Paying tips to employees on behalf of guests who later settle their bills with a credit card should be seen as an employee benefit. This is because the hotel is responsible for paying the merchant discount fee on the credit card payment (a few percentage points), which adds up over many employees and many years.

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The hotel incurs a merchant discount fee on credit card payments, which is a cost to the business. By paying tips to employees on behalf of guests who settle their bills with a credit card, the hotel is essentially offsetting this cost and providing a benefit to its employees.

Paying Tips to Employees on Behalf of Guests Who Later