Written by Marcia Heroux Pounds of South Florida Sun-Sentinel. This article appeared on the front page of Sun-Sentinel’s Money Section on Jan 14.
Like many Americans, you whip out your credit card to pay for your fabulous new look from your favorite salon. But the salon won’t let you add a tip, and you forgot to get cash.
What to do? Jump on the Tippy app on the salon’s iPad at the checkout counter to thank your stylist with a generous tip. Tippy, a new app by a Fort Lauderdale startup, makes it convenient for customers to leave tips for their hair stylists and spa workers when they don’t have cash and can’t add them to their credit-card tab.
The app, launched in early December, is already being used in 60 salons, according to parent company DirectTips, which has raised more than $3 million. It’s in support of the company’s nationwide rollout of placing an iPad featuring the app in salons.
Modernizing tips
The idea for Tippy came from conversations between two brothers-in-law, David Tashjian and Terry McKim.
“The salon and spa industry has been slow in catching up in the money-processing business and payment-processing business,” Tashjian said. “The app is solving a huge problem in the industry.”
DirectTips was co-founded in 2015 by Tashjian, CEO and president, an entrepreneur who founded Atlanta-based company Linq3, which allows consumers to buy lottery tickets along with their groceries. Other co-founders are McKim, chief information officer, who founded Digitizing, a digital advertising company; and Terry Derr, founder of Pennsylvania salon chain, Lords & Ladies.
Of course, there are other tipping apps available to consumers, such as Venmo and Square Cash that transfer money via a cellphone. But Tashjian said Tippy offers the convenience of being part of the salon checkout.
Jasen William, owner of the Jasen William Salon in Coral Springs, said customers immediately liked Tippy because of its “ease of use.”
“The customer has something visual to look at to add a gratuity,” he said.
Making it a breeze
Stylists like it because they can see the tip on their cellphone app, and they get a direct deposit into their checking or savings by the next day, he said.
The app is also making a difference in the size of tips, according to the salon owner and one of his hair stylists, Christine Justice.
“My tips have never been this high,” said Justice, 21, who has worked at the salon for two years. She said many stylists live “paycheck to paycheck,” so Tippy helps manage tip money. “When I have cash, it disappears. Now it’s a little more controlled,” she added.
McKim said many salons don’t allow customers to add a tip to their credit card, but even if they do, the stylist has to wait for next paycheck to receive that tip.
Tashjian said salons set their own range of tip options on Tippy. Most salons select between 20 percent, 25 percent and 30 percent.Customers also can choose “other.”
If they wish, customers also can tip multiple people at the salon, because they may receive several services during their visit. Those names pop up on Tippy as they checkout to allow them to choose tip levels.
So far, the percentage-tip method is reaping higher tips for stylists, Tashjian said.
“Somebody gets a $200 cut and color. They’re used to giving a $20 tip, but they’re not thinking that was [only] a 10 percent tip. The iPad starts at 20 percent, so the tip goes from $20 to $40,” he explained.
The customer pays a convenience fee for the Tippy transaction, which is roughly a dollar, he said.
Salons offering Tippy pay a monthly subscription fee of $29.99 for the service, but receive a free Tippy Kiosk, which consists of an iPad and stand, Tashjian said.
The iPad system doesn’t do payroll or submit taxes — that has to be done through the salon’s own services.
Eventually, DirectTips is planning to help hair stylists and spa workers with tip money management via the app, he said.
“Our big goal is financial empowerment of the stylists,” said Tashjian, who said some hair stylists have had trouble getting bank loans because of income verification. “We don’t want to be a financial adviser, but to provide the tools to save or spend money.”
At Jasen William Salon, “some stylists have opted to open a savings account so tips go directly into it,” William said.