Detailed in the New York Post earlier today, a couple New York City coffee shops are trying out a trial of a new electronic gadget that allows customers to leave a tip for the barista with a credit or debit card. Called the DipJar, the silver cylinder is placed by the register and customers simply slide their credit card into the blue cup to tip the staff. The amount of the tip is already preset and listed on the top of the card reader in a bold font along with a description of the transaction on an information card. For instance, the two coffee shops list $1 on the top of the DipJar. Once the card has been swiped, the credit card information is encrypted and transmitted directly to the servers at the DipJar headquarters. According to the developer of DipJar, the credit card information isn’t stored in the actual hardware.
This is particularly helpful for small businesses where the vast majority of transactions are already on credit cards rather than cash. When asked about the creation of the DipJar, CEO and co-founder Ryan Kessler recounted a story about a day spent within a coffee shop.
Kessler stated “Everyone was paying with credit or debit, so the tips had plummeted. Baristas take really great care of me, and I didn’t like that they were working just as hard and making less money.”
According to the company site, the hardware is completely free to retailers. Similar to Square, it’s likely that DipJar will eventually make money processing each transaction and Kessler is currently promising that 80 cents on the dollar will make it back to the tipped baristas. They are attempting to push that figure to 90 cents on the dollar, but won’t be able to negotiate more effectively until the business grows considerably. According to USA Today, DipJar is covering the cost of the credit card processing fees during the trial run with the coffee shops in New York City and sending back the entire $1 value of the tip back to the store employees. Setting up the DipJar is as simple as registering the device, plugging it in and placing it next to the register.
As tips are collected with the DipJar, the total amount is pooled and divided up among employees based on hours worked. Managers are encouraged to verify the inputted schedules before a check is cut to the employee.
Payments are sent out from DipJar every two weeks, but not everyone is happy with the disbursements yet. An unnamed barista told the Post “I get a check for, like, six dollars every two weeks. I think people just don’t notice it.”
To protect against fraud, DipJar checks for repeated dipping on a specific credit or debit card. If someone sees charges labeled “DipJar Inc.” on their credit card and suspects fraud, all charges can be contested on DipJar.com within 30 days of the original transaction. After providing information like credit card verification and the location of the transaction, a refund will be issued to the charged card within 30 days of filing the dispute.
Problem here is when I’m paying using the Starbucks app from my smartphone. It’s somewhat convenient, though I wouldn’t say it’s any faster than just hauling out your wallet and paying old-school…but anyways, point I’m making here is, if I’m already paying for my coffee using the app, why would I *then* pull out my credit card, just to tip?
Further is the whole issue of tipping for coffee that you’re lining up for and paying *at* the cashier, then getting the coffee yourself from the pick-up station. Think about this: Why don’t we tip at McDonald’s? Or Tim Horton’s? It’s a very similar type of transaction, no? You’re lining up to place your order, get your stuff, and go.
Now if the coffee was *served* to me while I was sitting down at a table, then yes I would tip. What separates the fast-food worker from the barista? Again, Tim Horton’s vs Starbucks/Blenz.
The fraudsters will clone a copy by sundown..
looks like a security issue to me
Yes! Please use this coffee shops and service industry small businesses. I always feel cheap when I can’t tip for polite friendly service because there is no field for tips on your receipts!
Why dont they make these for charities & donations?
I’m not sure
Ok somehow most of my reply disappeared so I say it again:
I’m not sure it’s such a good idea with smaller tips, only for slightly bigger donations. Reason is card companies tend to charge a fee for each transaction. I would like to see a Tip Button you could press as you’re about to pay for your order, automatically adding the tip to your bill. More pushes = bigger tip. Still just one transaction which means the tip isn’t lost in the transaction fee.