The scourge of digital guilt-tipping could soon be on its way to Uber – MarketWatch


It may be time to tip your Uber driver — whether you want to or not.

The New York Taxi and Limousine Commission announced Monday that credit card-based car companies such as Uber should offer a tipping option within the company’s app. The Independent Drivers Guild, a union which represents 50,000 ride-hailing drivers in New York City, delivered a petition with 11,000 signatures and estimated that all this extra tipping for car-ride apps would generate an additional $300 million a year in tips in New York City alone.

Last year, Uber settled two class-action labor disputes covering 385,000 drivers in California and Massachusetts that allowed Uber to continue classifying drivers as contractors rather than employees. As part of that agreement, it also agreed that drivers could alert customers that tipping is not included and drivers who want to be tipped could say that. But it did not make in-app tipping standard and other research suggest that most people would rather not tip their Uber driver.

The New York move suggests that car-ride services are unlikely to remain free from digital tipping. A spokesman for Uber said the company hasn’t seen the New York Taxi and Limousine Commission tipping proposal, but will review it. “Uber is always striving to offer the best earning opportunity for drivers,” he said. A spokesman for rival car-ride service Lyft added, “We’ve always known that offering in-app tipping is the right thing to do, which is why we’ve offered it since our earliest days.”

More companies like Seamless and Grubhub GRUB, +0.99%  tipping on their apps to make it easier for customers to part with their money. And this study shows that when people are presented with three tip choices — 20%, 25% or 30%, for example — they’re more likely to choose the middle option even if it’s more than the traditional 20%, according to one analysis of 13 million New York City taxi rides by the University of Chicago’s Booth School of Business.

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Consumers like to avoid social anxiety and guilt. There’s a hefty body of academic research — like this Journal of Marketing Research study, “The Effect of Forced Choice on Choice,” by two professors of marketing at Yale University and Stanford University — show the middle option as a “compromise” for consumers. It “provides an alternative way of resolving difficult choices that is not available when subjects are forced to choose,” the study found.

But a study released in 2015 found that at least some consumers are losing patience with digital tipping. Some 29% of respondents say they would actually be more likely to leave a tip if they were presented with a “no tip” button to allow them to opt out, the study by Software Advice, which helps businesses choose software, found. That said, other respondents still tip what they want regardless of suggested tip amounts or the presence of a “no tip” option.

And the nearer you are to the tippee, whether it’s a barista or an Uber driver, the more like you are to tip. While digital tipping has yet to go mainstream outside of cafes and taxis, American consumers are more likely to touch-type a tip if the staff member is standing (or sitting) expectantly nearby. Some 41% of respondents say close proximity to the server/cashier while entering a tip amount would make them more likely to tip, the 2015 Software Advice study found.

There are advantages to digital tipping over regular tipping (or even no tipping). It relieves customers of the pressures of doing the math on a tip — especially in front of others — and helps them avoid what psychologists call the “pain of paying” when they don’t have to rifle through their wallet to leave a cash tip, says Nir Eyal, author of “Hooked: How to Build Habit-Forming Products” and a researcher on consumer behaviors. Uber customers, meanwhile, face the pain of whether to tip.

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