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Generous Tips Restricted By Credit Cards

By Giordano Ciampini

A curious case emerged this past October when a server at Guiones' Gilded Iguana was tipped large by a generous customer. The finale take for the server, however, was only a fraction due to a little-known policy by credit card companies to restrict tip pay-outs.

Andrey “Coco” Eduarte was left with only twenty-five percent of the total amount he was tipped, “you feel like 'oh this guy wanted to treat me really well,'” he said.

The customer's bill was 50.000 colones, dinner and drinks for a group, and the credit card slip shows a desired tip of 25.000 colones. However, due to the policy of tip restrictions imposed on each separate transaction, the total take for Eduarte was only about 6.300 colones.


“At first,” Eduarte explains, “it makes me feel good because they gave me a tip for good service, but then I feel bad for the customers because they want to treat the servers well, but they aren't allowed to because of the policy.”

The Iguana's owner, Joellen Hughes said that it's unfair to her staff, “they show it to me every time,” she explained. “It's been happening for years, and I want to switch banks, so I'm probably going to contact them anyways, because it's sort of the straw that broke the camel's back.”

The policy is one that Banco Nacional de Costa Rica is well-aware of, according to Electronic Payment Methods Director Marcos Vinicio Calderon, and he explained that the credit card companies have instituted it in order to combat fraudulent activity using credit cards, a popular medium for identity theft and other illegal activities.

“Effectively,” he explained. “In the operating rules we're given by the Credit Card companies, there exists a restriction on how much a customer can add as a tip, and it is not permitted to exceed 15% for VISA cards, and 20% for MasterCard.”

“Banco Nacional is obligated to follow these rules,” allowed Calderon.

Although there is a belief among few that the banks are pocketing the remains of tips after pay-out, the concern has no basis in fact.

The transaction is processed electronically, and the tip is calculated, the customer is charged, and the total is paid out if it's below the threshold dictated by the companies. In cases where the tip is more than the restricted amount, the customer is only charged the maximum of what the card provider allows, and the rest stays in the customer's pocket.

Militza Gonzalez, VISA's representative for Latin America and the Caribbean, told VON originally that “VISA doesn't impose, limit, or control any tips within any transaction.” While MasterCard's public relations said much the same.

After some discussion back-and-forth between banks, card processing companies, and the credit card companies themselves, VON was able to get a confirmation of this policy from MasterCard's Latin America and Caribbean communications leader, Angelica Gutierrez.

“To prevent misuse of payment mediums, and to protect cardholders, there is a limit on each transaction of 20% on top of the total bill which can be authorized [as gratuity].” Said Gutierrez.

BNCR's Calderon elaborated on the reason this sort of consumer-protection measure is in place. “It has been seen, in few cases,” he explained. “When a cardholder indicated that they did not want to add a tip, and the merchant switches it. This situation has generated claims from clients,” although how many cases have been recorded, he did not mention.

“I see where the credit card companies are coming from as a fraud-related issue,” said Hughes. “They just don't want to deal with the complication of paperwork for every fraud case when the customer gets back to their country.”

However, since this process is in place, and generous customers want to continue to try tipping more than the card-restricted amount, “it's going to have to be in cash,” says Hughes.

MasterCard offered another, albeit more cumbersome, alternative. “If a cardholder wishes to give an amount larger than that [permitted], they could create another transaction for the payment of gratuity.”

“Every day the servers are losing money,” sighed Hughes. “I feel that customers should be aware of the process, but to try and tell them tableside is really awkward on our part. We've tried putting it on our receipt holders, we've thought about a sign somewhere in the bar, but it's just awkward to say.”


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Letter from the Editors
Celebrating Ten Years of Connecting Communities, and More to Come

For ten years now, the Voice of Nosara has been serving Nosara and the surrounding communities with the goal of connecting and uniting people—not just people in different towns but people of different backgrounds, nationalities and languages.

Citizen Journalists (THAT MEANS YOU!) Are Shaping the Future of Reporting

“Citizen journalism” has become a standard part of the way we gather and report news. But that was not always so.

Interview with Liza Vogt, Voice of Nosara’s First Publisher

Why was the newspaper started? 
VON was started for two reasons: to dispel many of the rumors that were constantly flying around Nosara and also to inform residents and tourists of current situations and upcoming events.

Most Talked About Stories

Our editors reviewed every print edition of The Voice of Nosara from October 2002 until September 2012 and chose the most talked about stories based on letters to the editor, comments made to reporters or on Facebook and follow-up stories.

The Most Repeated Themes During Ten Year

Our editors reviewed every print edition of The Voice of Nosara from October 2002 until September 2012 and counted how many articles were printed on each subject.

“They want to kick us out when we’ve lived here all our lives,”
Oscar Chavarría, resident of Garza

“I’ve lived here for 30 years and now they tell us that they want to annul our property titles and kick us out of our homes,” commented Oscar Chavarria indignantly. He lives in Playa Garza with his wife and daughter.


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