Gratuities are becoming increasingly digital across a number of industries — displacing cash as the primary payment method.
However, employees still expect to receive their tips daily — and many rely on it. While this growing trend provides convenience and security for patrons, it has created complexities for business owners and payroll systems.
Traditional payroll systems are not adequately equipped to handle the daily distribution of digital tips, resulting in delayed or irregular payouts. This predicament has sparked frustration among employees who rely on these tips as an essential part of their income.
The need for more efficient and streamlined tip access has become evident, pushing the industry to seek innovative solutions to address this pressing issue.
The digitization of tip collection has forced employers to choose between two less-than-ideal scenarios:
- Front tips to employees in cash at the end of each shift, which is time-consuming, expensive, and can be potentially risky and logistically challenging.
- Paying tips through the traditional payroll which means making employees wait until payday, which does not meet expectations in many tipped industries and can cause financial difficulty and even encourage employees to seek new work opportunities.
Digital Tips Provide a New Benefit for Employees
A February 2023 Forbes Advisor survey showed that 9% of Americans primarily use cash or check to pay for purchases while 90% prefer debit cards and credit cards as their primary method.1
As consumer trends move away from cash usage, it may be time for employers to follow suit in how they deliver tips to their employees.
A possible value solution is digital tipping or real-time tip disbursement, which allows employers to distribute tips electronically instead of relying on handing out cash to employees at the end of their shifts.
The Benefits of Digital Tip Access for Employees
Digital tip access meets consumer trends and puts your employees’ money where it’s most useful for them.
Digital tip access has several potential benefits including less manual work for employers, greater employee satisfaction, a streamlined payment process and more.2
Digital Tips Through DailyPay
With a digital tipping solution like DailyPay Tips, employers and employees can reap the benefits of real-time digital tips access.
For employers, DailyPay Tips offers an instant digital tips solution that helps you simplify operations, reduce risk and empower your employees. It integrates seamlessly with DailyPay’s on-demand pay platform, making digital tipping scalable and manageable.
To enable digital tip access with DailyPay Tips, an employer must provide employee-level tip data. With DailyPay’s comprehensive integrations, there are multiple ways to connect to your payroll or tip collection systems.
The benefits of DailyPay Tips include:
- Scalable: Powered by DailyPay’s enterprise-grade on-demand pay platform that has disbursed billions in payments.
- Instant: Employees can receive tips to their bank account or debit card in real time for a small fee.
- Safe: There is no need to keep cash on hand because access to tips is pre-funded by DailyPay.
- Simple: Manage on-demand pay for regular hourly earnings and tips in a single platform.
In addition to the benefits for employers, there are a variety of benefits for employees as well:
- Instant: View and access your tips each day.
- Flexible: Send tips to any debit card or bank account.
- Convenient: See your total earnings from both shifts and tips in one place.
Digital: Keep your tips digitally accessible.
1 https://www.forbes.com/advisor/credit-cards/credit-card-statistics/ :DailyPay, 2020
2 https://www.mews.com/en/blog/digital-tipping-solutions#subheading3 :DailyPay, 2020