Captive Markets in Everything

He said that if the airline was prevented from charging passengers on the way in to the toilet, it would impose the charge when they were on the way out.

He’s stealing an idea that Jessica Mitford came up with 50 years ago, when she charged guests at a fundraiser $5.00 to get in and $25.00 to get out. So maybe we can’t blame this on libertarianism.

Henry, not Kieran.

@dsquared/Henry: Just to twist the knife – At the ripe ol’ age of 44, I’ve never owned a check book. We went digital in Denmark in … 1984.

But try and find a 2 kroner-coin for a public toilet, when you need one…

Henry, you seem to be making the assumption that passengers aren’t already paying these costs and benefiting to various degrees from it.

I think the only reason checks are still used in the US is that they avoid the processing fees of the alternatives. The processing of checks has long been a basic part of having a bank account and, more importantly, doesn’t cost the account holder who deposits (i.e., vendors) anything.

Credit card processing and debit card processing (done by the credit card companies and charged to vendors) and ATM card processing (done by the banks and charged to the account holders) all involve additional charges.

I pay all my bills online via my debit card (linked to my bank “checking account”, which doesn’t pay an interest on balances) and there’s sometimes a fee charged for processing, sometime not.

The only exception is paying rent on my apartment lease to my landlord. That’s via personal check, there’s no alternative (other than a cashier’s check from the bank). This is annoying, but it’s simply because this is usually (but not always) a smaller business that doesn’t require paying the money for being able to process credit cards (retailers do, of course, but landlords don’t because people usually pay their rent with, you know, money they have and not money they are borrowing).

If there weren’t A) occasional extra fees for paying with debit/credit cards; and B) vendors such as landlords who don’t accept debit/credit cards; I think that checking would completely disappear in the US. And, really, I think it’s only a matter of time.

What we need now is the media stunt Irish betting company Paddy Power offering odds on whether the media stunt Irish airline is serious about charging for toilets.

There isn’t much in the way of consumer protection in the United States, but what little there is is based on the exchange of paper documents through the US Mail.

In the UK it is almost entirely the opposite – you are almost always recommended to pay by credit card as recovering the cash from bad transactions from the CC companies is generally very easy (partly because of regulation, but also probably because most problems are for small amounts and eating the loss is often better than potentially losing a customer), and they get the hassle of chasing down problem businesses through the courts when it is worth their time to do so.

Correct me if I’m wrong, but hasn’t there been, and isn’t there still, a way of exchanging money common in many if not all European states that predates plastic and doesn’t involve checks? I refer to wire transfer. When I was an exchange student in Germany in the mid-1980s I used to wonder why my host father, who was an architect, had his bank account number on his stationery–why in fact practically any commercial entity gave out their bank account numbers so freely. I learned that it was because wire transfer was the norm for business transactions that did not involve handing over cash.

Wire transfer, as far as I know, has never been used so freely in the US, and certainly not by the average citizen paying her rent or utility bills, for example. It was always checks or cash until credit cards arrived, and for a long time credit cards were the only digital/electronic way the average consumer did business. Even today in the US any electronic payment that draws money directly from a bank account at a point-of-sale transaction as far as I know requires a card with the imprint of the credit processing companies Visa or Mastercard, which (as previous commentators have noted) charge vendors a processing fee. (And so, of course, does PayPal.)

That surely must have something to do with why checks have held on so much longer here, and why no one uses them across the pond.

–And, come to think of it, anther factor must be that World War II gave European states the chance to modernize their banking industry and commercial infrastructure as they rebuilt, along with so many other things–something that did not happen in the US during the same time period. We were too busy building very large cars and drinking very large Manhattans.

MH: but practically any bank has the cancelled checks around, and many scan them digitally and store the files for reference. I can look at mine online through my credit union. Processing that paper has got to add quite a lot to the overhead of any bank.

Maurice, you can do wire transfers in the US, and they’re strongly favored for reasons I have no clue about by many collection agencies. I went through a patch in the mid-90s of getting severely into debt (my roommate and I both had rapidly degenerating cases of depression, on top of other problems; I learned a lot about how to make money matters worse), and the biggest payments went via wire transfer at the agencies’ instructions. If I ever found out why that was SOP, I’ve since forgotten.

Bruce, I know you can do wire transfers in the US–and I imagine someone like a collection agency would insist on using them, because it means no BS. The money is in your account, or it isn’t, and it goes right into their account.

That there is no float period is precisely why I wonder why wire transfer didn’t/doesn’t catch on in the US. When my wife and I paid the electricians who rewired our house last year, they didn’t give us a bill with an account number so we could have our bank wire their bank, which would have been instant and certain payment; they gave us a bill and we handed them a check.

Obviously for some people a check is a sign of aspiration, a token of good intentions, or a diversionary tactic, and not a reflection of the reality of their account. I have to believe that processing checks as the norm costs just that much more to small and medium-sized businesses in the US in processing and delays that would not be involved if the customer client either paid immediately and directly, or did not. And since more of what happens in the banking and finance industry represents the interests of business and not consumers, you’d think this would be a no-brainer.

How much does Ryanair charge for urinating on their seats?

I wonder what price they will charge for the service. I also wonder how they’ll deal with people who don’t have credit cards. I don’t know about Ireland, but it’s very common for low-income people in the US to not have credit cards and often not even have a bank account. This opens up a rather harsh two-tier system where many poor people pay a lot for the simple ability to move money around, something that people with checking accounts and even debit cards do easily. So anyway, I wonder what happens when you have someone on your plane who simply can’t pay for the toilet.

Only on Crooked Timber would a post about cackling Michael O’Leary and his toilets lead to a chat about cheques in the USA.

Anyway, try to remember that we all live in the great shareholding civilisation now. A dump on a Ryanair flight will soon be a dump for democracy. With arses wiped by the hidden hand.

Europe has chip & PIN now

London does. Much of Europe probably does. My corner of Aragón mostly doesn’t.

I travel by Ryanair quite a lot – enough, I may say, to hate them very deeply. In discussions I usually invoke the Goodfellas sequence “fuck you, pay me”. But it’s either that or five hours’ drive (in a car I don’t have) to the nearest alternative affordable flight.

Maybe the worst thing is they way O’Leary and his supporters plainly get off on this sort of thing – let’s see how far we can take the piss (as it were) out of the passengers and then laugh at them for complaining. Capitalism where the aim is to be a lousy human being.

JQ – I don’t agree that the resistance is higher when it comes to coins and bills — witness the completely stupid fussing of Brits every time anything like that changes. The difference there is in the political structure; the US has a political system that is very unwilling to make unpopular decisions, and very willing to waste public money.

A libertarian response…

Speaking of, I just opened my mail this morning to find an offer from the credit card company with a special rate if I put my phone and cable bills on their card.

Obviously the card companies are hoping you wind up paying interest, but a bunch of people I know pay this way anyway: if there’s any kind of reward system on the card and you pay at the right time – as you presumably would have anyway – you wind up with no penalty and a flight somewhere.

if Michael O’Leary thought he could get away with charging you for the attendants’ smiles, he would
But airlines do this already as a matter of course – emotional labour & all that. (Erm, ‘breakthrough service’ as my former employer, Cosmo-Demonic Airlines of Heathrow used to term it).
Of course, Swissair made the mistake of owning up to this in an ad some years back, and look what happened to them . . .

Maurice,

I´m from Germany and I hope I can answer some of the questions asked.

In daily life here you use cash or debit cards. Credit cards aren´t liked here (especially by shops) because of the percentage fee they have to pay the credit card company.
If needed, credit cards are mostly used for hotel reservations, renting a car. Things like that. And anyway, credit cards in Germany are usually “pay the full amount of money next month”. Making only minimum payments is practically unknown here. And many Germany don´t like them because they “hide” the consequences of spending. :)
Using cash or a debit card I immediately see the “damage” to my bank account balance. Using a credit card, it´s hidden till next month.

For money transactions generally a bank account is essential. So much so that the German courts have ruled that everyone (with a permanent address) is entitled to one. It´s considered a basic right. If I remember correctly local thrifts or the “Postbank” are the banks of last resort. They can´t refuse to open an account for you.

With regard to account fees, it depends.
In my case, my account is with a local thrift (savings bank?).
They offer three different options for a bank account.
I´ve got the “private (“Giro”) account inclusive”. Which means I pay a monthly fee of Euro 5.99. That includes:
– debit card with chip and pin
– no additional fees for money transactions
– credit card
– online banking
– no fees for getting money from any ATM belonging to any German thrift
(and according to their advertising that´s around 24000 in Germany, If I use the debit card at a non-thrift ATM in Germany or Europe, I do have to pay a fee.)
– monthly account statement sent home to me (Important! See below.)
(If I need a current printed statement I need to get to the bank of course and print it out.)

They´ve got 2 cheaper options for bank accounts too. One for Euro 2.99 and one for free. Both without credit card, one with a limited number of free money transactions
per month and one with a fee for each money transaction.

Now as I said, practically all money transaction in Germany are done using bank accounts. Direct electronic transfers between two accounts which take usually 1-2 days. Your wage will get transferred from your employer´s business account directly to your private bank account (You would have a problem getting employed without a bank account). Likewise unemployment benefits, social security etc. is transferred directly to your bank account.
And all transactions involving rent, utility bills, repayment of loans are generally done the same way.

In my case:
– rent
I deal with it using a “Dauerauftrag”. It´s a standing order to transfer at the first workday each month the rent (money) from my account to the account of my landlord.
(I can change/delete it any time I want.Takes 5 minutes at my local branch.)
– utilities (telephone, electricity etc.) or a newspaper subscription, monthly/yearly insurance payments
Here you´ve got 2 options.
Option 1: You get the bill each month / year and “manually” transfer the money. Either using online banking or going to the bank and fill out a money transfer order. After which the money will get transferred from your account to the recipient´s account.
Option 2: You allow in writing to automatically transfer (direct debit?) the money owned to them each month. They initiate the payment but you still get the bill of course.

And here´s the important fact mentioned above. You have a 6 week grace period (is that the right term?). Meaning you can take back any money transfer that happened in the last 6 weeks. You don´t need any reason. You just visit your bank, point out the transfer you want to cancel and the bank has to do it.

– any one time payments
Say I order something from Amazon.de. Here I´ve got the option between paying with my credit card or direct debit telling them my bank account number. Generally Germans (both shops and customers) consider direct debit safer.
If I use my credit card and something goes wrong, I have to contact the credit card company (probably a call center) and tell them to please cancel money transfer xyz. Either because the amount of money was wrong or because someone stole my credit card number. Which means that either the shop or me has to take a loss.
Authorizing a one-time direct debit from my bank account means that I can cancel any transaction (remember 6 week period) if I discover something wrong. And the shop knows my bank account number. Given that I can only open an account with proper identification the shop knows that they can track me down if I cancel the payment after receiving the goods.

The whole system also avoids “bounced checks”.
If you have a regular income German banks normally won´t hesitate to authorize a money transfer even if it means that your bank account will be in the “red”. You will of course have to pay an overdraw interest rate but no extra fees. But not authorizing a money transfer because that might result in an overdraft of for example $50 or $100 would be ridiculed in Germany.
Two caveats here.
If you are low income (social welfare) and the thrift / “Postbank” had to accept you because of the court rules mentioned above, they can decline to allow any overdraft.
And if you stay in the “red” for months on end, you will receive a polite telephone call asking you to meet with a financial adviser at the bank to discuss your financial situation.

Sorry. Seems comments here don´t like listings. Probably my fault.
This is a new try. If it works, could a moderator please delete my comment above?
Just decide which one is more readable. :)

In daily life here you use cash or debit cards. Credit cards aren´t liked here (especially by shops) because of the percentage fee they have to pay the credit card company.
If needed, credit cards are mostly used for hotel reservations, renting a car. Things like that. And anyway, credit cards in Germany are usually “pay the full amount of money next month”. Making only minimum payments is practically unknown here. And many Germany don´t like them because they “hide” the consequences of spending. :)
Using cash or a debit card I immediately see the “damage” to my bank account balance. Using a credit card, it´s hidden till next month.

For money transactions generally a bank account is essential. So much so that the German courts have ruled that everyone (with a permanent address) is entitled to one. It´s considered a basic right. If I remember correctly local thrifts or the “Postbank” are the banks of last resort. They can´t refuse to open an account for you.

With regard to account fees, it depends.
In my case, my account is with a local thrift (savings bank?).
They offer three different options for a bank account.
I´ve got the “private (“Giro”) account inclusive”. Which means I pay a monthly fee of Euro 5.99. That includes:

– debit card with chip and pin

– no additional fees for money transactions

– credit card

– online banking

– no fees for getting money from any ATM belonging to any German thrift
(and according to their advertising that´s around 24000 in Germany, If I use the debit card at a non-thrift ATM in Germany or Europe, I do have to pay a fee.)

– monthly account statement sent home to me (Important! See below.)
(If I need a current printed statement I need to get to the bank of course and print it out.)

They´ve got 2 cheaper options for bank accounts too. One for Euro 2.99 and one for free. Both without credit card, one with a limited number of free money transactions
per month and one with a fee for each money transaction.

Now as I said, practically all money transaction in Germany are done using bank accounts. Direct electronic transfers between two accounts which take usually 1-2 days. Your wage will get transferred from your employer´s business account directly to your private bank account (You would have a problem getting employed without a bank account). Likewise unemployment benefits, social security etc. is transferred directly to your bank account.
And all transactions involving rent, utility bills, repayment of loans are generally done the same way.

In my case:

– rent
I deal with it using a “Dauerauftrag”. It´s a standing order to transfer at the first workday each month the rent (money) from my account to the account of my landlord.
(I can change/delete it any time I want.Takes 5 minutes at my local branch.)

– utilities (telephone, electricity etc.) or a newspaper subscription, monthly/yearly insurance payments

Here you´ve got 2 options.

Option 1: You get the bill each month / year and “manually” transfer the money. Either using online banking or going to the bank and fill out a money transfer order. After which the money will get transferred from your account to the recipient´s account.

Option 2: You allow in writing to automatically transfer (direct debit?) the money owned to them each month. They initiate the payment but you still get the bill of course.

And here´s the important fact mentioned above. You have a 6 week grace period (is that the right term?). Meaning you can take back any money transfer that happened in the last 6 weeks. You don´t need any reason. You just visit your bank, point out the transfer you want to cancel and the bank has to do it.

– any one time payments

Say I order something from Amazon.de. Here I´ve got the option between paying with my credit card or direct debit telling them my bank account number. Generally Germans (both shops and customers) consider direct debit safer.
If I use my credit card and something goes wrong, I have to contact the credit card company (probably a call center) and tell them to please cancel money transfer xyz. Either because the amount of money was wrong or because someone stole my credit card number. Which means that either the shop or me has to take a loss.
Authorizing a one-time direct debit from my bank account means that I can cancel any transaction (remember 6 week period) if I discover something wrong. And the shop knows my bank account number. Given that I can only open an account with proper identification the shop knows that they can track me down if I cancel the payment after receiving the goods.

The whole system also avoids “bounced checks”.
If you have a regular income German banks normally won´t hesitate to authorize a money transfer even if it means that your bank account will be in the “red”. You will of course have to pay an overdraw interest rate but no extra fees. But not authorizing a money transfer because that might result in an overdraft of for example $50 or $100 would be ridiculed in Germany.
Two caveats here.
If you are low income (social welfare) and the thrift / “Postbank” had to accept you because of the court rules mentioned above, they can decline to allow any overdraft.
And if you stay in the “red” for months on end, you will receive a polite telephone call asking you to meet with a financial adviser at the bank to discuss your financial situation.

Well, my second try looks better although I have lost the “head”. :)
I tried to answer Maurice using a German perspective.

Bernard,

In the US at least there is a difference between wire transfers and the kinds of electronic payments systems that banks have available for their customers. Funds moved by wire transfers are, as has been noted, immediately available, but there is a fee for this, in the range of $10-12 in my experience. (What is particularly annoying is that my bank charges for receiving the transfer – making me pay to make a deposit in effect).

What do you mean by “wire transfers”?
I assume that any money transfers made between banks in Germany are probably using the Internet (although a secure form of the Internet :) ).
As in, I authorize a money transfer from my bank account (local thrift) to a bank account in another German state. So local thrift computers –> state thrifts computer server center –> then either to a another state thrifts computer server center or the national server center of a private bank –> local thrift computer or local branch of a national bank.

Takes 1-2 days. Probably reasonable once you know that any bank involved wants to slow down the money transfer. :)
(The technology certainly allows faster transfer times.)
As in, for 1-2 days they can play around with our money. Multiply that with a million transfers every day and the overnight interest rate profits suddenly promises real profits for the banks.

And why would they charge you “for receiving the transfer”?
Looks like they´re ripping you off. Any bank likes money transferred to them. It allows them to use your money overnight to make a profit for them.

The consumer electronic payment systems usually involve no fees. For some vendors, like utility companies for example, the payment is made overnight. Smaller ones, not set up to receive electronic payments, are actually just issued checks by the bank, and this takes at least as long as mailing a regular check, though it is more convenient.

That seems ridiculous. Don´t the smaller ones have bank accounts too?
A company (large or small) doesn´t need to be “set up to receive electronic payments”. The banks where they have their accounts need to be able to deal with electronic money transfers.

I am a partner in a small business here in Germany.
We never thought we needed our own system to “receive electronic payments”.
When we write a bill, we just include at the bottom the 2 business bank accounts we have. Leaving our customers a choice. :)
If we received a check, we would have to go to the bank and deposit it there. Filling out some forms and costing us time. To say the truth, none of our customers ever tried to write us a check. If they did we´d immediately be suspicious.

And I´m not even mentioning the fact that some letters might be lost.
How would we prove that a letter with a check didn´t reach us? Whereas in the current situation we just have to look at our bank statements. They advised us that they paid us. And if the bank statements 3-5 days later don´t prove their statement we can start to ask questions.

One reason checks are still used – the reason I still use them – is that some people prefer to be paid on the spot and don’t want to pay credit card processing fees. This includes many service workers – plumbers, piano tuners, and so on.

Ah, but a check is still a piece of paper.
And who knows if your check doesn´t “bounce back”?
Cash or a debit card however are direct payments. No question needed about cash. But a debit card is also depending on your overall financial health. :)
If the payment is authorized, you´ll have it immediately too.
In my experience – unless you deal with black-market workers who prefer cash – a debit card is preferred.

Simply put, a debit card is accepted everywhere in Germany. Just like cash.
A credit card is accepted in some places. A check won´t be accepted anywhere.
For the simple reason that a check can´t be checked immediately against your bank account (and its limits).

I wouldn’t mind so much if they charged by the second at a steeply increasing rate, in order to persuade those who spend an eternity in these vile cubicles doing God knows what to hurry up and let the other half a dozen waiting people have their shot.

A friend of mine who works for a rival airline tells me that his work was discussing this (in an office banter kind of way, I must add) and came to the conclusion that the costs of certifying the coin-lock (as nobody else has done this in the past) would be about £50-£100k, and this made it a non-goer…

let the other half a dozen waiting people have their shot.

I know long haul flights are dull, but they’re not that dull.

Detlef,

What do you mean by “wire transfers”?

A transfer of funds over what is called the “fedwire,” a system operated by the Federal Reserve, which is used to transfer between banks and brokerages and so on. Individuals do not, AFAIK, have access, but must go through an institution to make a wire transfer over this system. The advantage is that the money goes through on the same day, and is instantly available to the recipient. Similar systems are available in Europe and elsewhere, and they interconnect.

This is different than electronic payment systems banks make available to theoir customers over the internet.

And why would they charge you “for receiving the transfer”?
Looks like they´re ripping you off.

You have answered your own question.

Ah, but a check is still a piece of paper.
And who knows if your check doesn´t “bounce back”?
….
In my experience – unless you deal with black-market workers who prefer cash – a debit card is preferred.

Nonetheless many people prefer them. Of course they ask for identification and so on, unless dealing with a regular customer, and bouncing a check is not cost-free, so there are safeguards. It still happens, naturally, but it may be that the cost to the merchant of the occasional bad check is less than credit card processing fees.

Few retail businesses – primarily the occasional restaurant – can survive if they take only cash or debit cards. Taking credit cards is almost a necessity, and some are willing to take checks, certainly from regular customers.

We tried; it was too cold to play Gulch in the landing gear bay, and the darned mystic flight attendants kept shouting about cabin pressure or something. I’ve never seen such death premise-ridden evasions in my life!

Americans collectively seem to be less inclined to innovation than others.

I think the difference is that Americans collectively seem less inclined to accept anything ‘collectively’. And particularly less inclined to accept top-down innovations (and ‘innovations’) designed by panels of experts and imposed by government fiat. So you end up with a messier system where all the options from archaic to bleeding-edge are available as the government is unwilling to dictate which ones are out, and which ones we’ll all be using now, like it or not.

Consequently, in the U.S. you can pay here with debit card w/pin. Or a credit card. Or EFTs through an online banking system. Or direct withdrawal. Or cash. And god knows why, but ladies (particularly older ladies) seem to love their checkbooks. And they all vote. Personally, I write very few checks, but they are handy occasionally. My bank does not send back the canceled checks, but makes digital images of the checks available for free through their online banking system, which has been handy a time or two when I needed proof of payment.

I guess the Rorschach test here is the metric system. I love it that Americans said hell no to the universal imposition of the metric system. Having used both, I think the English system is inherently better for cooking and carpentry (and, in any case, our homes are already built with 2x4s on 16″ centers and cookbooks are already in cups and teaspoons). I’m indifferent between km and miles for driving, but there was no reason to waste money re-doing all the signs. And for science & engineering, the use of the metric system is obvious. I see no problem with one system for technical use and another for daily ‘human’ uses. Practically, all it means is that it’s necessary to have a set of metric sockets and hex wrenches. And the predictions by official experts that failure to switch would mean doom for the American economy and technology turned out to be so much nonsense.

predictions by official experts that failure to switch would mean doom for the American economy and technology turned out to be so much nonsense.

Except perhaps for .

Also, bars and restaurants in Brussels usually have Madame Pipi charging a few cents in exchange for a scoot, so I don’ t believe the last bit either.

Slocum, we discussed metric and similar issues here. My point then was that all societies have their own sources of inefficiency, and the refusal to go metric (and similar) is the mirror image of lots of the things certain US pundits like to lecture Europe about. And, as with metric, plenty of US pundits don’t find “you’d be 10 per cent better off if only you removed these inefficiencies” impressive enough, and resort instead to “failure to switch will mean doom for the American European economy and technology”