Tech Is Allowing Businesses to Overcharge You in Tips

The devil is in the defaults.

In 2013, Square released a point-of-sales product that replaced cash registers by letting vendors input an order into a tablet and letting customers swipe a credit card to add their signature and tip. Square has said its products have led to big increases in tips for many businesses. Its technology has since been widely copied by many brands, and traditional cash registers are a rare sighting.

A key driver of the success of digital payment systems, design experts said, is that they take advantage of a design principle that influences consumer behavior: The default is the path of least resistance.

Payment technologies allow merchants to show a set of default tipping amounts — for example, buttons for 15 percent, 20 percent and 30 percent, along with the “no tip” or “custom tip” button. That setup makes it simplest for us to choose a generous tip, rather than a smaller one or no tip at all.

Plenty of studies document this type of behavior. Ted Selker, a product design veteran who worked at IBM, Xerox PARC and elsewhere, led past research on encouraging people to register to vote. He found that they were more likely to register if that option was preselected when they filled out applications for driver’s licenses and address changes. In other words, people were much more likely to not opt out than they were to opt in.

A Square spokeswoman said the company’s payment technology does not allow merchants to preselect a tip amount (except when tips are automatically added for large groups in a restaurant, an industry standard). But in my experience, some of Square’s copycats allow merchants to do so.

A broader issue remains: When businesses that don’t ordinarily get tips use technology to present a tipping screen, they require the consumer to opt out.

“It’s coercion,” Mr. Selker said.

On the bright side, the gratuity screens are not considered deceptive, said Harry Brignull, a user-experience consultant in Britain, because the “custom tip” and “no tip” buttons are roughly the same size as the tipping buttons. If the opt-out buttons were extremely difficult to find, this would be an abusive practice known as “dark patterns.”

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