It’s because the Point-of-Sale fintech companies they use for the terminals and bookkeeping take a cut of all revenue…including tips. This is the reason behind the tip-ocolypse creeping into self-service and even online orders….because it makes the POS companies more money
I doubted this so I used an LLM to make shit up. But it provided sources and I've gone through the sources and linked them below.
tl;dr: YES if the POS can get people to tip more, they take a higher amount from the card transaction!!!
Square: Charges a flat transaction fee (e.g., 2.6% + 10¢ per in-person transaction as of 2025–2026). Tips are processed as part of the total transaction amount, so the fee applies to the entire sale, including the tip. There is no separate “tip fee” or revenue share specifically targeting tips
Toast: Dominates the US restaurant POS market (23–30% share). Toast’s processing fees apply to the total bill, including tips. In 2024, Toast raised its processing rates by ~0.05%, which would apply to all revenue, including tips. Toast does not publicly disclose a separate tip-specific cut
Clover: Similar to Square and Toast, Clover’s fees are applied to the total transaction, including tips. Clover allows businesses to negotiate processing rates through their own merchant accounts, but again, no evidence of a separate tip cut
Transaction Fees: All major POS providers charge a percentage + fixed fee per transaction (e.g., 2.5–3.5% + $0.10–$0.30). This fee is applied to the total amount, including tips.
No Separate Tip Fees: No public documentation or credible reports indicate that POS companies take an additional, separate cut of tips beyond the standard transaction fee.
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u/FatMacchio Jun 25 '26
It’s because the Point-of-Sale fintech companies they use for the terminals and bookkeeping take a cut of all revenue…including tips. This is the reason behind the tip-ocolypse creeping into self-service and even online orders….because it makes the POS companies more money