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Cash only gratuity allowed ... you may NOT charge the TIP to your CC.

Why is this even a practice at certain restaurants? Cash only tip??
Certainly it's one more reason to always carry ca$h on your person, but come on now. I'm especially thankful that none of us had to scurry off to a nearby ATM to get cash. So, fellow posters (and waitstaff included) ... please chime in explaining WHY such a practice even exists. TIA.

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  1. When I waited tables in college and grad school, from diner to pretty high-end, cash tips were much preferred. Most simply by the waitstaff, of course, because it was immediate, and you knew what you were taking home. Different cards, different managers, different policies meant sometimes I didn't receive the cash from card tips until the end of the week, they were very often inaccurate, but hard to prove. Like, I had somewhat of a running total, I saw all the slips, but after 3-4 days, when I got the cash, I was Pretty certain I should have $150. But when I was given $110, the manager just shrugged it off. I just never know the situation of anyplace for sure, so always try to tip in cash, and servers almost always express their appreciation.

    5 Replies
    1. re: tracytrace

      One restaurant in Scottsdale, AZ (just search CH, and you will figure it out) keeps 100% of the tips for themselves - the servers get zilch.

      Hunt

      1. re: Bill Hunt

        if management is stealing tips, they would not have a policy for cash-only gratuities.

        1. re: hotoynoodle

          Their policy seems to be that any tip is theirs, and the servers are SOL. Now, I have only seen the news featurettes on them, plus the Gordon Ramsay episode, so cannot comment on exactly what it is, that they do.

          Hunt

          1. re: Bill Hunt

            i don't have a tv and certainly wouldn't watch gordon ramsay if i did, lol. (have had enough celebrity chefs screaming at me, tyvm.) if this is coomon knowledge, where is the attorney general or labor court?

            again, if the owners are openly pilfering, they wouldn't demand cash only tips, which the waiters will keep.

            1. re: hotoynoodle

              Perhaps a few of these threads will answer your questions:
              https://www.google.com/search?q=amy&#...

              Happy reading,

              Hunt

    2. It can work for or against servers. PRO - I once cashiered in a private club. At the end of the evening, I paid out the tips in cash. The always got the exact amount that had been paid. I guess I mistakenly assumed all restaurants did the same thing. CON - if the guest has no cash, the server gets... nothing? They rely on those tips to pay their bills. That policy is terrible. If I was a server I wouldn't work for any place that does it!

      4 Replies
      1. re: sassNall

        I can definitely see why cash only tips is a restaurant practice, but as you highlight it really can be a huge CON if the customer has no cash which I often do not. Of course I probably should, but rarely do.

        1. re: sassNall

          One problem is that if the servers get the full amount of the cash tip, the restaurant is eating the fees the credit card company will take off that portion of the bill.

          I would prefer to leave tips in cash, but it's just so darn convenient to put it on the card with the rest of the bill, plus you don't have to explain why you sent a credit card slip back with the tip line crossed out!

          1. re: Ruth Lafler

            Instead of the line, I always write cash in the spot where the tip would go on the cc slip in this situation. :)

        2. with a cash-only tip, only one thing can go wrong.
          with a credit cart tip a million things can go wrong.
          take a couple of minutes to figure it out.. . .
          often, i'll go one better, only leaving cash IN THE HAND of the server

          1 Reply
          1. re: westsidegal

            Exactly. Especially when I've been with, er, troublesome company, I will hand the tip to the server personally with my thanks. And, if necessary, apologies.

          2. This is a bad move. It's one thing if you know you're going to a cash-only establishment, but this is a hybrid of sorts which probably leads to shorts. I feel like a douche when I order coffee in the morning, reach in my pocket to see that I spent all my cash the night before and can't tip the barista.

            1 Reply
            1. re: evenworse

              I gotta agree. I've never run into this and it makes no sense. It seems you're setting the customer up to be caught short.

            2. I can't speak to the other aspects, but I can say WHY:

              CCs take a 2-3% cut of all transactions, and automatically get added on to whatever accounting the business does. So as a business owner, you have to decide to tip the servers as intended (the ethical route), thereby essentially paying them an extra 2-3% off each table out of your own pocket, or skim off the tips to save yourself this service charge. It also automatically registers as payments to your business, which you then pay out, but I imagine it affects your total income, which affects your taxes come April. Cash keeps everything even steven and under the table.

              10 Replies
              1. re: thursday

                " It also automatically registers as payments to your business, which you then pay out, but I imagine it affects your total income, which affects your taxes come April.

                ~~

                tips are not considered "income" for the restaurant owner, but do factor into what is paid in unemployment taxes and such.

                in many states, it's actually legal for the owner to take that processing fee from the servers before paying their tips. even while paying them far less than minimum wage.

                IT'S A COST OF DOING BUSINESS.

                raise the price of soda a nickel and stop being an a**hole tightwad.

                and yes, i have worked for owners who have done this.

                most times i leave cash when practicable, but have yet to encounter a place that takes cards and yet demands cash tips. am quite sure that's illegal.

                1. re: hotoynoodle

                  "but have yet to encounter a place that takes cards and yet demands cash tips. am quite sure that's illegal."
                  .
                  Laws vary by jurisdiction...........................that said. in many US jurisdictions a merchant may set the rules for what may be paid for via credit card and what may not, or even have an upcharge for using the credit card.
                  Example: here in Connecticut it is perfectly legal for a gasoline station to have one price posted for cash and a higher price posted for credit. In a coin shop, collectibles can traditionally be paid by credit card, while bullion purchases may not unless an additional percentage is paid. Yesterday I had a manicure/pedicure and it was posted that no tips on credit cards.
                  As long as the restaurant posts/notifies in advance of taking your order that no tipping in credit cards is permitted, it would be legal.

                  BUT>>>This action might violate the merchant agreement with the credit card company, but still be legal.

                  Disclaimer: I am an attorney, but am not offering legal advice, merely commenting in the situation in my own jurisdiction.

                  1. re: bagelman01

                    my understanding is there was a compromise made with gas station owner types about the differential in cash vs. credit payments since their margins are so slim.

                    and yes, i still see signs that say "no cc purchases less than $10", but here in mass. that violates the contract both with credit card issuer and their bank for mc and visa. amex does allow minimums, but only if applied to ALL cards the retailer accepts. double whammy. those signs are mostly in mom & pops where i pay cash anyway. (i realize federal law is different.)

                    1. re: hotoynoodle

                      My understanding is that the credit card companies used to have contracts that prohibited minimum credit card charges but that such a stipulation is now illegal under the Durbin Amendment. Instead, merchants can set minimums up to a limit decided by the Federal Reserve, currently $10.

                      1. re: hotoynoodle

                        Hoytoynoodle,
                        I don't ususally discuss law outside of my jurisdiction (Connecticut), but as I went to law school in Mass and passed the bar exam there, I'll do so.

                        Just because a merchant does something which violates the contract with either or both the credit card issuer or the bank, doesn't make it illegal. The credit card issuer and bank have means of redress. They can cancel the merchant account, they can sue in civil court for breach of contract.

                        If the merchant's action was truly illegal, then the Commonwealth would be in position to prosecute, but that's not the case you describe. Mass. has very strong consumer protection laws M.G. L. chapter 93A, though some of Connecticut's consumer protection laws are better for the consumer, but I'm biased <VBG>.

                        1. re: bagelman01

                          blah, i get hung on legalese. i am not trying to play a lawyer on the interwebz.

                          bm: i know the federal law changed as mentioned by nocharge, but can state law supercede that?

                          1. re: hotoynoodle

                            In this case the federal law trumps the state laws. Congress has reserved most banking regulations tto the federel government. Chances are the Card issuer and clearing bank are not in the same state as the restaurant and when all else fails the feds will find this falls under the commerce clause of the constitution...............

                            Basic rule of thumb. A state may grant more liberties than the federal government, but not less.

                            Example here in New England: Mass and Connecticut have Equal Righta Amendments to their state constitutions. It failed nationally decades ago. and we have gay marriage, a liberty not yet granted by the feds.

                    2. re: hotoynoodle

                      I've never seen this at a restaurant, but every hair salon I have ever been to in Massachusetts has this policy. You can put the payment for services on your CC, but if you want to tip, it has to be cash.

                      When I once asked what the reason for the policy was, I was told that the salon's auditor recommended it. Seems kind of fishy to me, but I wouldn't stiff a stylist (or a server) because of it.

                      1. re: Isolda

                        I just ran into that in a nail salon on a visit to Pennsylvania. They reluctantly allowed me to put the tip on my bill since I was short on cash, but their posted policy was cash tips only. It may be that it makes accounting for a small business like that much easier.

                    3. re: thursday

                      In California it's illegal for the restaurant to deduct CC costs from the employees' tips. I've never been to a place that won't let you charge the tip, but I can see why one might not. Just seems really stingy on the part of the owner, and an inconvenience to guests.