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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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July 8, 2019


A Tip for Summer Travel

Because I study payments, people like to brag to me about the ways they pay. "I never use cash." "I don't carry cash, even when I travel." "I buy a pack of gum with my phone." "I haven't seen a dollar bill in five years." Et cetera.

Lots of times, I get these comments while I'm traveling. Like me, the people I chat with are traveling. Handing over a bag to a skycap. Getting housekeeping services in a hotel. Eating a burger at the bar.

So please tell me, all you smartphone-carrying, thin-wallet sophisticates, how do you tip?

When I was a kid, hotel rooms had tiny paper envelopes "for the maid," my father said. Filling the envelope was the last step before loading kids and caboodle into the car. Before we got to drink Tang and eat powdered-sugar donuts, we thanked the housekeeper. Like Tang, those envelopes are becoming an artifact of the past, with the result that you might expect: declining tip income for service workers.

Plea to app developers: find a way to make it easy to tip on the go. There are plenty of tipping apps out there, and from my point of view, they work fine for relationship tips—for example, an app payment to a hair stylist. But what about the one-time tip? When I'm running for the subway I can't (or won't) stop to open or download an app and key in a dozen letters or numbers to thank Keytar Bear, a busker who performs here and there in Boston.

This brings up a key obstacle to apps for tipping: not only do I have to have the app, but the service person does also.

What could be easier to adopt and use than the $2 bill I keep in the outside pocket of my backpack for Carlos, the best guitar player in Harvard Square? I don't have to ask, "Do you accept this or that?" I don't scan or key. I just wave to Carlos, drop the cash, and keep moving.

To tip in cash, we need to carry cash. About 20 percent of respondents to the 2017 Diary of Consumer Payment Choice reported that they carried no cash on any of their three reporting days. My Atlanta Fed colleague Oz Shy cites Rule #1 of tipping: "There are no rules about tipping." So I'll offer a guideline, not a rule: "Carry a bit of cash."

If you haven't found a cashless solution, go to a bank or credit union and get yourself a stack of $2 bills (Thomas Jefferson on the front, signing of the Declaration of Independence on the back, so appropriate in July). Stash them with your carryon bag.

It's summer travel season. In 40 states, the minimum wage requirements are lower for tipped workers. How do you thank the people who made your stay clean and comfortable? How do you tip?

Photo of Claire Greene By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed

July 8, 2019 in cards , credit cards | Permalink

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