South Africa’s service workers are missing the certainty and immediacy of cash tips as many businesses are encouraging cashless payments, with some workers losing income to processing fees and the various distribution methods used by employers.
Over 80% of service workers experience some kind of “wage theft” which in short occurs when customers include the tip as part of the credit card payment. The service workers will only see a portion of the original tip due to credit card fees and processing fees. This is a trend that is happening more often than not in many service environments such as restaurants in South Africa.
The safest way to ensure that the service worker receives their tip in full is to hand them cash. There are no T’s and C’s to cash tips.
Cashless tips are also hard for workers to keep track of, meaning they’re unlikely to know exactly how much they will receive in their wages at the end of their shift. In general, customers pay with a mix of cash, credit card or digital payments, such as Snap Scan, however cash tips are always most welcome.
In South Africa in particular where at least 60% of the service workers such as waiters, hotel staff and tour guides rely solely on the cash tips they receive to pay their day-to-day expenses, they are starting to feel the pinch when customers want to tip them. Instead of receiving the full value of the tip when in cash they are now only seeing a portion thereof, when payment is made using a credit card or any other cashless option. This is directly affecting their pockets.
Some service workers, who preferred to stay anonyms said that there is no transparency when tips are not paid in cash. Processing fees and credit card fees vary from day to day and from employer to employer, making budgeting for service workers extremely difficult. Cash is immediate, real and has a definitive value.
Often times people who work for tips only are working from more vulnerable economic positions and hence having cash in hand is something extremely beneficial to them and can very much be a matter of bread on the table or not.