Restaurants: Spaniards abandon cash for card payments, but still tip | Economy and business



Eduardo, waiter at Cantalejo in Madrid, with a tip left by a customer.Victor Sainz

Eduardo and his credit card terminal have been joined at the hip in the past year. Before the coronavirus pandemic took our world by storm, only a casual customer paid with plastic at the Cantalejo bar in Madrid’s La Latina district, where he works as a waiter. But, like in so many other sectors, the health crisis has changed the way Spaniards consume. And the vast majority of them are less attached to cash these days. “Now I always have my credit card device with me so I don’t have to make two trips,” he says.

Everything suggests that this new trend is here to stay. At first, the introduction of card payment seemed to threaten the practice of tipping, which in Spain often involves leaving the remaining pieces of the check payment. However, the industry says consumers have adjusted, and there has only been a slight dip in this appreciative gesture that raises the wages of people employed in the hospitality industry. “It is more and more common to leave a tip when paying by card,” explains Emilio Gallego, general secretary of Hostelería de España – an association of employers in the hotel industry – who claims that tips don’t have fallen by only 10% in recent months. , according to an internal survey.

If 41% of Spaniards regularly used a card to pay in 2019, this figure rose to 54% in 2020

David Fernández, owner of the Asturian restaurant Paixariños in Madrid, says eight in 10 customers now pay by card, which only happened occasionally before the pandemic. But he doesn’t believe this new trend is the end of tipping. “Maybe it’s because we work the sidewalk tables a lot these days, but people are leaving even more. He adds, however, that those who left a very small tip left almost nothing at all. “It’s the perfect excuse; they never bring small change, ”he says. Eduardo, from Cantalejos, agrees: “Card payments have gone up a lot, but we don’t see tips going down. What’s very common is they ask if they can include the tip in the card payment because they think my boss might keep it.

The Bank of Spain confirms that payments have become digital because of the pandemic. While 41% of Spaniards regularly used a card to pay in 2019 and 53% paid in cash, this figure rose to 54% in 2020 with 36% continuing in cash. In the case of retail and hospitality, the decline in cash payments was even greater; 70% of customers used a card in 2020 and 69% plan to continue using it.

David Fernández, owner of the Paixariños restaurant in Madrid, settles a customer's check with a credit card machine.
David Fernández, owner of the Paixariños restaurant in Madrid, settles a customer’s check with a credit card machine. Victor Sainz

The bank’s cash use report also reveals that hygiene was behind only 2.5% of the population’s suspension of cash use during the pandemic. The vast majority have switched to the card as half of establishments in Spain have promoted the use of alternative means of payment. The Spanish Association of Banks (AEB) estimates the increase in the sale of card readers at 9% last year.

The digitization of consumption has also boosted micropayment applications, such as Bizum, now commonly used in the hotel industry because it allows each guest to transfer their share of the bill to the person who paid it without commission. In the first half of the year, Bizum had already recorded more transactions than in the whole of 2020 and expects to reach 450 million transactions by December, compared to 212 million last year.

According to Fernando Rodríguez, Business Development Manager at Bizum, the next step for the app is for customers to be able to pay for restaurants and stores directly through Bizum. “Our idea is to fight against cash,” he says.

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Bizum is owned by around 20 major Spanish banks, and its goal of eliminating cash altogether indicates these companies are the ones benefiting the most from digitalization. The average rate applied in 2020 to each card payment was 0.35%, according to the Bank of Spain – a cumulative cost to businesses of € 562 million.

In the hotel industry, the rate is much higher – around 2%, according to Miguel Alonso, owner of the restaurant La Bodeguita del Arte, opposite El Retiro Park in Madrid. “The increase in card payments is a financial blow to me,” he says. “It seems like a small percentage, but if you charge $ 600 per day, we’re talking about over $ 4000 per year.”

The pandemic has also triggered other trends that are making consumption easier, such as the use of contactless payments, which increased by 45% during the pandemic, according to consulting firm Gfk. The use of mobile phones for payment is also gaining ground, which is already the preferred option of 12% of consumers, according to a survey by Spanish fintech Pecunpay.

Those who work in the hospitality industry agree that foreigners are the best tips, and the drop in tourism triggered by the virus outbreak has reduced that advantage for waiters. But, according to Emilio Gallego, the tradition of tipping has been in decline for years. “It’s true that in Spain tips are becoming less and less important, especially compared to other countries,” he says. “Today, the tip is nothing more than a small bonus, but not a large part of employees’ wages.”

english version by Heather galloway.



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