Social Media

Is Twitter’s Tip Jar good for creators?

Twitter is on a roll this week: they released TwitterSpaces to everyone with more than 600 followers, introduced a “think before you tweet something mean” feature, added images without cropping (not a fan) and gave early access to Tip Jar to selected people and Spaces hosts. Twitter is really focused on helping creators thrive: they acquired newsletter Revue earlier this year, and are working on a Community feature as well.

This article is an early review of Tip Jar. I just received early access, probably because I participated in Spaces testing. More on that fun experience here.

What is Tip Jar?

Tip Jar allows you to give and receive cash tips on Twitter. If someone has a Jar, you’ll see a new cash button on their profile page:

When you click the button, you’ll see a list of the payment services they subscribe to. The current supported services are:

  • Bandcamp
  • Cash App
  • Patreon
  • PayPal
  • Venmo

In order to tip someone, select the payment service you subscribe to, open the App, enter the amount and complete. It’s that simple.

Twitter has announced that they don’t take a cut of tips. Which is laudable but doesn’t mean the full tipping amount ends up in your bank account. According to Twitter “depending on the payment service, they may take a cut or charge a small fee.” Let’s take a look.

The fine print

Even though the principle behind the idea is sound, a tip jar has some issues, especially because I expect most people will tip small amounts, or so-called micro payments. And while Twitter doesn’t charge for tipping, some of these payment services do. They usually charge a fee plus a percentage. Which means that $1 payment ends up being around $0.70-$0.80 for you.

When people pay you in a different currency that amount goes down even faster. Not only will you pay an additional conversion fee, the exchange rate always favors the payment service.

And finally, outside of the US, your choices are limited. If you aren’t an artist that sells on Bandcamp or Patreon, PayPal is your only option. Twitter will undoubtedly add more services, but for now, that means choices are limited.

So let’s see what this means in practice. To keep it simple, I’m going to assume that people will pay either $1 or $5. All fees are dated May 7, 2021 and taken from the services websites.

Bandcamp

Who can use it? Bandcamp is for music artists anywhere in the world and 16 years or older.

Bandcamp charges:

Note that Bandcamp send payouts to your PayPal account and PayPal will charge 1% of the total payout amount.

Cash App

Who can use it? You’ll need to be a U.S. resident and at least 18 years old. If you want to send cash, you’ll need to verify your identity. Cash App (Square) is also available in the UK.

Cash App charges: Cash App does not charge for sending money from a linked bank account, debit card, or your account.

Patreon

Who can use it? Patreon is for creators anywhere in the world and 13 years or older.

Patreon charges:

Patreon charges a monthly fee on earnings of 5%, 8% or 12%, depending on your plan. I’ve used 5% as the lowest option.

PayPal

Who can use it? PayPal is available for people in more than 200 countries.

PayPal charges:

Paypal is free to send money to family and friends. While you might assume that tipping with PayPal is a personal transaction, according to PayPal, sending or receiving a donation is a commercial transaction. Note that PayPal charges different fees depending on your location. A 3% or 4% charge is added for currency conversion. PayPal reserves the right to charge you retro-actively if it determines you received a payment they classify as commercial.

Warning: If you use PayPal, note that the receipt will show personal details like your address. More on that here. Also, when a user chooses PayPal, the first screen in the App allows them to either send or request a payment. Guess which option they choose?

Venmo

Who can use it? Venmo can be used by anyone in the United States and you must have a U.S. bank account to use the Venmo services.

Venmo charges: Venmo does not charge for sending money from a linked bank account, debit card, or your Venmo account.

The verdict

As long as Twitter is testing Tip Jar, I understand that they offer a limited set of payment services. But it also limits its application: you can’t tip a person unless you subscribe to the same payment service. While you have options in the US, PayPal is the only universal option.

As some users discovered, when you leave a tip, PayPal might disclose personal details, like your username or address in the receipt. Do you really want to tip someone you’ve never met knowing they’ll get access to your personal data?

Paypal also charges the highest fee of all services on a $1 tip. It’s really not meant to handle micro payments. The fact that users can send you a payment request, coupled with the privacy issues, makes it too much of a hassle. So for now, non US-based users don’t have safe alternatives.

And while tipping sounds like fun, as a creator, you’ll actually need a lot of tips to make it worth while. Or a couple of people that tip really, really well. But there are better ways to achieve that, e.g. publish a newsletter with a recurring monthly fee, or sell on Bandcamp or Patreon. These services allow you to establish a long term relationship with your clients.

And that’s really the problem with tipping: it’s fleeting. It’s a one-off without a guarantee that people will every pay you again. Which makes it a fun option for incidental tips, but it does not help creators. And as the world is pivoting to recurring payments for services, a Tip Jar will buy you a coffee, but not more.

How can you activate Tip Jar?

Currently, Twitter is testing Tip Jar with a restricted number of people. If Tip Jar is available for you, you’ll find it on the “Edit profile” screen. Open your profile, tap “Edit profile”, then tap “Tip Jar”. From there, you can switch on your Tip Jar and add your accounts for the payment services you use. Then tap “Save”.

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