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Tipping Goes Virtual as COVID19 Impacts US Restaurants

November 17, 2020

COVID-19 has affected restaurants harder than many other industries mainly due to the lack of cash flow. Not that restaurants aren’t making the money, they just make it differently. Most payments are electronic to avoid the risk of passing germs with cash (not necessarily because of the lower accessibility of it).

That leaves restaurant owners and wait staff with a problem. How do they get paid? If there’s no cash, owners have to run to the bank, which isn’t as easy as it used to be thanks to the pandemic. Wait staff, who deserve to have their tips right away, are now forced to wait, sometimes as long as two weeks until they receive their paycheck.

Fortunately, many restaurants have started tipping virtually, here’s what that means.

eTipping is an Option

Many restaurants have turned to eTipping, similar to what Uber and Lyft offer. At the end of the night when the restaurant closes out the tabs, they electronically send your tips to your bank account. You should have the funds within a day (usually less) this way.

Here’s the problem.

It doesn’t work for every restaurant or employee, for that matter. If an employee doesn’t have a traditional bank account, it could cause more trouble than it’s worth.

Pay Cards

Another more common solution is pay cards. They work like debit cards and restaurant owners can load the cards with the appropriate tips at the end of each night. Employees then have the money available on a card that they can use like a debit card.

Here’s the problem.

Not all retailers or businesses accept all cards. Many pay cards also have fees, sometimes a monthly fee and sometimes a fee for each use. This reduces an employee’s pay, which right now is the last thing anyone needs.

The Benefits of Electronic Tipping

No matter which method you choose, there are many benefits of electronic tipping including:

  • You don’t have to worry about cash flow. With fewer customers paying cash, you’d have to constantly run to the bank to payout tips in a timely manner.
  • You don’t have to resort to payroll tips. Waitstaff and bartenders are used to receiving tips the same day they earn them. Making employees wait until payday would mean putting them off for 2 weeks. This could cause bill paying problems and financial destruction.
  • There’s a lower risk of mistakes and theft. Dealing with cash is risky business. Withdrawing large amounts of cash and doling it out creates plenty of room for errors, misplaced cash, and even theft.

Virtual tipping isn’t as ‘new age’ as it sounds and it could be more beneficial for restaurant employees in the long run. Restaurant owners must work out the kinks, find the right program that suits their employees, and make sure it’s an easy enough system to adapt during these trying times when every aspect of our lives are changing whether we want it to or no.

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