In the hospitality industry, tipping for service is the norm. However, not all tipping is done in cash. If a tip is added to the bill and paid for with plastic (prepaid, debit or credit card), the funds are not immediately available to the workers.
In fact, tips are typically paid as a part of their normal wage on the next pay period. Prepaid debit cards are the perfect solution for immediate payout of workers tips on a daily basis, and can be used immediately once funded.
In the ever evolving financial world, cash is becoming used increasingly less often by customers. This is especially true in the service industry. Cards are becoming king when paying and this includes tipping. Pre-paid cards can be a great way to pay out tips to service industry workers in real time and for immediate access.
On average there are estimated to be over 1 million workers in the accommodation and food and beverage service industry in Canada today. The majority of these workers rely on gratuities which make up a large percentage of their wages. This isn’t an issue when customers pay in cash but in today’s largely cashless society workers are seeing a shortage at the end of their shifts and have to wait up to a week to receive gratuities in some cases.
Digitizing tips is a great solution for workers to receive money in real time every day after every shift and prepaid cards are a great way to do so. Employers can transfer gratuities instantly to a prepaid card. This also creates a safer environment for workers who are no longer leaving jobs with wallets full of paper cash.
Ideally, the company would determine how much each person received in “plastic tips” and perform a funds transfer via a paycard system to each person’s card at the end of the night. Many workers in the hospitality industry are already paid using payroll cards (which are prepaid), which means this would just be an extra step to be programmed.
Not only does this create a safer environment for workers, prepaid is a great option for budgeting and tracking spending. As someone with experience in the service industry for many years, it is safe to say spending cash is easy and hard to track. By digitizing tips and having real time data, this allows workers to be more in control of their finances rather than having cash disappear from their wallets.
Consumers today rely less and less on cash, employers need to recognize this trend and find the best options for employees to get paid.
Overview by Sue Brown, Director, Prepaid Advisory service at Mercator Advisory Group