‘Tipflation’ Culture Putting Added Financial Pressure on Canadians: Survey

A credit card is placed into a credit card machine for processing payments on September 11, 2023 in La Puente, California. Credit card debt from US consumers is rising by billions of dollars amid higher inflation and interest rates, topping $1 trillion for the first time in history, according to the Federal Reserve Bank of New York. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)

The rising costs of food and housing have consistently been named as stressors for Canadian households over the past year, but a new phenomenon is adding extra financial pressure: tipflation.

Tipflation—the growing gratuity expectation in the service industry—may be adding to the financial stress Canadians feel. A recent poll revealed that two-thirds of Canadians feel pressured by electronic payment machines to leave a 15 percent tip, even when a tip isn’t warranted.

Conducted by budgeting app Hardbacon, the online survey asked 513 Canadians about their tipping habits and attitudes. It found that 65 percent of Canadians left a tip because they felt prompted to do so by the card payment terminal. Sixty-two percent of respondents said they left a higher tip than expected due to the choices presented by the payment terminal.

Businesses like cafes, bakeries, and restaurants without table service benefit the most from tipflation, said Hardbacon CEO Julien Brault, especially because most Canadians pay for purchases with their credit or debit cards.

The prevalence of electronic payments combined with the shortage of staff in retail, “has created an environment conducive to tipflation,” Mr. Brault said in a blog post.

“Indeed, merchants seem to have identified tips as an effective way to retain their employees without increasing wages, and payment terminals have allowed them to ask their customers to foot the bill.”

Tips on Tipping

The online survey gave participants a chance to leave comments about their experiences and tipping in general. Some respondents called for tips to be done away with for good, putting the onus on employers to pay a fair wage.

Related Stories

Food Prices Still Rising Despite Ottawa’s Pledge They’d ‘Stabilize’: StatCan

1/4/2024

Canadians Will Dine Out Less in 2024 in Wake of Rising Food Prices: Report

12/28/2023

“Tipping should be abolished completely. Instead, restaurateurs should pay their staff a better than average wage and charge accordingly,” one respondent said. “Wait staff should not be required to rely on the ‘kindness of strangers’ to allow them to make a living wage.”

“Service establishments are directly outsourcing staff salaries to the customers and then shaming the customers for not paying enough,” another person said. “The establishment is responsible for the staff’s fair wage.”

Other respondents said they would like to see more reasonable rates pre-set in card payment terminals.

“When I come across a machine that doesn’t offer 15 percent in the percentage choices, I manually set the tip to 10 percent,” someone else shared. “When I’m given the option to give 15 percent, I give 15  percent. I believe that being coerced into giving a larger tip is very poor service.”

“The tax percentages on payment terminals are usually post tax so an 18 percent tip would be well over 20 percent of the pre-tax total,”  another respondent said. “This is deceptive. Since when do we pay tips on taxes?”

Canadians’ Tipping Habits

While some Canadians do have a beef with today’s tipping culture, the practice hasn’t changed much over the years when it comes to compensating wait staff for service at sit-down restaurants. The survey revealed the average tip size is 15.14 percent.

Canadians tip hairdressers or barbers an average of 10.91 percent, while meal-delivery people are given 10.26 percent, and Uber drivers 9.40 percent. Restaurants without table service average a 2.14 percent tip.

The best tippers are also the youngest ones, Hardbacon found.

Generation Z adults (aged 18-27) were the most generous tippers, leaving servers at sit-down restaurants a 16.58 percent tip on average. Second place goes to Baby Boomers (60-78), who leave a 15.24 percent tip, closely followed by Generation X (44-59) who tip 15.05 percent on average.

Millennials (28-43) and the Post-War Generation (79 and over) left an average tip of 14.77 percent and 13.85 percent respectively.