Why bar staff may sniff at your credit card tips

PUBLISHED : Sunday, 25 April, 2010, 12:00am
UPDATED : Sunday, 25 April, 2010, 12:00am

Hong Kong's most widespread rip-off is worse than you thought.

Not only are unscrupulous bar and restaurant owners keeping the 10 per cent service charge rather than passing it on to their staff, in many establishments owners also use the tips that customers add to their credit card payments to pay commission fees charged by card companies.

Credit card companies charge businesses a commission for accepting their cards. If a customer foots his bill using a credit card, the card company charges the establishment up to 4 per cent on the final bill.

But instead of paying the 4 per cent out of their own pockets, some bar or restaurant owners pay it out of the service charges or tips that are supposed to go to staff.

Toby Cooper, director of the Globe bar in Central, is a staunch advocate of leaving tipping at the customer's discretion and then sharing out the tips among staff. He condemned the act of paying credit card commissions with staff tips.

'On every credit card the merchant pays between 2 and 4 per cent commission,' he said. 'But what a lot of companies do is that they take this 2 to 4 per cent commission out of the tips. Then whatever tips are left are divided among the staff.

'Basically the credit card commission is not paid by the company - it also comes out of the staff's tips. It's a joke, but it's done here all the time - which is ludicrous.'

Some bars and restaurants in Central take 10 per cent of all the credit card tips and put it towards the Mandatory Provident Fund contributions they must make for staff. This is not illegal.

Since the Sunday Morning Post's report last week about the common practice of pocketing the service charge among upmarket bars and restaurants, restaurant activism has emerged.

Ronald Pineda, manager of Al Dente in Wan Chai, is one who is determined to do something about it.

'I've spoken to managers and staff in other restaurants and we feel it's time that our voice was heard,' he said. 'That all this is taking place is a disgrace and we are all really sick of it. All we want is to be treated fairly.'

Pineda said the salaries of many staff were very low and that they depended on the tips to get by.

Some companies say they are struggling to make ends meet and have no option but to keep the charge, while successful businesses see it as a way of improving profits.

'We intend to fight for our rights and bring this to the attention of the government,' Pineda said. Cooper added: 'There were plenty of issues with it in Britain, where employees got sacked because staff were telling customers not to leave tips on their credit card because they didn't get them. It's ... another way of owners not having to pay themselves.'

It's theirs to pay

The percentage of the final bill that businesses must pay credit card companies is up to: 4%