Twitter on Thursday introduced Tip Jar, a new feature that lets people send money to accounts they support. The ability to receive tips is currently available to a limited group of creators, journalists, experts, and nonprofits, but everyone who uses Twitter in English can send tips, the company said in a blog post.
“Tip Jar is an easy way to support the incredible voices that make up the conversation on Twitter. This is a first step in our work to create new ways for people to receive and show support on Twitter – with money.”
Those who are eligible and have enabled Tip Jar will have a new dollar bill icon show up on their profile next to the Follow button on iOS and Android apps. On Android, tips can be sent through Twitter Spaces as well. The receiver can choose which payment methods to enable from the following: Bandcamp, Cash App, Patreon, PayPal and Venmo. The ability to receive tips will soon expand to more people and to more languages, the company said. Notably, Twitter currently doesn’t take any commission on these tips.
Twitter acknowledged that people have been using the platform indirectly to receive tips for a while now. “We $ee you – sharing your PayPal link after your Tweet goes viral, adding your $Cashtag to your profile so people can support your work, dropping your Venmo handle on your birthday or if you just need some extra help,” the company said in the blog post. This new feature just streamlines the process of sending and receiving tips.
Availability and tax implications in India
MediaNama hasn’t been able to confirm if any Indian account is currently eligible for receiving tips, but Indian users can send tips to other accounts if the receiver has enabled Paypal as one of the payment methods. Other payment services such as CashApp and Venmo are not available in India and hence cannot be used for tipping.
As far as tax implications go, Pallav Narang, Chartered Accountant and Partner at CNK RK, told MediaNama that tips will most likely not attract GST because the tipper is not sending money in exchange for some good or service. Rather the tipper is sending it as an appreciation or to show support, which makes it more likely to be considered as a “gift” under India’s Income Tax Act. As such, gifts up to Rs 50,000 in a financial year are exempt from tax. But for any amount higher than this, the entire gift amount becomes taxable and will be added to a person’s income and taxed at his/her slab rate.
PayPal privacy issue and other social engineering risks
One issue that Rachel Tobac, CEO of SocialProof Security, pointed out right away was that sending tips through Paypal revealed the address of the tip sender to the receiver. This definitely carries privacy implications if the sender does not want to share such personal details. Tobac admitted that this might be a Paypal issue, but suggests that Twitter warns the tipper of this if they choose to tip via Paypal or that Paypal stops sending address details.
In response to this issue, Twitter Support tweeted saying “We’re updating our tipping prompt and Help Center to make it clearer that other apps may share info between people sending/receiving tips, per their terms.”
Tobac also pointed out other social engineering risks that might arise from this new feature. “Many payment tools have ATO [account take over] issues — for example, Venmo requires “real” phone number leading to user ATO + sim swap risk. Publicly displaying preferred payment tools/details can [increase] social engineering and ATO risk,” she tweeted.
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