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January 31, 2025Directing traffic in Indonesia, you might not have been hired by anyone. Instead, you just show up, help drivers navigate busy intersections, and wait for a tip. At the end of the day, you could go home with $12. Several years ago, it was $16 to $18.
According to one traffic director, ““There is no small money for small people any more,…”
The problem is cash. Because of online payments, many of us carry less, if any, cash. And it became worse when the Jakarta government promoted a QR payments system.
As cashless transactions increased, traffic directors earned less.
Elsewhere also cash tips have shrunk.
Cashless Tips
Restaurant servers, Uber drivers, and Starbucks baristas are typical tipped workers. Also, we could add to our list, hotel housekeepers, bellhops, and parking lot attendants, as well as people that work for nail and beauty salons. Interviewed by the Washington Post in 2022, one hotel housekeeper said that she used to pick up $1 to $3 a room everyday. However, when she spoke with the reporter, her total for the entire day was $3.
The stories are mainly anecdotal because researchers tend to focus on food, driving services like Uber, and the impact of online tipping suggestions. Everywhere though, It appears that when people have less cash, cash tips evaporate.
At this point, we can understand a worker’s distress. Even when a tip is added to an online payment, only a part of it will reach the intended recipient if the employer and online facilitator take a cut. As for Indonesia’s traffic directors, it would be too impractical to swipe a card or use a QR code.
Indeed, going cashless can be complicated.
Our Bottom Line: Externalities
Defined as the impact on a “bystander,” an externality affects uninvolved third parties. Consequently, we could say that consumers, businesses, financial institutions, and governments are all experiencing the externalities of cashlessness. Further dividing a diverse response into regions, affluence, urban and rural populations, and generational cohorts, we can only imagine the complexities of the transition.
So, although it looks simple when we see a list of countries eliminating cash, it is so much more complicated:
And that takes us back to how we can tip Indonesia’s traffic directors.
My sources and more: Several weeks ago WSJ started me thinking about cashlessness and tips. From there, this study and this article had more detail as did this econlife post. Finally, for the bigger picture, this World Bank blog focused on regulatory issues and The Conversation looked at the cash dependent poor and the refugees that suffered from Sweden’s switch.