Cash Dependent Workers Are Affected by the Plastic Trend

While it is no doubt more convenient for consumers to rely on credit cards than use cash for all of their purchases, it may not be the same for those people who are in professions that rely heavily on cash tips.

In the days of old, it was possible for many waiters, cab drivers, attendants, porters, bell boys, doorman, performers, and other such “tipped” workers to live off of the cash tips they earned on the job. Many were able to keep the cash tips unreported as income as there was no paper trails to prove otherwise. Additionally, it was a nice benefit to having instant access to cash before payday rolled around.

However, there are more and more people carrying credit cards than cash for safety or convenience reasons and it is affecting the incomes of those who accept tips. There is now a very obvious paper trail when credit card tips are involved, which employees must report to the IRS as part of their income. As many patrons are now prone to paying their bills and adding the gratuity onto their total bill, waiters and other workers no longer get to keep tips outright on a daily basis.

There seems to be one advantage of customers using credit cards to pay for meals and such. It seems that consumers who add a tip to their total bill typically will give a higher tip than those laying cash directly on the table. Perhaps it is psychological: Simply writing down a number to many is different from having to count out and leave actual dollars.

Not only are waiters and other customer oriented staff effected by a so-called “cashless” society, but others who count on cash donations are also seeing a slowdown. For instance, musicians or charity groups, such as the street corner Santa’s, have in the past been able to make a decent day’s take from appearing or performing on a public street. However, since less people are carrying around actual cash in their pockets, less money is being tossed into the hats and collection baskets of those soliciting donations.

While a future life without cash is unlikely, at least in the approaching few years, it may actually become a necessity for business people such as cab drivers and yard sale entrepreneurs to be able to accept credit cards or face lost income. Many charities and groups who thrive on donations have reported to see an increase in online transactions despite the fact they are seeing less actual cash donations. Consider places you visit regularly and note that if money is changing hands there is probably a credit card sign on the door.

Overall, technology is making it easier to become a cashless society and having at least one credit card on hand can help protect you from fraud when making purchases, unlike regular bank debit cards. If you plan to use a credit card the next time you visit a hotel or dine out at a restaurant, throw a few extra bucks into your wallet for the wait staff. They’ll appreciate your effort.

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Tisha Kulak is a writer for Creditorweb.com, where she writes about credit card offers, finances, credit cards, and responsible credit card use.

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3 Responses

  1. Nick says:

    Those are some interesting things to keep in mind. I admit that I often add the tip into my check or credit card bill!

  2. Hmmmm, I never really thought people actually did the whole make a donation online via credit card thing. I always figured donations would be most effective trying to get 50 cents or a dollar from everyone….maybe I need to add a dontate button to my site 😀

  3. Jamie says:

    I have not thought about the impact that this would have on donations. I can see that there would be a huge impact there.

    http://www.WeLearnAsWeGo.com

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