Tech is allowing businesses to overcharge you in tips

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You might be wondering why I, a tech columnist, would write about tipping. The reason is that tipping is no longer just a socioeconomic and ethical issue about the livelihoods of service workers.

It has also become a tech problem that is rapidly spiraling out of control, thanks to the proliferation of digital payment products from companies like Square and Toast. Since payment apps and touch screens make it simple for merchants to preset gratuity amounts, many businesses that didn’t ordinarily ask for tips now do.

And many consumers feel pressured to oblige or don’t notice the charges. This phenomenon — known as “guilt tipping” — was compounded in recent years when more privileged professionals shelled out extra to help essential workers weather the pandemic. But even as businesses have somewhat returned to normal, the gratuity requests have remained steadfast.

Tipping practices may become part of a broad government crackdown on so-called junk fees, extra costs that businesses tack on to products and services while adding little to no value. The Federal Trade Commission, which announced an investigation into the practices last year, said people could experience “junk fee shock” when companies used deceptive tech designs to inflate costs at the end of a purchase.

I have felt the pain and awkwardness of seemingly arbitrary tip requests. I was recently taken aback when a grocery store’s iPad screen suggested a tip between 10% and 30% — a situation that was made more unpleasant when I hit the “no tip” button and the cashier shot me a glare.

When a motorcycle mechanic asked for a gratuity with his smartphone screen, I felt pressured to tip because my safety depended on his services. (It still felt wrong, because I had already paid for his labor.)

I shared these instances, along with stories I had read all over the web about consumers outraged by abnormal tipping requests, with user-interface experts who work on tech and financial products. All agreed that while it was good that payment services had increased gratuities for service workers who rely on them, the technology created a bad experience when consumers felt coerced by businesses that didn’t normally expect tips.

“If your users are not happy, it’s going to come back and bite you,” said Tony Hu, a director at the Massachusetts Institute of Technology who teaches courses on product design. “Ideally, they should be tipping for an excellent experience.”

Based on my conversations with design gurus, there’s an upside to all of this. If we focus on the tech design aspects of tipping, we can overcome the pressure of tipping in the same way that we grapple with issues like digital privacy. Let me explain.

The devil is in the defaults

In 2013, Square released a point-of-sales product that replaced cash registers by letting vendors input an order into a tablet and letting customers swipe a credit card to add their signature and tip. Square has said its products have led to big increases in tips for many businesses. Its technology has since been widely copied by many brands, and traditional cash registers are a rare sighting.

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