Payment Choice and the Pain of Paying: Evidence on Tipping Behavior from Payment Diary Data
Type
working paper
Date Issued
2025-12-04
Author(s)
Abstract
We examine how payment methods and the perceived pain of paying shape tipping behavior. Using unique transaction-level payment diary data from Switzerland for 2024-2025, we estimate the effects of the most common payment instruments—cash, debit and credit cards, and mobile payments—on both the likelihood and amount of tipping. We also analyze how subjective pain of paying interacts with these tipping choices. Our results show that both payment method and the pain of paying exert statistically and economically significant influences on tipping behavior. Relative to cash, electronic payment methods are associated with a lower probability of tipping. However, this difference in tipping probability between the payment methods disappears when the bill totals a round amount, i.e. a multiple of CHF 5 or CHF 10. Conditional on tipping, electronic payment methods result in smaller tip amounts for an average bill amount of CHF 32.45. However, this effect reverts for bill amounts larger than CHF 90. We find no meaningful difference in tipping behavior between contactless and chip-and-PIN card transactions.
Language
English (United States)
Keywords
Payment Method
Pain of Paying
Payment Diary
Tipping Behavior
Payment Choice
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Subject(s)
Division(s)