In the restaurant and hospitality industry, loyalty goes beyond just customer relationships—it’s about the commitment and reliability of the workers who keep operations running smoothly. As this workforce undergoes a transformation, innovations like instant digital payouts are emerging to tackle longstanding challenges such as income stability, employee turnover, and overall job satisfaction.
The recent partnership announcement on Wednesday (Aug. 28) between Kickfin and the Toast Partner Ecosystem underscores this shift. Now, Toast customers can instantly calculate tip distributions and send payments directly to employees’ preferred bank accounts, eliminating the need for cash or pay cards. This development is quickly establishing instant digital payouts as the new standard for the restaurant industry.
“What we’ve seen is that operators have been spending close to an hour each shift actually doing the calculations, dividing up the cash tip pool, trying to understand what each and every employee is making,” Justin Roberts, Co-Founder at Kickfin, told PYMNTS’ CEO Karen Webster during a conversation with Drew Edwards, CEO at Ingo Payments. “Tipping is here to stay, and it’s only becoming more complex. The expectation for instant and flexible payout options is just beginning and is trending strongly upward,” Edwards added.
Data from PYMNTS Intelligence shows that 62% of restaurant workers prefer to receive their tips on the same day, with 37% wanting them immediately, reflecting a broader industry move toward cashless transactions.
Revolutionizing Payouts in the Hospitality Industry
Traditionally, cash dominated the tipping economy, making it simple to divide earnings at the end of a shift. However, the rise of credit card transactions has complicated this process, leaving many establishments still tied to the outdated method of cash payouts. The friction and risks associated with cash handling have led operators to seek digital solutions. By integrating digital payout systems into restaurant point-of-sale (POS) platforms, operators can reduce the time spent on end-of-shift calculations from nearly an hour to just 60 seconds, Roberts noted.
“Cash is no longer naturally flowing into businesses; many are paying companies like Loomis to deliver cash by truck every day,” Edwards said, highlighting the inefficiency. He also noted that despite these changes, 90% of restaurants still pay their workers in cash, a practice that is becoming increasingly outdated.
Both Edwards and Roberts emphasized that the growing demand for instant digital payouts is not just a convenience but an essential feature for modern hospitality businesses.
“When we launched this product in partnership with Ingo, our goal was to replace cash,” Roberts said. “From the employee’s perspective, it’s about making it easy for them to be rewarded immediately after their shift.”
The rise of digital tipping is not just about speed—it’s also about managing the increasing complexity of tip distribution. In many establishments, tips are shared not only by the front-of-house staff but also by those working behind the scenes, such as cooks and dishwashers.
The ability to instantly transfer funds directly to a worker’s bank account represents a significant leap in efficiency, job satisfaction, and employee retention. Access to immediate earnings helps workers manage daily expenses, avoid high-interest payday loans, and improve their overall financial well-being.
The Future of Instant Payouts and Embedded Finance
As digital tipping gains traction, the integration of embedded finance within these platforms is expanding opportunities for managing the flow of money. Edwards explained that real-time management of fund inflows and outflows requires sophisticated controls and risk management, particularly as transaction volumes grow. Offering a variety of payout options, including card issuance, adds flexibility and convenience for both workers and operators.
“These workers are accustomed to leaving work with cash in hand, and they want immediate access to funds they can spend,” Edwards noted. This is particularly important for employees who may not have a bank account, such as teenagers, which presents additional challenges.
To address these needs, Kickfin and Ingo are exploring solutions like issuing new virtual accounts for workers. This approach not only meets the demand for alternative banking options but also provides a strategic opportunity to penetrate the quick-service restaurant sector, where tip amounts may be smaller but the demand for digital payouts remains strong.
“When you can instantly set up a new account and continuously fund it for workers in a high-turnover environment, especially when those workers rely on that income, you create the foundation for a highly profitable relationship,” Edwards said.
Expanding Beyond Restaurants
While restaurants are a primary focus, the application of digital tipping and instant payouts extends to other service industries as well. Spas, salons, and other personal service providers also depend heavily on tips, and their employees are seeking the same level of immediacy and convenience in their payments.
“Our partnership with Ingo is always focused on finding new opportunities,” Roberts said, pointing out that other industries face similar challenges to restaurants in terms of tip distribution and payout efficiency, making them ripe for expansion.
