. Only after a tick appears on the screen, your transaction will be completed successfully! I realized I paid $18 (£15) for my morning latte, pastries, and gourmet pastries. I couldn't believe what I had done. Even as I blamed myself for making an impulse purchase, I couldn't help but curse the touchscreen.

As card payments have grown in the United States, so have remittance methods. You can still find tip boxes at your local cash register, but many tips have gone digital as point-of-sale (POS) systems require customers to enter their tips before completing a purchase.

Customers must consciously opt-out under staff supervision, and the rate is often higher than most people would choose. In a June 2023 bank tip survey of nearly 2,500 Americans, 32 percent reported feeling "uncomfortable" with pre-entered tip amounts in touch-screen payment systems.

But the annoying number might be the floral pink frosting on top of the cake. Experts say the move to digital remittances is aimed at increasing participation in remittances and increasing home payments, but the technology has a dark side. Consumers are often embarrassed to throw away money they don't have, and service providers are stuck in a paycheck culture. behavioral changes

Touchscreen POS systems are often used by small businesses, including catering establishments such as bars, pubs, cafes, and other restaurants. However, it is also a portable payment method in restaurants. If it seems like these payment systems have spread overnight, don't be mistaken.

With more companies moving to tablet-based technology, the COVID-19 pandemic has been a catalyst for more employers to adopt touch-screen systems, said Deepayan Biswas, professor of marketing at the University of Florida's Mooma College of Business. South. Its mobility, ease of use, and contactless payment capabilities make it ideal during a health crisis, especially as consumers fear handling cash due to the virus.

But according to Biswas, the biggest driver of demand for digital kiosks is a feature the payment processing company calls "smart funds transfer." This allows merchants to activate the tip screen during a shopping transaction and select the dollar amount displayed. At the consumer's choice. "Tablets allow you to add more options at checkout and generate more revenue by adding options like tipping," he says.

Some research data has shown that people who leave a tip on a touch screen leave a larger tip than, say, when they drop a coin into a jar at a cash register. Two-thirds of the 2,000 Americans surveyed by Forbes Advisor in 2023 said they had at least 11% more money left over when they shopped digitally instead of using cash.

Giving money is already an emotional thing, says Biswas. This topic is hotly debated. In the United States in particular, rates and estimated frequencies are often higher than in other countries because of the low wages in service occupations.

However digital remittances have created another variable. Consumers are being asked for their money in more places than ever before. This can often be as low as 15 to 20 percent, which most American consumers consider "standard." Besides being "annoying," as Bankrate survey participants noted, Biswas says the sheer volume of advice requests has changed consumer psychology and behavior.

The so-called "anchoring effect" is a cognitive bias in which many consumers default to the first option presented to them. This option then becomes the default choice for future decisions. So when a customer is presented with a screen with four tip options (the first is 20% and the last is "no tip"), they will often choose the first tip. (Anecdotally, Biswas said the option to skip the tip was given at the end.)

The more consumers do this, the more the first option becomes the "reference point" for deciding how much to donate in the future. The higher the percentage, the more likely customers are to tip more. "Change something and it becomes normal," says Biswas.

"Ten years ago, airlines didn't charge baggage fees. People don't like it, but now they're used to it." He warns that while rewards like airline payments, for example, may seem small, these small payments add up, and many companies don't want to do that. If you give up the extra income by asking for a quote, they will be here. You will stay in.

guilt factor

Some of this advice, as expected, is passed on to employees. Some service workers tip more than before the pandemic, according to data from payroll software Gusto. From March 2020 to May 2023, sales revenue increased by 42%.

But Rachel Diehl, Square's director of food and beverage communications, says that while tips are up "slightly," the company's data shows that base wage increases are more than a source of economic growth. The average base salary for retail and restaurant workers in September was $14.06, according to Square data, which measures service worker wages in 20 metro areas and is calculated using a limited sample of Square users.

(The Bureau of Labor Statistics reports that the median annual wage for food, beverage, and related service workers is $13.52.) But Biswas says some companies can keep base wages low with the promise that unlimited tips will boost total pay.

This allows the industry to keep base wages low, and if the moves aren't matched, workers risk missing out on expected or even budgeted wages, he says. Biswas said many business owners pass on increased tip income to their employees, but there is no guarantee that hourly employees will receive the full amount of tip money.

This is called "information theft," and a 2023 ProPublica study found that the problem is particularly acute in the restaurant industry. Touchscreen POS systems can put negative pressure on customers. According to Biswas, customers can feel guilty when they don't want to tip or feel they have to (for example, at a self-service restaurant where they've never interacted with an employee but are asked to leave a tip anyway). ).

Because many of these digital POS machines tip by default, “you have to actively refuse to tip. You have to say no and that can create a lot of guilt,” he says. Servers often notice customers choosing tips that increase the pressure. Biswas explains that the debt factor can be especially difficult for people on tight budgets or marginalized populations trying to fit into social norms. They may feel that they have to spend more money on goods, even if doing so puts their financial security at risk.

"We all have budget constraints, so you shouldn't feel guilty," says Biswas. "Businesses need to consider the long-term social impact of touchscreen payment systems and tipping messages."

While some customers feel guilty about having to hand over their cash, others have tipped less since the machines were introduced. Many people believe that cash purchases have gotten out of hand, causing "inflation." Bank rate data shows that fewer people tipped restaurants in 2022 than in 2021. 66% of respondents said they have a negative image of Congress.

Confusion about when and how much to donate was also reported. As commerce seeps into industries that traditionally didn't depend on it, consumers aren't sure whether to shell out money for simple services like buying a sandwich or a cup of coffee or getting help at a convenience store.

These issues of confusion and inconsistency arise again for part-time workers, for whom the benefits of remittances are already unclear. Restaurant workers in the United States are paid well below the minimum wage ($2.13 [£1.75] - the federal base rate for tipped employees), and customers and employers have an implicit understanding that tips make up the majority of their income.

Employees suffer when turnover drops when people become irritated, angry, or confused. But more significantly, consumers think companies should pay employees higher base wages to ensure that discretionary tips don't boost or undermine anyone's earnings.