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Service charges and paying by credit card


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Went to the Hardwick in Abergavenny today for my birthday lunch. Very good pub food. My wife and I agreed her steak was the best either of us had ever tasted. Service wasn't perfect, we sat in the "back room" so towards the end of lunch we were alone with no opportunity to catch anyone's eye from front of house. But never the less I'd have been happy to leave about 10%. Paid by debit card, but no opportunity to enter a gratuity. I've found this at a few places recently. Is this becoming normal? Some days I have cash, some days I don't. And if I have cash I may not want to leave the £20 note in my wallet. So what to do? Carry a petty cash reserve?

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I think the problem is that if tips are captured on debit/credit cards then they have to be put through the payroll system and taxed. In addition to this, the bank sticks it's hand in the jar and pinches a few percent of all tips left on cards.

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Which is all well and good. But the other problem is that I suspect no one gets anything at all a lot of the time. I know I'm not the only person who usually has very little cash with them. It's a payment for a service, so why shouldn't it be taxed?

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It's a payment for a service, so why shouldn't it be taxed?

Can't argue with the logic of your point but in reality many waiting staff are minimum wage workers who depend on tips to earn a living and by the time the taxman has had his cut, it doesn't amount to a lot.

Having the machines closed to tips is generally the policy of the restaurant and not the staff. The owners incur less credit card charges, employer levies and admin burden by having to account for the tips and, as you point out, not everyone will have cash with them so the staff end up losing out on a tip.

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Are you sure the "optional" 12.5% hadn't already been added to the bill? If so, it would have already been charged to your credit card.

'You can't be a real country unless you have a beer and an airline - it helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer.'

- Frank Zappa

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Are you sure the "optional" 12.5% hadn't already been added to the bill? If so, it would have already been charged to your credit card.

I think that demonstrates why places like Which campaign against "open" credit card slips.

Although many places are honest enough not to add an "optional" charge and then leave the machine set to prompt you for a tip others are far less scrupulous and will try to encourage you to do both.

If we have the option of adding a tip to the credit card payment, and the restaurant seems to be good enough that it will pass this on to staff then we will do so.

If in doubt we do not but leave a cash tip behind, and increasingly the good places do not leave the bill "open".

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I'm with Judy in being all for electronic "slips closed". And, these days, we usually make sure we also have cash for tipping.

That said, if we cannot be like Belgium & France where service is inherently included in menu price, then I'm a fan of service charges.

John Hartley

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Hmm, well I well and truly caught out at Trianon in Versailles a couple of years ago. Meal was about EUR500, and service most definitely wasn't included, and nowhere to add gratuity either on the bill or when the machine turned up. Now, I had EUR100 on me but that was for my cab back into town. So, almost uniquely, I left nothing, and received an awful mean eye on my exit, so perhaps they deserved nothing after all. Maybe I could have spared EUR10 or EUR20, but my view was that that have been perceived just as badly, if not worse, than none at all.

I don't think these days that people should have any need to carry around large sums of cash.

Howard

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Are you sure the "optional" 12.5% hadn't already been added to the bill? If so, it would have already been charged to your credit card.

Yep, I checked.

That said, if we cannot be like Belgium & France where service is inherently included in menu price, then I'm a fan of service charges.

It's another thread but I'm all for including service in the price of the food. I don't get to discretionarily award who cooked my food, and I think their job is more critical. Not that I'm dissing good service.

I presume one can always ask the restaurant to add a tip amount to the bill before they input anything to the machine.

Not always. I noticed on Y Polyn's website (place I want to try in Carmaerthenshire) that they cannot accept tips by card.

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Main reason why you might wish to reward staff directly via cash rather than undirectly via a credit card is the proportion of the credit card payment that disappears as tax etc before it can reach those that are to be rewarded.

The numbers for £10 of tip with the maximum possible going through the payroll run like this.

£1.49 VAT

£0.20 Credit card commission (might well be higher)

£1.06 Employer National Insurance (based on £8.31 left after the deductions above)

£0.91 Employee NI

£1.66 Income tax at 20%

-----

£4.68 Net to employee

=====

I think I know which way I'd prefer it to be done if I was working in a restaurant and I reckon I would take the same view if I was the proprietor.

And the cash on the table method is completely legal for the restaurant as long as management have no control over who gets what in the way of tips. The recipients do of course have a responsibility to report such receipts to the taxman but in practice very few will do so.

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I presume one can always ask the restaurant to add a tip amount to the bill before they input anything to the machine.

Apart from this one unique exception, it is a safe assumption that there will be a Gratuity option at the card machine, as is so commonplace as to be expected in these circumstances. As I went through tapping "Yes", no gratuity option appeared, and by then it was too late, it was hand back to the waiter.

Cheers, Howard

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I presume one can always ask the restaurant to add a tip amount to the bill before they input anything to the machine.

Apart from this one unique exception, it is a safe assumption that there will be a Gratuity option at the card machine, as is so commonplace as to be expected in these circumstances. As I went through tapping "Yes", no gratuity option appeared, and by then it was too late, it was hand back to the waiter.

Cheers, Howard

I'm not quite clear which is the "unique exception" that you refer to, but no, it is not a safe assumption that there will be a Gratuity option on the card machine. Many places these days, as implied (I think) earlier in this thread, simply enter the amount of the bill and that is it, meaning that you must leave a cash tip if you want to leave anything.

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Hi JudyB

I presume one can always ask the restaurant to add a tip amount to the bill before they input anything to the machine.

Apart from this one unique exception, it is a safe assumption that there will be a Gratuity option at the card machine, as is so commonplace as to be expected in these circumstances. As I went through tapping "Yes", no gratuity option appeared, and by then it was too late, it was hand back to the waiter.

Cheers, Howard

I'm not quite clear which is the "unique exception" that you refer to, but no, it is not a safe assumption that there will be a Gratuity option on the card machine. Many places these days, as implied (I think) earlier in this thread, simply enter the amount of the bill and that is it, meaning that you must leave a cash tip if you want to leave anything.

Hmm, perhaps if they're only expecting 10 or 20 quid, but surely not £50 or £100?

Cheers, Howard

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Howard

Now it's me that doesnt understand your point, I'm afraid.

If the machine is programmed to not allow a tip to be entered, then it is programmed to not allow a tip to be entered, however much one might have wanted it to. And I remain in agreement with JudyB, that's how many are programmed. Your own experience is not at all uncommon in my experience.

Edited by Harters (log)

John Hartley

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