Digital Tip Jars: What They Are & How They Can Help Your Business

A digital tip jar is a cashless tipping solution that enables customers to give staff gratuities without using cash. In an increasingly cashless economy, many business owners struggle with how to reward staff members with tips when fewer and fewer customers carry currency.

What Is a Digital Tip Jar?

A digital tip jar is an app or online platform that lets customers give gratuities – often to entertainment or hospitality workers like musicians, baristas, or valets – without the need for physical cash. Digital tip jars offer a seamless, cashless tipping experience that aligns with the growing trend toward digital payments. They can be utilized through various methods such as QR codes, links, or embedded buttons on websites, making them convenient, safe, and efficient for customers.

How Do Digital Tip Jars Work?

In practice, a digital tip jar works very similarly to tip jars of old. However, instead of dropping in spare change or bills, customers can send tips electronically either through a payment app or a dedicated digital tipping platform. These platforms – including ours – support various payment methods, including credit/debit cards and mobile wallets. They let business owners generate QR codes or links that can be shared with customers, making it easy to scan or click to tip.

Though still relatively new, digital tip jars can be a boon – particularly to staff in the hospitality and entertainment industries. These apps offer an easy, low-cost way to collect tips and can be particularly beneficial in businesses with multiple service layers or those with a significant delivery component. Customers, who increasingly favor cashless transactions, appreciate the convenience and simplicity of digital tipping. They can show their appreciation for good service with just a few taps on their smartphone.

Digital Tip Jar Fee Structure

Digital tip jars typically charge a percentage fee on each tip received – often around 8.9% – plus a flat fee – usually $0.30 per transaction. In contrast, Kickfin provides a digital tip jar service for a 5% fee, plus $0.20 per transaction. This fee is primarily used to cover the operational costs of the platform, including transaction processing fees.

It’s important to note that while some platforms might not charge the businesses directly, they may charge the customer a surcharge. However, this is prohibited or restricted by many payment processors, including Visa.

Benefits of a Digital Tip Jar

Digital tip jars aren’t just a trend – they’re a solution to a modern business challenge. They provide a seamless and hassle-free way for customers to show their appreciation for excellent service. But their advantages go beyond convenience. Digital tip jars can significantly impact your business’s bottom line, boost employee morale, and improve customer service.

Increased Tips

Digital tip jars often lead to an increase in tips. With more and more people going cashless, having a digital gratuity option allows more customers to tip, and the ease of tipping digitally often results in larger tip amounts.

This benefit is particularly advantageous for businesses in the service industry where tips contribute significantly to staff income. Higher tips can lead to happier staff and less employee turnover.

Improved Customer Experience

In many industries, tipping forms part of the overall customer experience. When customers find every aspect of their interaction with your business easy and convenient, it contributes to their overall satisfaction and increases their likelihood of returning.

Increased Transparency

When you set up a digital tip jar for your employees, all tips are tracked and recorded, eliminating any disputes or confusion about how much was received. It also eliminates the chances of tip theft or discrepancies and the need for you to stock a cash drawer to help employees make change for tips.

Having a clear record of tips can also help with managing employee performance. By tracking the amount and frequency of tips, businesses can identify their top-performing employees and reward them accordingly.

What Kinds of Businesses Should Use Digital Tip Jars

Digital tip jars are a game-changer for any business where employees rely on tips as a significant portion of their income. Here’s a look at what types of businesses can benefit from incorporating digital tip jars:

Bars/Restaurants: Servers and bartenders at bars and restaurants often rely heavily on tips. Digital tip jars make it easy for customers to tip, even if they are paying with a card or mobile payment. They also ensure that employees receive their tips immediately, rather than having to wait for cash-outs or paychecks.
Hotels: Hotel employees like bellboys, housekeepers, and concierge staff often receive tips as a token of guest appreciation. A digital tip jar allows guests to tip without the need for spare change or cash.
Valets: A digital tip jar makes the process of tipping valets seamless, eliminating the awkwardness when customers don’t have cash on hand.
Pet Groomers: Many pet owners appreciate the services of pet groomers, and a digital tip jar allows them to reward good service easily.
Car Washes: Employees at car washes often go the extra mile to ensure cars are spotless, making them prime candidates for tip-based income. Digital tip jars streamline this process.
Tours/Events: Tour guides and event staff often provide exceptional service that warrants a tip. A digital tip jar allows customers to tip these individuals easily, regardless of the payment method they used for the tour or event.

How to Get the Most from Using a Digital Tip Jar

Promote Digital Tipping: A digital tip jar won’t do much if nobody knows about it. Start by communicating its presence to your customers. Use signage, menu mentions, or verbal reminders from staff to encourage customers to tip digitally.
Train Your Staff: Your employees are on the front lines of promoting a digital tip jar to customers. Make sure they know how it works and the benefits it offers, so they can confidently explain the system to customers.
Offer Multiple Payment Options: Different customers are comfortable with different modes of payment. Ensure your digital tip jar accepts a wide variety of payment methods, from credit cards to mobile payment apps, to cater to all your customers’ preferences.
Ensure Compliance: Make sure your digital tip jar system is not surcharging customers as this can lead to problems with payment processors. Regularly review your compliance status to avoid unforeseen issues.

Staying Compliant with a Digital Tip Jar

While digital tip jars offer a host of benefits, it’s important to use them properly.

Adherence to State Laws

Each state has its own set of laws pertaining to tips, including how tips are taxed, who can receive tips, and how tips can be distributed. It’s crucial to ensure your digital tip jar adheres to the specific laws of the state(s) in which your business operates.

Compliance with Payment Processor Rules

Digital tip jars are often facilitated by third-party payment processors. These processors usually have their own set of rules and requirements, which businesses need to abide by. Some processors may have specific policies about how tips are processed and recorded. For example, digital tip jars that surcharge customers on debit card transactions or more than 3% of the tip on credit transactions violate Visa network rules. As a result the merchants run a high risk of Visa turning them off their processing network.

Following Tax Regulations

Tip income is taxable. Digital tip jars track and record all tips, making it easier for businesses and employees to report tip income accurately. However, how this income is reported may vary depending on the tipping platform you use and the flow of funds from customers to staff. Check with your accountant to make sure you report tips properly.

Fair Labor Standards Act (FLSA)

Under the FLSA, tips are considered the sole property of the tipped employee. While tip pooling is permitted in some cases, employers must follow strict guidelines. A digital tip jar needs to be set up in such a way that it adheres to these regulations.

Using Kickfin as a Digital Tip Jar

We’re proud to say that we’re one of the most popular cashless tipping options available on the market. We offer a flexible platform for businesses to collect and manage employee tips, streamlining the process and ensuring that employees receive their tips quickly and easily.

Here are some things you should focus on when you’re looking for a digital tipping solution for your employees:

Easy Set-Up: We help business owners set up cashless tipping in minutes with no technical skills required.
Multiple Payment Options: Customers should be able to tip using credit or debit cards, as well as popular mobile wallets like Apple Pay and Google Pay.
Instant Tip Distribution: Employees should receive their tips immediately after a transaction is processed, eliminating the need for cash-outs or waiting for paychecks.
Customizable Tipping Options: You should be able to set up custom tipping options, such as percentage or dollar amount.
Real-Time Reporting: A digital tip jar should track tips and let you view real-time reports on employee tips.
Secure Transactions: When you’re collecting tips for employees, security is paramount. Any platform you consider should ensure all transactions are safe and secure.

Digital tip jars offer a convenient and efficient way for businesses to manage employee tips, making it easier for customers to show their appreciation while also ensuring that employees receive their tips promptly. With platforms like Kickfin, implementing a digital tip jar has never been easier. Schedule a demo with our team to learn how digital tipping can motivate your employees and improve your customers’ experience.

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Restaurant Management

4 Ways to Save on Restaurant Labor Costs with Kickfin

In the restaurant industry, profit margins have always been tight — and these days, they’re only getting tighter.

Running a restaurant is a labor intensive business. You need a strong back of house team to push out food, front of house workers to greet and care for guests, and managers to keep everyone in check. Naturally, labor is one of the most significant expenses for restaurant operators. In order to keep costs reasonable for customers, even a slight overage on labor can break your budget — but thankfully there are levers you can pull to reduce labor costs.

If you want to secure your business’s financial future, you’re going to need to streamline scheduling practices and keep a close eye on labor costs… without frustrating employees who want more shifts.

Don’t worry: you can turn to traditional wisdom, sales forecasting, and emerging restaurant technology to make sure that you stay on budget.

Here are a few ways you can save on labor costs at your restaurant:

1. Rethink the schedule

Obviously, the most straight-forward way to cut labor costs is to reduce the number of people you schedule on a given night.

We get it — you don’t want to see hour-long ticket times and poor guest experiences. But you might not need as many folks on the line or servers on the floor as you think — at least, not all the time.

Staffing and scheduling isn’t a perfect science, but there are some tactics operators should test if they’d like to “right size” every shift — including:

Analyze your daily schedule. Don’t make assumptions about your peak times and slow periods. Analyze sales trends and let the data be your guide.
Anticipate seasonal trends. If you’re in a college town, don’t wait until your servers are twiddling their thumbs in July to implement a new summer schedule.
Let your seasoned staff shine. Your veteran employees likely thrive on those super busy nights when they’re running on pure adrenaline (and earning way more in tips). Consider giving more experienced workers more responsibility — assuming they’re willing and able — and you might be able to get away with fewer people on a shift here and there.

>> Learn about scheduling software that helps you manage labor and engage with employees

2. Assess and address productivity

Are you making the most of the team that you already have? There are a few ways you can identify your highest-producing employees and make the most of their success:

Evaluate employee performance. Most employees want to be successful; observe your team and analyzes things like sales per labor hour, table turnover rate, and tip volume to get a sense of your strongest players and those who could use more training (and bonus: this can reduce turnover and boost team morale)

Provide incentives. Create a fun bonus system that rewards strong performance and high levels of productivity. You can use data from the previous data point to set goals.
Cross-train employees. Training your staff to handle multiple roles – or hiring folks with vast service experience – offers flexibility for scheduling and can reduce your need for additional hires.

3. Don’t pay employees to wait for their tips

No, we’re not saying to cut all of your servers early (no matter how much they ask).

But, you can send your servers on their way much quicker when they don’t have to wait around for managers to count out cash tips. Once they’ve finished their sidework, servers can clock out and see their digital tips sent directly to their bank account, instead of hanging around on the clock waiting for the shift manager to do their check outs.

4. Prevent labor overages before they happen

Most restaurants simply can’t afford to pay overtime for staff. But sometimes your full-time staff creep toward 40 hours of work without anyone noticing…and suddenly you’re paying 1.5x what you expected for a single worker.

This, too, goes back to proper scheduling policies. Give yourself a bit of wiggle room for the employee who clocks in 10 minutes early or often takes a long time on sidework by never scheduling anyone for more than 38 hours each week.

5. Pay close attention to clock-outs

People make mistakes, and tired servers often leave their long double shift without clocking out for the night. Usually, they’ll realize their mistake and call the store to have someone clock them out (still adding extra time to their shift).

But sometimes, the clock keeps running all night, and no one notices until it’s time to process payroll. Two weeks later, your admin team is spending way too much time correcting clock-outs so that you don’t end up paying for 8 extra hours of work.

Try using technology that puts guardrails in place to prevent any clock-out mistakes before they happen. Kickfin doesn’t allow you to process and pay out tips until an employee is clocked out, so managers can make sure everyone is clocked out at the proper time.

(We also have some other exciting new features that can make your life easier!)

Not only can Kickfin help you reduce labor costs, but we’re ready to simplify your entire tip management process. Reach out to us to learn more about our instant tip calculations, integrations, and smarter tipping solutions.

Restaurant Management

How to Get Your Restaurant Ready for Football Season

Football is back! Whether you’re rooting for your alma mater or just hoping to see massive sales at your restaurant, it’s an exciting — but often stressful — time of year.

If your restaurant has at least one TV, you’re going to have some customers asking you to switch it to ESPN. And if you’re running a sports bar … it’s officially crunch time. Expect your tables to be full (and harder to turn) and your staff to be running on pure adrenaline as the restaurant fills up with fans hoping for a bite to eat.

You probably know the drill: hire more staff, add more servers to game day schedules, and manage your inventory with hungry fans in mind. But if you want to get the most out of football season, get game-ready for some of the busiest weekends of the year with our tips for a successful season.

Consider a game day menu

When your restaurant is at full capacity with hungry football fans, you might want to consider a limited menu for the weekends in order to keep wait times down. Shorten the food menu down to shareable apps, best sellers, and items with the simplest prep so that your kitchen isn’t lined with tickets at halftime.

At the bar, don’t limit your customers to certain cocktails — but consider the power of suggestion and list out some easy-to-batch cocktails that will keep your service bar out of the weeds.

**Make sure they can watch their game**

Is there anything worse than a group of die-hard fans walking in to see their team play — only to realize you don’t have the right subscription service to stream it? Next thing you know, some guy has commandeered the remote to sign into his YouTubeTV account.

Before that embarrassing situation arises, check your cable listings and subscription services to see if you’re missing any important channels. You’re probably going to need to upgrade in order to show games that aren’t carried in your market. Here are just a few channels you might need:

ESPN+
Hulu + Live TV
Peacock
NFL Sunday Ticket
YouTubeTV or cable
Netflix (yep — Netflix will be streaming a few NFL games this year)

If viewing options are limited, or you don’t have enough screens to air multiple games at once, make sure you’ve got a strong wifi connection (free, of course) so that your guests can watch on their phones — or more importantly, talk smack to their fantasy league.

Offer game day deals

Now that you’re logistically ready for the season, it’s time to draw in the customers. Make your restaurant the place for fans to gather by offering drink specials and deals on appetizers.

Leverage social media to get the word out about your game day deals. Consider paying to boost a post or running a giveaway for people who share a post about your game day specials.

Plan for Post-Game

You don’t want the restaurant to empty out as the clock runs down. Entice fans to stay and celebrate (or lick their wounds) once the game ends by extending deals. That could mean a discount for fans of the winning team or an extra-long happy hour.

Pay out your employees — quickly.

After a long game-day shift, your servers and managers are going to be more tired than usual. Let them head home early by using Kickfin to pay out tips instantly. We take care of all of the tip calculations and send tips directly to servers’ bank accounts in seconds, so your exhausted team members don’t have to wait to put their feet up and rest.

Want to see our instant digital tip outs in action? Get a demo of Kickfin today.

Hiring, Training and Retention, Restaurant Management

The Art of the Upsell: Teach Servers to Increase Average Check Amounts

You want to make more profit. Your servers want to make more tips. A crash course on upselling is a win-win for everyone.

Your servers might not realize it, but their words have a lot of power. Knowing how to present a higher shelf vodka or a premium side could make a world of difference for their wallets.

And beyond the increased checks, pro servers who are able to successfully upsell are also recommending your restaurant’s very best for guests. Those bigger ticket items are often your best dishes or most unique cocktails that will stand out in guests’ minds and make for an elevated dining experience.

Here are a few ways your servers can gently suggest some pricier upgrades that will boost their average check size, making everyone a few extra dollars.

1. Consider your memorable dining experiences

Before you dive into our upselling go-tos, take a minute to reflect on your last really good experience at a restaurant and how your server’s language, attitude, and knowledge affected your experience.

Did your server walk right up and ask if you want an appetizer? Or did they take the time to talk through specials, field questions about menu items, and give you the space you needed to make a decision?

Was your server’s demeanor generally excited and upbeat? Or did they actually look a bit disappointed when you said you’d just be having water?

These small, unspoken cues are what make or break a server’s night. Leading with confidence, positive energy, and genuine concern for your guests’ experience is what will build trust between server and customer, so they’ll be more open to suggested upgrades.

2. Value authenticity

Upselling just for the sake of a higher tip is not a successful strategy.

Remind your servers that while upselling can improve guest experience and your tip, it’s important to flex to the needs of your guests. Don’t continue to push higher priced items if guests are starting to look uncomfortable.

They say the most successful salespeople believe in what they are selling — and the same goes for servers. Your servers should have tasted all of the higher priced menu options and be able to explain to guests why this upgrade brings their dining experience to the next level.

3. Start with the drinks

Alcohol sales are restaurants’ bread and butter. So when a table orders the first round, servers should make it count.

Scenario #1: A customer orders a simple spirit + mixer drink

If a guest asks for a vodka soda, this is an opportunity to turn a $10 drink to $15 or even $20 — which will add up after a few rounds.

Naturally, most servers would ask what vodka the guest prefers. Teach your servers to resist that urge! Instead, servers should offer them a selection of higher-shelf options. For example, a server could respond with, “Vodka soda? Sure, would you like that with Tito’s, Ketel One, Grey Goose…?” And keep listing options until one resonates with the guest. That gives the guest the impression that they have a seasoned, well-informed server, but this framing also leads the customer to choose from the higher-shelf suggestions, rather than just asking for the house vodka.

Scenario #2: Ordering a glass of wine

We’re not suggesting you hire a sommelier, but getting more familiar with common flavor profiles and notes in wine can be a game-changer for servers’ nightly tip income.

Customers often ask for something similar to pinot grigio, cabernet sauvignon, or a pinot noir, and if their server can give a detailed description that makes a wine sound irresistible, they’re probably going to splurge for the higher-end wine. Bonus points for servers who can successfully suggest splitting a bottle (because once they taste it, they’ll want more than one glass!).

Consider hosting a weekly wine training to help your servers get more familiar with what your bar has to offer. Another pro-tip: Teach your servers about beer and wine pairings! When servers let guests know which entrees pair well with the drink they’ve ordered, guests may opt for a higher-priced entree to match their favorite beverage.

Don’t skip over the apps

Not everyone is going to order an app — but there are a few small changes servers can make to their dialogue with customers to convince those who wouldn’t normally spring for a first course.

For one, servers shouldn’t just ask if they’d like anything to start. Instead, teach your servers to approach tables with a suggestion for a specific menu item. For example, they could say, “Would you like a charcuterie board to start? We just added a really delicious local cheddar to our rotation.”

Offering patrons a specific menu item and talking up the details makes it a lot easier to add that extra course to their meal — increasing their check size and making it more likely that they’ll order a second beverage.

Taking the order

When it’s time to take the entree order, this is your servers’ time to shine. Just like the previous courses, they should know how to create opportunities to upsell guests by making entree upgrades too enticing to pass up.

From fine dining to fast casual, many American restaurants offer a burger on their menu. Rather than simply asking, “Great, are fries ok with that?” task your servers with turning a simple cheeseburger into a deluxe meal with several upsells.

First, make sure your staff knows your menu options well, so they can pass along those options to customers. Here are a few common upgrades that servers should be asking guests if they would like:

Pretzel or gluten-free bun
Added cheese
Premium toppings, like bacon, egg, avocado, etc.
A premium patty, like bison or imitation beef

Rather than asking if fries are okay, instruct servers to say, “What side would you like? We have french fries, macaroni and cheese, caesar salad…” and continue with options until one piques the guest’s interest. If they succeed in getting at least one upgrade to a customer’s burger and a premium side, the check can increase by around $4 per person, depending on the pricing at your restaurant.

Higher-end restaurants should follow the same formula, subbing in an option for steak oscar rather than a bacon cheeseburger. The goal is for servers to provide options for guests who may not realize that their favorite accoutrement is on the menu — and will gladly pay for the upgrade.

The grand finale

“Did you save room for dessert?”

Servers often bring out this line while pre-bussing tables, usually expecting guests to say that they’re far too full to even think about dessert. If you want to convince more guests to stick around for a final course, ask your staff to remove that phrase from their vocabulary.

Dessert is a rich treat for the senses that most of us crave at the end of the night, so servers shouldn’t treat it like an afterthought in front of customers. As they’re clearing away dishes, servers can tap into their senses by talking about your pastry chef’s perfect chocolate cake with buttery layers of icing, or the warm peach cobbler served with house-made vanilla ice cream on the side.

Even if guests seem like they’re truly full, your team can still offer them a slice to-go, since they’ll surely be wishing for something sweet in about an hour anyway.

Reap the rewards

After putting on their best smiles, connecting with guests, and using these upselling tricks, your servers should ring in above-average size checks — and an above-average amount of tips.

Once your servers see their huge tip out for the night, they’ll want access to those funds ASAP. At Kickfin, we provide instant digital tip payouts, so managers don’t have to waste time counting cash and servers can clock out of their shifts sooner.

Check out a demo of Kickfin today.

Product and Company News

Kickfin Ranked Fastest Growing Restaurant Tech Company | 2024 Inc. 5000

Kickfin ranked in the top 3% of Inc.’s 5000 fastest-growing companies — and we’re leading the charge for tip management software.

Every year, Inc. identifies 5,000 U.S.-based companies that have seen the highest rate of growth over the past three years based on revenue — and this year, Kickfin was at the top of the top.

A few stats we’re pretty proud of:

🏆 Kickfin ranked 189th overall.
🏆 We’re the fastest-growing restaurant tech company on the list.
🏆 We’re in the 💥 top 3%💥 of all 5000 companies.
🏆 We ranked 24th in the Software category.

Since 2020 — in spite of a pandemic, supply chain disruptions, The Great Resignation, and record-setting inflation — we’ve grown by 2,066%.

Our Keys to Success

We’ll cut right to the chase: We owe our success to our customers. (It’s not cliche if it’s true, right?)

The bottom is that we know the way you pay your staff matters, a lot. Thousands of restaurants are trusting us to handle that for them, and we don’t take that trust lightly.

And of course, we might be biased, but we think we’ve got the best team and partners in the biz. Thanks to everyone who has helped build, support and evangelize Kickfin. This has been a big year for our small but mighty company — and there’s a whole lot more to come.

This kind of growth doesn’t happen overnight. We’ve been putting in the work to make Kickfin even better for the thousands of restaurants we serve. Here are just a few ways we’ve expanded to better serve Kickfin customers.

Integrations

We’re making it easier to access and use Kickfin by integrating with dozens of leading POS systems, including Toast and SkyTab. Using our integration, managers can pull tip data directly from their POS and Kickfin will handle even the most complex tip calculations in a matter of minutes.

Thanks to our POS partnerships, we’re able to bring a further simplified version of Kickfin to new and existing customers so they can kick cash to the curb. As an early adopter of our Toast integration, Bar Louie has already saved around 15,000 hours in labor annually by cutting their tip calculation time from hours to minutes.

>> See more customer success stories

Find out if your POS integrates with Kickin, and reach out to our support team to learn how you can activate the integration.

New Features

Kickfin is no longer just an alternative to cash tip-outs — we’re a holistic solution to your entire tip management system.

In case you missed it, 2024 has been a big year for our product. In addition to our new integrations, we’ve rolled out some exciting new tip management features, including:

Splitting large party tips
Increased security
Reallocating manager tips
Preventing labor cost mistakes

>> Learn more about Kickfin’s newest features

Each of these new updates is inspired by requests from operators, managers and restaurant employees who use our product daily — and that’s something that will never change. As we continue to innovate our best-in-class tip management solution, we’ll always be listening to and learning from our customers so we can ensure every need is met and every expectation is exceeded.

What’s next for Kickfin?

We’re not stopping anytime soon. Expect to see more POS integrations, more user-friendly features, and more guidance from our amazing customer support team.

Not a Kickfin user yet? Now’s the time to rise with us! Get a demo of our restaurant-revolutionizing product today.

We’ll see you next year on the Inc. 5000!