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Comment by wdewind | Hacker News Reader

So first off, I want to question the premises that this is a widespread thing, and that it is an effective business practice. The whole point of credit cards is it allows the bar to be out of this business, and most of them gladly accept credit cards so they can do that.

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.

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> I want to question the premises that [tabs in pubs and bars] is a widespread thing

Really? Where do you think it's confined to?

Credit cards are not an equivalent service, they're a means to pay the tab...

I think its confined to places outside of major metropolitan areas, where the vast majority of money moves around.

If you have a credit card you don't need a bar tab.

If you have ever spent a non-trivial amount of time in a bar, you can see that people with credit cards run up tabs due to a myriad of events that include intentional bad decisions or irresponsibility (like being too drunk to remember to pay before jetting off to another destination). These tabs are generally held for a number of hours, days or weeks (depending on familiarity with the parties involved) before being elevated to a more serious consideration.

Is it normal in <your country> for the bar to take a credit card when opening a 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.

that's not really a 'tab' in the original sense as implied by the OP.

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.

That's like arguing that restaurants are extending credit because they charge you at the end of the meal. The "keep it open and then you forget to pay" type tabs are very different than having a long running tab at a bar, which is not super common and is what I thought we were talking about. One is much closer to credit than another. Regardless, neither are significantly meaningful in the larger credit market.

> Really? Where do you think it's confined to?

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.

No, credit cards essentially replace the tab. In fact that's how credit cards were invented:

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.

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