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Tips on Transactions

by Guillaume Lepecq | Apr 19, 2018

TRestaurant_Cookshe Chicago Tribune reports that a diner in an exclusive restaurant gave a $2,000 tip in appreciation of his meal. The client first added a $300 tip on his tab and then went into the kitchen and gave each of the 17 members of staff a $100 note.

This illustrates the issue of transaction volumes and the difficulty in comparing cash and non-cash transaction volumes. How many transactions did the diner make?

  1. One? The bill and the tip are part of the same transaction. Had he paid the total electronically, it would have counted as a single transaction.
  2. Two? The transaction and the tip should be counted as separate transactions.
  3. 18? The transaction could be defined as a settlement between a payer and a payee. But had the diner left the $2,000 tip on the table, it would only be counted as two transactions.
  4. 19? The cheque, the $300 tip and each additional $100 tip should be measured as separate transactions.

This question is not only a rhetorical one. It is often stated that cash usage is declining because the relative volume of transactions in cash is declining. But the example shows that it really depends on how transactions are measured. It clearly shows that cash and digital payments are different animals.

Furthermore, the story provides a compelling reason why restaurants should accept cash. In December 2017, Visa announced an initiative in the United States to steer restaurants and food vendors away from using cash. The credit card company was giving away $500,000 to 50 restaurants and food vendors to pay for their technology and marketing costs, as long as the businesses pledge to refuse cash.

Tips like these are one of the many reasons why restaurants should accept cash. As Brianna Meyers, sous-chef said “It was definitely a rare experience that I think everybody was happy to be a part of.”

 

 

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