Today, tips are better called “tips” and are often paid cashless: when the card machine makes suggestions, customers may have to actively say no. Pleasant or annoying?
Once upon a time in Germany: a simple “That’s right” or “The rest is for you”. Many people used to say this patronizingly when paying in cash and give the waiter or waitress a tip that often only rounded up the amount a little. Today, in the age of digital payments, things are different. While tipping used to only be common in restaurants or for services such as hairdressing, pedicures or taxi rides, today you are also asked to give a so-called tip in places where it was not previously normal.
In a luxury patisserie on Kurfürstendamm in Berlin, for example, the bright blue options on the touchscreen display are “7%”, “10%” and “20%”. Only when you look closely do you notice that “Free entry” and “No tip” are also options. At the hip hamburger stand not far away, the card machine only communicates in English: “0%”, “10%”, “15%”, “20%”, “25%” are possible tips. 25 percent? For the double cheeseburger that is simply handed over the counter for 9.50 euros, that’s a whopping 2.38 euros.
In the United States, many restaurants pay their employees less than the minimum wage because they assume that tip income will easily make up the difference. US researchers attribute the current trend in America towards much higher amounts of so-called tipping (“Tipflation”) to Corona, among other things. Accordingly, consumers were more generous in the early days of the pandemic to support delivery services, restaurants and other hard-hit companies. Then it took on a life of its own.
Tipping culture is changing
But why has tipping culture changed so much in Germany recently? Why are you asked for a tip when it’s actually self-service? In any case, the time of tip cups at the checkout that were easy to ignore seems to be over.
If payers are now required to tip more often via touchscreen, many in Germany feel compelled to give a large sum. Economists like Christian Traxler from the Berlin Hertie School call this “nudging”. The behavior of customers is controlled and even manipulated, says the behavioral economist.
“It is often communicated not only that a tip is expected, but also in what context it would be considered appropriate,” says Traxler. However, if programmed values are very high (perhaps even outrageously high for many), individual tips tend to be higher, but at the same time the number of people who give tips at all decreases. A tightrope act because customers should be nudged but not alienated.
Customers are reminded to give tips
Economist Sascha Hoffmann from the Fresenius University of Applied Sciences in Hamburg says that the technical trick of reminding customers to leave a tip when paying at the card reader is extremely helpful for service staff and restaurateurs. Hoffmann has researched tipping levels. He knows that Germany is still a cash country in comparison, but the proportion of card and smartphone payments is growing.
“Studies show that, on the whole, people tip less when paying by card,” says Hoffmann. “This has a direct negative impact on the earning potential of employees in the catering industry and other service professions. The hourly rates there are not particularly high anyway and the employees are particularly dependent on tips as an additional source of income.” According to Hoffmann, if the tip goes away, the industries may become even less attractive, which could further exacerbate the labor shortage in service professions (especially in the catering industry).
Many customers have always found it stressful to calculate a well-rounded tip in front of a waiter and possibly other guests. In addition to mental arithmetic problems, social norms come into play, as most people want to “behave properly” and not be perceived as stingy.
Tipping in unusual industries
However, the supposed help of card reading systems, which are now also being used in industries where tipping was previously unusual (for example in bakeries), could be problematic, stresses Hoffmann. “Overall, there is a great risk that customers will be induced to behave in a way that they do not want to by specifying tip amounts. In other words, they may see the guidelines as relieving in the acute decision-making situation, but later regret that they tipped too much.”
If, for example, 10, 15 and 20 percent are available as options instead of 5, 10 and 15 percent, excessive tipping could be triggered by the “bias towards the middle” known from psychology. The decoy effect could also strike. If a tip amount is intentionally set absurdly high, then the other suggestions, which are actually too high, suddenly seem appropriate.
So-called dark patterns (manipulative design designs) exploit these psychological effects (bias towards the middle and bait effect) and can deceive consumers. Suggestive designs are otherwise common in online marketing, for example, when attempts are made to obtain the consent of website visitors to set marketing cookies.
However, most tipping problems probably stem from the social norm that money and therefore the amount of the tip are not discussed openly – especially if you could be considered a miser.