Under public pressure UK pizza chain, Pizza Express has announced it will stop taking an 8% cut of tips when paid by card. Citing an “administration fee”, Pizza Express claimed it did not profit from the tip sharing but it could now be dropped thanks to the introduction of a new automated system to distribute tips across the company’s 430 UK restaurants.
In a statement, Pizza Express wrote,
“The automated system has been developed over the last six months and is being launched following pilot trials to avoid any potential implementation issues. It replaces the more labour intensive manual procedure used to help redistribute tips among staff and to meet the company’s tax and legal obligations to HMRC.”
With payments increasingly electronic the move to cease siphoning tips will be welcomed by staff and customers alike. However it does show that many retailers have developed methods to compensate for the cost of card acceptance. But with interchange caps set to go live shortly, Pizza Express and other retailers will have no foundation to implement card acceptance fees as regulators have ensured that the cost of card acceptance will be virtually zero.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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