Ins and Outs of Tipping with Gift Cards with CardNow

Written by: CardNow

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Let’s face it – Americans are somewhat unique with traditions of tipping wait staff at full-service restaurants. However, as long as the tradition continues, and we want to continue paying and tipping with gift cards at restaurants, there are some etiquette rules and transactional tips you should know.

If you are in a time crunch, here’s a brief summary of tipping with gift cards:

  1. Yes, you are still expected to tip if you are paying with a gift card.
  2. Be sure to know your balance before you go. (Or order online.)
  3. If your total bill (including tip) is more than your gift card, either tip in cash OR add the tip to your credit/debit card payment. Helpful hint – if your gill excluding tip is less than your gift card amount, ask your server to put at least $.01 on a credit/debit card, so that you can add your tip there.

Restaurant Tipping 101

One of the first things to remember is that, in most restaurants, the tip you leave is not just for the waiter, but is shared with the entire service team. Depending on the restaurant, the tips may be put into a pool of funds for the staff working the entire shift. Restaurant rules may require each individual server to “tip out” the support staff – busser, runner, back-waiter, and/or bartender.

Also, in many states the minimum wage for tipped waitstaff is significantly lower than standard minimum wage. The federal minimum wage for tipped staff is only $2.13, with earned tips making up the difference to the standard minimum wage. 

Restaurant Tipping Etiquette

Now that we know who we will be tipping at the end of our meal, we have to determine how much.

At full-service restaurants (with a waiter), the usual tip is 15%-20% on the pre-tax amount of the bill. If your waitperson provided exceptional service, helped with menu advice, dietary challenges, or assisted with wine, err on the 20% side. Tipping on exceptional service begins at 20%.

If you use a coupon, it is customary to tip on the amount of the full-priced meal. After all, the waiter and staff haven’t worked any less!

How to tip using the restaurant’s own gift card:

Paying with 100% Gift Card

If your check, plus your desired tip amount is less than your gift card balance, tipping is easy! Simply provide your gift card to your server as your method of payment.

Be sure that your gift card balance covers the check plus the full tip amount you wish to pay to the waiter – customarily 15%-20% of your bill.

Paying with Gift Card + Cash

If you wish to pay for any tip or balance owed after using your gift card with cash, simply use the gift card balance first, then make up the difference with cash. Simple!

Paying with Gift Card + Debit/Credit

If you wish to pay for any tip or balance owed after using your gift card with a debit or credit card, things are a bit more tricky.

If your bill (pre-tip) is more than the balance of your gift card, simply ask the waiter to use your gift card first, then place the remaining balance on your debit or credit card. By paying part of your bill with a debit or credit card, you will then be presented with a receipt allowing you to write in a tip amount.

If your bill is less than the balance of your gift card, ask the waiter to put $.01 on your credit or debit card, and the remainder on your gift card. By authorizing $.01, you will be given a receipt with a space to fill in the amount of tip you wish to charge to the card.

How to tip using a Happy Card, Visa®, or MasterCard®, Gift Card:

Happy Cards Tip: If you are using a Happy Card (such as Happy Moments  or Happy Dining), you may not be able to order food online for pickup or delivery. The cards are designed to use (and work best) when dining in person.

Almost all restaurants, when accepting debit, credit, Happy Cards Gift Cards, Visa Gift Cards or Mastercard Gift Cards, all place a temporary hold on the card for an additional 20% of the check amount, in order to cover the tip. This extra “hold” amount may cause your Happy Card, Visa or Mastercard Gift Card to decline. And yes, this hold occurs even in situations where the restaurant has already included the gratuity – such as for large parties.

If you don’t find math fun, here’s an example to make it easier. Our fictitious couple, Mike and Amanda, went to eat at a casual, sit-down restaurant. They have a Happy Moments gift card with a $40.00 balance.

Mike and Amanda’s meal comes to $36.00, including tax – but not tip!

When the waiter runs the Happy Moments Gift Card, the point-of-sale system automatically applies a 20% hold ($7.20), plus the $36.00 dinner – for a total of $43.20.

Since the  Happy Moments Gift Card they are using only has a $40.00 balance, the card is declined.

To avoid joining Mike and Amanda with a declined gift card, you need to be sure to:

  • Have sufficient balance on your Happy Card, Visa or Mastercard Gift Card. This will  cover the cost of your bill, tax, and 20% additional funds.
  • Ask the waiter to do a split tender transaction (meaning – use two different methods of payment) with either cash or another credit or debit card.
  • Specifically ask for the Happy Card to only be run for $33.32, and your other card for the remainder. This  allows you to pay the tip with your other method of payment. You will have a $6.68 balance on the Happy Moments Gift Card to be used next time.

We hope your next restaurant gift card dining experience goes smoothly! Bon Appétit

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