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How do restaurants process tips

Those among us who ponder the things around might have a question about how restaurants process the tip which you write on the receipt.

The usual procedure is for a waiter to bring a bill in a bill holder. If you are paying by card, you insert your card into the holder, and hand the holder back to the waiter. The waiter brings the holder up front to the cash register and swipes your card for the bill amount. If the card payment goes thru, two receipts are brought to you. One is usually the restaurant register receipt, and the second is the POS card terminal printout (the smaller of the two, usually). You take out the card, and keep the POS card terminal receipt. 

There is a section on the larger receipt to write in an additional tip amount and to sign below. Well, your card was already swiped, and you took it out, so how is the tip handled?

Answer: Restaurants are allowed by the card company to do adjustments. The amount which will be taken out of your card can be adjusted after the card was swiped and the money has been taken out of your card account. The adjustment can be done immediately (right after you write in the tip amount), when they batch out, or at the end of the day. 

For the curious, here is some additional information. If you use your debit card in the restaurant, it gets treated as a credit card. The amount from the bill is deducted from available balance, but is held as a pending amount. In these cases, debit card companies such as banks may display two different amounts, one being a listed balance and one being available balance.The difference is the pending amount. Some smarter companies (like Capital One, for example) now display the exact information about pending transfers. The deduction usually happens within 36 hours.

The debit card is only used as a debit card (immediate transfer) if you enter your PIN at the point of sale.

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