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Here’s a tip for restaurant goers.
As more restaurants adopt digital payment systems that automatically suggest a gratuity option, debate has heated up over whether those tips should be calculated pre- or post-tax.
The topic of tipping and proper etiquette has long been a cultural debate, but the discussion drew recent attention after a Dave & Buster’s controversy, where customers accused the restaurant of running a tipping “scam” by covertly inflating the 20% standard.
Customers shared that tip suggestions differed based on whether they paid via a paper receipt or a digital payment platform, and the inconsistency had people wondering how tip amounts were calculated — and whether the system was increasing gratuity amounts on purpose.
Some suggested that the disparities were likely due to tax calculations. It appeared that the digital receipt gave a suggested tip based on a post-tax price, while the paper receipt offered a suggestion based on the pre-tax amount.
The Post has reached out to major digital payment platforms such as Square, Toast, Stripe, Revel, Upserve and Clover for comment.
However, two options could help restaurants hike tip prices without the customers even realizing.
When setting up tipping on Square, for instance, the account owner is asked to set a tip calculation and to select whether they would like tips to be added before or after taxes have been applied to the sale.
Digital platform Toast also allows the restaurant to determine whether a tip percentage should be calculated before or after tax, and the suggested tip amounts guests will see, according to their website.
In addition, the default setting on Toast for tip calculation is to calculate tip before tax is added to a check, so restaurants would have to change that manually.
Setting tip calculation to be post-tax lines up with online accusations that digital payment options calculate tipping differently than a paper receipt.
Looking at Square’s step-by-step guide for business owners, they can choose from a variety of tipping options when setting up.
With the automatic Smart Tip Amounts option, if a transaction is less than $10, the available tipping options are No Tip, $1, $2 or $3. For a transaction of $10 or more, the available tipping options are No Tip, 15%, 20% or 25%.
Set Percentage Amounts allows owners to enter three custom percentage options, as well as an option to allow customers to enter an amount of their choosing.
There’s also a Beta option where owners can choose to ask for tips before payment is made.
There’s additionally something on Square called round-up tipping, which will automatically populate a tip based on the total transaction size. If the total transaction is less than $20, the tip will round up the amount to the next $1. If it’s more than $20, it will round up the amount to the next $5.
So while Square’s operations are automatic, the restaurant has control over how much it chooses to collect.
Account owners or team members with items and inventory permissions also set unit prices themselves in the Square dashboard.
They can bulk import items, typically to upload the catalog or menu for the first time, as well as manually update and change individual items.
With consumers noticing more and more discrepancies on their bills these days, it might be worth checking the itemized bill given on the digital payment platform and comparing it to menu prices.
Beyond Square and Toast, other popular payment platforms handle tipping a bit differently.
Stripe lets restaurants choose what tip suggestions appear at checkout — the platform displays the options the business sets up instead of independently calculating or inflating tip amounts.
Revel and Upserve both let restaurants arrange the tipping options customers see — including what suggested tip amounts pop up — and some platforms like Toast also let businesses choose whether tips are calculated before or after tax.
Clover lets restaurants enable or disable digital tipping and choose what percentage options appear, but its docs don’t clearly show a toggle for pre- vs. post‑tax calculation — it calculates tips on the subtotal plus adjustments (including tax) by default.
In short, it’s not the platforms secretly hiking your tip — it’s the businesses themselves making the choices.
Customers who see discrepancies between digital and paper receipts are often just seeing the result of different settings or rounding rules on each system.
For example, Square’s “round-up” feature can push tips slightly higher depending on the transaction total, while Toast defaults to pre-tax calculations unless the restaurant changes it.
The takeaway for diners? If your tip looks off, check the receipt carefully.
Digital systems make tipping easier, but they can also make it easier for small inconsistencies to pop up — and now consumers are noticing.
As restaurants increasingly rely on technology for payments, the debate over pre- or post-tax tipping is unlikely to disappear anytime soon.
