Question About Credit Card Use at Restaurants

[alamogunr]

I know there is another thread similar to this but I can't find it and my question is somewhat different.

I always use a credit card when paying for a meal at a restaurant and include the tip. If I check the charge on the credit card site, it will only show the base amount of the charge w/o the tip. I always see the total amount in a few days. What is the reason for this?

[reddog81]

1. They give you the bill.
2. You give then the card.
3. They run the card for the meal total and it is processed as an initial authorization or pre-authoriziation
4. They give you a receipt with a line for the tip.
5. You fill in a tip and the total amount.
6. They update that initial authorization and process the final transaction.

A similar process happens at many gas stations. When you enter your credit card at a pump it has no idea how much gas you will pump. Some stations run an initial pre-auth amount of $1 to verify the card is valid, however when gas prices go up and drive-offs spike they might up that to $100 or more depending on the station. The gas station releases the $1 or $100 or what ever the amount is immediately and then charges the correct amount. The bank will sometimes show that pre-auth amount sitting there for a day or 2 until it expires.

[Scrounge]

I know there is another thread similar to this but I can't find it and my question is somewhat different.

I always use a credit card when paying for a meal at a restaurant and include the tip. If I check the charge on the credit card site, it will only show the base amount of the charge w/o the tip. I always see the total amount in a few days. What is the reason for this?

They run the charge for the meal as it's printed on the bill, then when you write in your tip, and sign the bill, they process the new balance, and dump the old one. Or as reddog81 says.

Bill

[alamogunr]

1. They give you the bill.
2. You give then the card.
3. They run the card for the meal total and it is processed as an initial authorization or pre-authoriziation
4. They give you a receipt with a line for the tip.
5. You fill in a tip and the total amount.
6. They update that initial authorization and process the final transaction.

A similar process happens at many gas stations. When you enter your credit card at a pump it has no idea how much gas you will pump. Some stations run an initial pre-auth amount of $1 to verify the card is valid, however when gas prices go up and drive-offs spike they might up that to $100 or more depending on the station. The gas station releases the $1 or $100 or what ever the amount is immediately and then charges the correct amount. The bank will sometimes show that pre-auth amount sitting there for a day or 2 until it expires.

So they(the restaurant/server) doesn't get the tip until whoever goes into the system and adds in the tip amount. It would seem that the interval could be the same day or two mentioned in the gas station example. Woe to both if the update gets overlooked. Is there anything in the system to prevent this?

EDIT! i posted this after Scrounge posted so only the very last question remains unanswered.

[jonp]

1. They give you the bill.
2. You give then the card.
3. They run the card for the meal total and it is processed as an initial authorization or pre-authoriziation
4. They give you a receipt with a line for the tip.
5. You fill in a tip and the total amount.
6. They update that initial authorization and process the final transaction.

A similar process happens at many gas stations. When you enter your credit card at a pump it has no idea how much gas you will pump. Some stations run an initial pre-auth amount of $1 to verify the card is valid, however when gas prices go up and drive-offs spike they might up that to $100 or more depending on the station. The gas station releases the $1 or $100 or what ever the amount is immediately and then charges the correct amount. The bank will sometimes show that pre-auth amount sitting there for a day or 2 until it expires.

One of my crypto cards runs $100 and it shows on the bill but im not charged it, of course. First time this happened I called and had it explained to me. Never knew about the pre authorization thing

[reddog81]

So they(the restaurant/server) doesn't get the tip until whoever goes into the system and adds in the tip amount. It would seem that the interval could be the same day or two mentioned in the gas station example. Woe to both if the update gets overlooked. Is there anything in the system to prevent this?

EDIT! i posted this after Scrounge posted so only the very last question remains unanswered.

If the server forgets to update the tip amount and send the final transaction through it should show up as an outstanding item when they go to close up shop for the night. If the server closes out the transaction without adding the tip, it's on them I suppose. The fact that it takes a few days for you to see this is just a matter of how quickly the banks process various transactions. Restaurants point of sales will generally submit transactions daily so they are paid ASAP.

[reddog81]

One of my crypto cards runs $100 and it shows on the bill but im not charged it, of course. First time this happened I called and had it explained to me. Never knew about the pre authorization thing

It really does vary by card and bank. A lot of places process it so quickly that most people never notice. Issues arise when the station does a $100 pre-auth and the person fills up for $150 and they only have $105 balance left... The station can setup the pumps to shut off at the pre-auth amount but then you have people who want $150 in gas, have the ability to pay, but the pump shuts off at $100.

[45_Colt]

Personally, I always tip in cash. The reason is that many restaurants charge the server the CC fees. So they don't get the full tip. On top of that some places take a cut of a CC tip. Plus, it goes on the taxable income form (W2) they get at the end of the year.

Being a server is a tough job, it helps to make it easier.

45_Colt

[Scrounge]

When folks at the various places ask if I want the ticket, receipt, or bill that I've paid with a card, I tell them "Yes, it helps me figure out what I did with all that money at the end of the month." Mom was a single-parent waitress, at Denny's for 40 years total, plus Spires and some others. Back in the day bfore credit cards, we lived on her tips, and if there was a night that tips weren't all that good, we might not get to eat that night. Most of the time, I tip in cash so the waitstaff get it that day. A little windfall can make the difference between feeding the kids and having gas to get to work the next day.

And if the service is crappy, you can leave a couple of pennies on the table, and it tells them the service wasn't worth two cents, but you feel guilty not leaving a tip, and they may improve, unless they're a Karen.

Bill

These days, with money kind of tight, I don't eat out all that often, but when I do, and if the service is anywhere near decent, I tip between 30-50% of the bill. With a really good waitress (or waiter) sometimes I tip more. Waitstaff tip the busstaff, and sometimes the cook, as well, so they often don't get to keep all their tips. And I'm the only one in my family in five generations that has not worked food service. I throw bread on the waters in hope that if my kids are in need of good tips, that there are folks out there who remember how exciting it is to get a good tip. My son currently makes toast, and busses table at a restaurant in one of the hotels downtown. He's been there over a year, has gotten tipped by a customer three times now, and puts every dime of his tips in savings. I do hope one day he'll find a better job, but he has the customer service idea down pat. He's also autistic, and doing so much better than the doctors led us to believe he would.

[Handloader109]

We think these stores and restaurants get the money the same or the next day if we go out at night. It takes several days to get the deposit into your bank. When I process a cc, it takes 2 to 3 business days to go to the bank and then another day to deposit. It's one reason I like cash and pay that way as much as possible. Including tips.

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[Geezer in NH]

I tip in cash! To many of my family have been waitresses screwed by the restaurant of the credit card "TIP". Many get frauded by the owners themselves.

My great niece had a boyfriend that was convicted of fraud by the Feds for card frauds. Had a serious talk with her she finally dumped him when he said everyone does that to her. Smart girl by the way.

[Mal Paso]

Restaurant wait staff are taxed on tips Whether They Get Them Or Not. Totally unfair but that's the IRS. You are assumed to have made tips even if you didn't get a dime!

[alamogunr]

I'm glad I started this thread. I have always paid/tipped with credit card. My card pays points on amount charged. I try to tip at least 20%. I never thought about the waiter/waitress not getting all of it. I think I will start leaving my tip on the table and maybe increasing it a bit. I know they went thru some lean times during the covid restrictions. It should be easy to up the tip to the next $ or more if that is too small an amount.

[GhostHawk]

I prefer to pay both bill and tip in cash. Although I have used the card at times. I guess I did not watch it closely enough fast enough to see the updated charge vs the initial.

Really good service will get you a 20% tip from me. Mediocre service will be 10-15%. And I have not failed to tip wait staff since my daughter spent 3 years working as a waitress and I found out how little they were paid.

Simple for me, you do the minimum of effort and you get the minimum of reward. Go above and beyond to make my night special and I will do the same.
Basic honesty IMO. YMMV.

[trails4u]

Personally, I always tip in cash. The reason is that many restaurants charge the server the CC fees. So they don't get the full tip. On top of that some places take a cut of a CC tip. Plus, it goes on the taxable income form (W2) they get at the end of the year.

Being a server is a tough job, it helps to make it easier.

45_Colt

^^^^This!!!!!!^^^^

[dverna]

Restaurant wait staff are taxed on tips Whether They Get Them Or Not. Totally unfair but that's the IRS. You are assumed to have made tips even if you didn't get a dime!

And we will soon have 87,000 more agents to catch them.

[lightman]

Personally, I always tip in cash. The reason is that many restaurants charge the server the CC fees. So they don't get the full tip. On top of that some places take a cut of a CC tip. Plus, it goes on the taxable income form (W2) they get at the end of the year.

Being a server is a tough job, it helps to make it easier.

45_Colt

I tip in cash too! I just want to be sure the server gets the tip. I've known establishments that took a % and even a few that kept all of it. What the server does with it tax wise is up to them.

[PopcornSutton]

I never use my card where it is not in my sight. I don't even like when they put their mitts on it to swipe it themselves. In a restaurant, they go way in the back to run the charge and you have no idea what they do. I pay with cash, tip with cash. If I'm eating out, I prepare before I go.

[jonp]

Always tip cash. What gets me is when i order out, go pick up the food and they ask me if i want to leave a tip. For handing a bag of food over a counter? Nope.

I did have one guy approach out table at a Waffle House. Said he was getting off shift and wanted his tip before he left without knowing if i was even going to leave one. What i told that entitled little dweeb would get me censored

[Thundarstick]

The ONLY time I've ever been the victim of credit card fraud was by a restaurant staffer! I now scratch that security code of the back of my card, record it in code somewhere else in my wallet and to memory. If your card is out of your sight, it can be used later, or sold to someone else a thousand miles away and used!
I try my best to have cash for eat outs as well, and having 4 children that ALL worked as food staff at various times I almost always tip very well!
I'm going to throw out a BIG gripe they All Had for US Christians to keep in mind. Ask anyone who's in the restaurant service, who the worst, most demanding, hardest to please customers are, and you'll be told the after church croud at Sunday lunch! Let that sink in.