Why don’t tips show up on credit card charges?

Have you ever wondered why the tip you left at a restaurant doesn’t always show up on your credit card statement? Well, it turns out that the reason is not something many customers are aware of. In an article titled Why don’t tips show up on credit card charges?, author Emily Price sheds some light on this often overlooked issue.

The article explains that when a customer pays for a service with a credit card, the total amount charged is authorized on the spot. However, the amount that includes the tip is not finalized until the customer signs the receipt. This means that the initial charge is the base amount of the bill, and the tip is added or adjusted after the fact. For merchants to streamline this process, they may charge the base amount first and then manually enter the tip amount later, leading to a separate charge on customer’s card statements.

While it may seem like a minor inconvenience, this practice can lead to confusion and discrepancies in customers’ spending records. Additionally, it can make it difficult for customers to accurately track their spending and budget accordingly.

This issue is particularly important now, as contactless payments and touchless transactions become increasingly common in the wake of the COVID-19 pandemic. As more customers rely on credit card transactions for safety reasons, it’s important that merchants and credit card companies improve their systems to ensure that tips are accurately reflected on card statements.

In conclusion, understanding why tips don’t always show up on credit card charges is important for both customers and merchants. By improving the systems used to process credit card transactions, we can avoid unnecessary confusion and ensure that hardworking service industry workers are properly compensated for their work.