Tips Go Digital and Make Restaurant Life Easier

COVID-19 has been the ultimate disruptor for the restaurant industry and has been a catalyst for change that would have otherwise not been on the table for consideration. Usually, restaurant owners don’t have the time to improve procedures and systems, but the pandemic has provided downtime to focus on shifting their payment systems to work better for themselves, customers, and employees.

With more customers ordering and paying online to minimize cash handling when making purchases, one area that has seen tremendous growth is eTipping, or electronic tipping. This new way to pay tips digitally keeps customers safe, boosts restaurant income, and helps get the 15 million employees who work in the U.S. restaurant industry paid quickly.

What Is eTipping?

A digital tipping solution is exactly what it sounds like. Instead of paying out bartenders, servers, and other floor staff in cash tips, it is a method of distributing tips electronically. And it is very easy for customers, who pay with credit or debit cards to quickly add a tip to their bill electronically. Reed Daniels, CEO of Red’s Savoy, a Minnesota-based pizza chain, has recently adopted eTipping, which has made life better for his customers, employees, and managers. He no longer has to stand in long lines at the bank for cash to pay his employees their well-deserved tips or make change for customers. And there are many other benefits to this new way to tip.

Digital Tipping Benefits for Employers

Digital tip disbursements have several benefits for employers, including reducing:

• the administrative burden associated with ensuring each employee receives the exact tips they are entitled to upon reconciliation of credit/debit card transactions
• the amount of on-hand cash needed to tip employees at the end of their shifts
• errors associated with determining tip amounts, especially when tips are shared among different co-workers
• risk associated with having a lot of cash on the premises (i.e., loss, theft, security)

Benefits of Digital Tip Disbursements for Employees

Tips are estimated to account for 70% of some restaurant employees’ total income, which makes employees excited about the benefits of eTipping:

• Instant availability to their tips as they make them, without having to wait for credit/debit card reconciliations
• The convenience of receiving tips and their regular pay in the same form. Rather than receiving cash tips and a paper check, for example, employees can receive both digitally (via either direct deposit or instant payment).
• No issue when a restaurant lacks sufficient cash to pay out tips
• Employees receive tips in a safe and secure way, without having to leave their place of employment carrying a lot of cash on their person. They also do not have to handle paper money that carries germs.
• Digital tips encourage more favorable financial options. Employees are known to keep their tip income “under the table” so they do not have to pay taxes. eTipping allows restaurant employees to build credit and it makes it easier for employees to track tips.

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