Instant Digital Tip Access Offers Hospitality Industry Retention Solution

The travel and hospitality industry is experiencing a resurgence in revenue as it emerges from the impact of the COVID-19 pandemic. And to enhance the overall customer experience and streamline operations, establishments in this industry are embracing digital and instant payments.

These innovative payment methods, buoyed on by the convenience of mobile apps and real-time payments, do not only benefit travelers but also have a positive impact on hospitality workers, recent PYMNTS Intelligence research showed.

Take for example, tipping. Digitizing gratuities through mobile apps allows guests to tip staff instantly and securely, even if they don’t have cash readily available. This not only benefits the guests by providing a simple option to show appreciation but also helps retain staff who normally do not receive tips included on a bill.

In fact, instant payouts for tipping staff ensure that employees receive their gratuities promptly, boosting morale and job satisfaction in a fast-paced and competitive service industry where staff retention has always been a challenge. This, in turn, can lead to higher staff retention rates, as workers feel valued and appreciated.

Getting access to those tips instantly is where platforms such as 7shifts are helping the restaurant sector solve the staff retention problem.

Last month, the restaurant team management platform operator introduced a new feature called Tip Payouts, which allows restaurant operators to send tips directly to employees’ personal debit accounts, providing them with immediate access to their earnings.

Not only is this new feature expected to enhance the employee experience, but it also offers a potential solution to the worker shortage problem faced by the service industry.

“Employees will appreciate the convenience

and transparency Tip Payouts provides them,” 7shifts Vice President of Product Brent Beatty said in a blog

post last month. “They can get their

tips faster (no more delays) and have a digital record of all the tips they

received. Increased transparency and trust means happier employees, and happier

employees stay longer.”

According to 7shifts, three-quarters of restaurant employees rely on tips as a significant part of their income. Wages have long been a concern impacting the average employee tenure in the industry. However, with tips increasing in both full-service and quick-service restaurants, providing instant access to these earnings can significantly improve staff retention.

From an employer’s perspective, the Tip Payouts feature eliminates the need for last-minute bank runs or the hassle of tracking and counting cash. This not only saves time but also reduces the risks associated with sending employees home late at night with large amounts of cash.

Brian Hassan, co-CEO of instant cashless tip payouts platform Kickfin, discussed some of those employer benefits in a conversation with PYMNTS earlier this year, noting that he sees instant digital tip access and payouts having much the same transformative effect that early wage access had when it appeared several years ago.

Hassan added that the adoption of instant access and payouts of digital gratuities has brought small- to medium-sized businesses (SMBs) in the service industry closer to the likes of Uber and Lyft as they meet a core need for hard-to-find workers in this segment.

Moreover, the increasing number of delivery and quick-service restaurants (QSRs) deploying instant payments as a recruitment and retention tool is an indication that “it’s not just marketing sizzle,” he noted further.