How is then rational for bars to have a "customer tab", with 0 interest typically?
How about clients paying suppliers many months after stuff was delivered?
It is very rational to lend money with zero risk if that gets you more business.
How about clients paying suppliers many months after stuff was delivered?
It is very rational to lend money with zero risk if that gets you more business.
Second of all, especially in smaller communities where this practice is more likely to occur, there is a social capital gained by doing it which is not necessarily directly monetary, but I think it's pretty easy to see the rational self interest argument for "being part of a community" outside of just purely monetary gain.
> It is very rational to lend money with zero risk if that gets you more business.
Well it's definitely not zero risk, and when credit cards exist, which deal with all the risk, it's not rational to lend money without credit cards.
Really? Where do you think it's confined to?
Credit cards are not an equivalent service, they're a means to pay the tab...
If you have a credit card you don't need a bar tab.
That's the normal method in Britain -- your credit card is generally put in a little booklet behind the bar, so they can charge it if you forget at the end of the night¹. Alternatively, they may take a payment upfront -- for example, if a large group of teenagers have booked a private area of a nightclub and put £500 up for a tab. The drinks continue until the upfront money is spent.
I assume the situation is a little more relaxed for the regulars in a rural pub.
¹ They won't have your PIN, but they can still run the transaction -- though it's easier for the cardholder for dispute.
a tab is where you dont pay at all for an extended amount bof time, and settle afterwards. for example, you might settle monthly, or yearly. i do think this kind of tab doesn't happen very often.
What a weird request. For someone to be confident that a practice is not widespread, he does not need to know where it is confined to. We don't expect him to have visited all localities.
I am confident that there is a goat behind one of the doors because the host has told me as much. That doesn't mean I can tell you with confidence which door it is behind.
https://en.wikipedia.org/wiki/Diners_Club_International#Orig...
With tabs, the bar management has to do risk management: to decide who is allowed to keep a tab and how large each tab can get. This is hard to do without access to customers financial data. With credit cards, that risk management is done by the credit card network (mainly the issuer bank). The merchant pays a fee, and in return it gets cash at a predictable timeline with relatively little risk.