A new service called DipJar allows customers to tip baristas at coffee shops using their credit or debit cards. The hardware is currently being tested in a select number of New York City coffee shops and if successful, could expand to other locations and service-based businesses across the country.

The DipJar is a small cylinder-shaped device designed to sit near a cash register. Customers simply "dip" their card into the machine in order to add a pre-selected tip to their card. The tip value is prominently displayed on a sign just above the DipJar - usually $1. When a customer dips their card, the information is immediately encrypted and sent to DipJar's headquarters for processing. The company says that no credit or debit card information is stored locally on the merchant's end or internally in the DipJar hardware.

The hardware is free for merchants to use although DipJar does take a 20 percent cut of each tip. The plan is to eventually get that figure down to just 10 percent but they won't be able to do so until the business grows substantially. DipJar is also covering the cost of credit card processing fees, at least during the NYC trial run.

Tips are pooled and divided among workers based on the number of hours they work each week. Payments are mailed out to employees bi-weekly and there's even a built-in fraud system that can detect if cards are being dipped excessively. If a customer suspects fraud, they have up to 30 days from the original transaction to file a dispute. A refund will be issued within 30 days of the filing.