Last year, a curious invention called “DipJar” was released for testing in small number of businesses, which has a credit card reader so people can tip using plastic. Results haven’t been fantastic, though there are issues with non-cash tips to begin with.
DipJar not exactly a smashing success
In summer of 2012, buzz got around the news wires about a new invention called the DipJar. It was not, as some might have believed, a jar that is marketed exclusively to tobacco chewing enthusiasts, but instead a tip jar, for the twenty-first century.
It’s a plastic contraption about the size of a coffee grinder. It has a credit card reader, where one can “dip” their card and leave a $1 tip for the coffee shop employees, restaurant workers, whatever.
However, it wasn’t the resounding success the inventors were hoping for. After putting the device in a few stores in New York City for a test run, it typically only yields a few dollars every two weeks for most servers, according to NBC News.
In fairness, the DipJar is a great idea. According to NPR, a person doesn’t have to sign a receipt or enter a PIN to complete the transaction, as some credit and debit card companies don’t require signatures on transactions larger than $25. The way it works is that the card is “dipped” into the reader and DipJar pools a portion of the funds, usually 80 cents on the dollar, and cuts a check to servers every couple of weeks, usually around payday.
Most people get less than $10 every two weeks. Granted, it’s only in six locations for the time being, almost entirely in coffee shops. The good news about that, according to NBC News, is that baristas aren’t classified in that state as tipped employees, meaning they earn full minimum wage of $8.90 per hour at least. Tipped employees earn the federal minimum for tipped workers, $2.13 per hour.
Part of a larger problem
DipJar is an attempt to solve the problem of tipping presented by using credit or debit cards. The casual observer might remark “what is the point? You can just write the tip in on the receipt – I hope nobody’s paying for that thing!”
Before the tip you write in goes to the server, card processing fees – also called interchange fees or “swipe fees” – have to be deducted, often a small percentage of the total bill. Typically that’s done by the restaurant owner and then the funds are distributed after processing though as USA Today points out, that doesn’t mean all the funds will get to the server. Unscrupulous owners will use pooled tips to kick back to back-of-house staff like cooks or dishwashers, instead of the people who earned said tips.
Increased debit and credit card transactions have also led to a number of low wage employees who earn tips having to deal with diminishing tip income. Tips are the difference between starving and not if you make $2.13 per hour.