The mere sight of an iPad screen at a coffee shop is enough to make most Americans cringe.
In recent years, Apple devices have become synonymous with the country’s “tipflation” problem that has seen tipping culture spill over from bars and restaurants and into shops, takeaway chains and even self-service machines. service.
But there is one man who surely isn’t complaining. Billionaire Jack Dorsey’s tech company Square – which sells the software that powers many of these iPad payments – made a staggering $3 billion profit last year alone.
That’s a three-fold increase from what the company earned four years ago in 2018, when it earned about $1 billion a year. In the first quarter of 2023, it grossed $770 million, up 16% from the same period last year.
The numbers show how quickly these digital point-of-sale systems have taken over retailers and hospitality venues nationwide.
Square – which sells the software that processes iPad payments – made a staggering $3 billion profit last year alone
iPad screens have become synonymous with the country’s ‘tipflation’ problem, which has seen tipping culture spill over from bars and restaurants and into shops, takeaway chains and even self-service machines .
Square was founded in 2009 by former Twitter CEO Dorsey – who notably implemented a “tip jar” feature on the microblogging site – and Jim McKelvey. The men have a net worth of $4 billion and $1.4 billion respectively, according to Forbes.
In 2021, the company was rebranded as Block – but the branch that controls its point-of-sale systems retained its original name.
Shoppers might recognize its blue-and-white screens on iPad and iPhone checkouts asking how much they’d like to give away, with options typically starting at 18%.
His company’s accounts show that it processed $46.22 billion in transactions during the quarter of the year, the equivalent of $513 million a day.
The company – which works with merchants in all 50 US states and Australia, Ireland, Canada and Japan – facilitates card payments and takes a small slice of the amount from each transaction.
According to its website, it takes 2.6% and 10 cents on a contactless or “swipe” transaction.
For an entered transaction – when a customer manually enters their card information – they will charge a fee of 3.5% plus 15 cents.
If an employee receives a tip, it adds to the value of the transaction, which means Square gets more of the money back.
Square said it would be ‘inaccurate’ to say increased tipping is the reason for its profit explosion, saying the money it makes from tips on a transaction amounts to ‘mere pennies “.
Even so, the company’s earnings reveal how dependent retailers have become on these interfaces that customers have come to hate.
Historically, tips were only expected in restaurants and bars – or other places where people were expected by servers.
But recently, more and more shops and cafes have started implementing iPad point-of-sale machines that ask customers if they want to add a tip before completing the transaction.
Square was founded in 2009 by former Twitter CEOs Dorsey and Jim McKelvey, who have a net worth of $4 billion and $1.4 billion, respectively.
The trend was partly sparked by the pandemic which has seen stores reluctant to accept cash and in need of a quick and easy digital alternative.
Although they may say no, shoppers have often complained of feeling “guilt” when agreeing to the supplement.
Earlier this year, Square said BNC News that the frequency of tipping at quick service restaurants – including cafes and fast food chains – increased 16% in the last quarter of 2022 compared to the same period a year earlier.
Recently, shoppers have raged saying that even self-service machines even ask for tips, despite having no interaction with an employee.
And the topic made headlines again when it emerged that Apple employees at a Maryland store were lobbying to allow customers to tip its employees.
Experts say the transition from physical tip jars to screens has caused a shift in customer attitudes.
Professor Michael Lynn, professor of consumer behavior at Cornell University, told Dailymail.com: “iPad screens make it harder for customers to say no.
“Before, customers only saw a tip jar and could skip it if they wanted. But now they have to actively say “no”.
“A lot of people line up at a cafe and worry about what the guy behind them thinks.”
He added that the minimum amount set by the retailer for tipping also has an impact.
Square says its merchants can choose not to include the tip option in their payment system.
And they can also set their own minimum amount at which tipping starts.
Shoppers on Twitter have complained that some vendors set their minimum tip option at 30%.
“The higher you set this amount, the more likely customers are to click on it, and the more money the worker will receive,” Lynn said.
Square is not solely responsible for all iPad transactions as it has several rivals in the field.
A similar company called Toast made $511 million in gross profit last year, a 63% year-over-year increase from 2021.
In the first three months of the year, the company made gross profit of $174 million, a 96% year-over-year increase.
Toast is exclusively used in restaurants. Square and Toast have been contacted for comment.
The Man Behind the Brand: The Eccentric Life of Jack Dorsey Who Once Tried to Spread Tips on Twitter
Square was founded in 2009 by former Twitter CEO Jack Dorsey, pictured, and Jim McKelvey
Just two years after Jack Dorsey co-founded Twitter in 2006, he was sensationally named CEO.
The businessman, now 46, was portrayed as an eccentric manager famous for his clashes with his board members in the book Twitter outbreak on the beginnings of the company.
In 2011 he returned as executive chairman before becoming CEO again in 2015, stepping down once again in 2021 amid Elon Musk’s bid for the company.
Before leaving in 2021, he set up a “tip jar” feature on Twitter where users could pay for prominent voices on the site.
He said at the time, “The first thing we want to focus on is this economic incentive for people who contribute to Twitter.
“It can come from a regular subscription, it can come from unlocking content, it can come from tips.”
Dorsey was a two-time college dropout, certified masseur, and hobby fashion designer when he decided to turn to tech.
In 2009 he founded Square as a payment processing solution and within two years had two million US users.
His rise to billionaire status surprised those who knew him. A former employee told the New York Post in 2021: “No one expected Jack to reach the heights he did. He was a semi-homeless hippie software developer who surfed on the couch.
Dorsey is famous for his generous philanthropy: in 2020, he pledged to donate $1 billion of his Square shares to fund Covid-19 relief efforts, universal basic income and healthcare support and girls’ education.
He has previously claimed that he incorporates fasting and daily ice baths into his daily routine. Her hobbies include yoga and skirt making.
