Add-Ons Add Up

The Washington Post has a story about the proliferation of extra fees tacked on to just about every product or service under the sun. A couple of good insights make it worth the read.

Comments

Vancouver Airport

[EkiM in De]

I had a conference in Vancouver in October. When I flew into Vancouver's airport I found out, much to my surprise, that I would have to pay 15 Canadian dollars just to leave the place (this fee not being included in my ticket). The airport authority called it an "Airport Improvement Tax". My only thought was, "I don't care what this airport looks like, I'm only going to be here a couple of hours".

Per Transaction Fees Suck...

[KagatoLNX]

My boss gets lots of complaints because we pass the 3% credit card charge on directly. Like somehow people who pay with cash or check should subsidize the credit industry.

I hate that sort of thing. It first really hit me when I got an unexpected $1 fee for using an ATM. Not the fee from the ATM's owner--a fee from MY OWN BANK for not using a preferred ATM network! After that I just came unglued (switched banks too).

In the end, I think it's all just part of the game. Most people are so jaded about "the value of service" anymore that the only way to sell something is with the lowest price. A lot of these fees serve no other function than to allow the price to represent the real value of whatever it is you're paying for. No longer do we live in an age where many aspects of the transaction are rolled into an "overhead account". Everything seems to be billed in excruciating detail!

While it largely makes sense, I long for the days when bills were simpler.

Re:Per Transaction Fees Suck...

[MyHair]

My boss gets lots of complaints because we pass the 3% credit card charge on directly. Like somehow people who pay with cash or check should subsidize the credit industry.

But doesn't handling cash and checks cost money, too? Armored cars and local security to guard the cash, and someone gets paid to take the checks to the bank. I don't know if it compares to credit card fees, but don't discount the cost of cash and checks.

Re:Per Transaction Fees Suck...

[Rubbersoul]

But doesn't handling cash and checks cost money, too?

Yes, but the difference is that with cc transactions the company you are buying from gets a bill from the credit card processing company for using the service, a fee that the company would not have had with a paper transaction.

With paper money the cost is internal to the business so it does not get added on extra. If they just raised the price of every item a few dollars that would 'punish' those that want to pay with cash.

What it comes down to is you have to pay the workers to cover the cash register anyway, but you don't have to pay the charges to use a cc processing company.

Re:Per Transaction Fees Suck...

[the-banker]

Whether you think the fee is justified or not, you should at least familiarize yourself with the facts surrounding the situation.

There are 2 types of ATM usage, the banking jargon usually refers to "domestic" and "foreign" but that is in relation to a bank. So Bank X's card on Bank X's ATM is a 'dmestic transaction" or an "us-on-us" transaction.

For us-on-us transactions, they are almost always free - the cost for maintaining the ATMs and the network is figured into the normal account setup.

For us-on-them transactions, it gets messy. First, the owner of the ATM will almost always charge you a dollar or two for using their machine when you don't bank with them. That is the fee you are prompted for on the screen.

Now, Bank X's ATMs don't have access to Bank Y's accounts. This is reasonable, Chase isn't going to give Wells-Fargo access to ttheir systems, for example. So to facilitate this, their must be a middle clearinghouse that facilitates transferring the money and providing a standard network interface. This is the Plus, Cirrus, etc network. These are independent companies, or sometimes banks. In this area, Midwest Payment Systems is dominant, owned by Fifth Third Bank, for example.

This clearinghouse network charges the bank the card is from a fee for facilitating the transfer of money. That is why your own bank charged you a fee.

My suggestion is to find a bank with a large ATM network if you are interested in avoiding fees. For better or worse, its the system that is there.

Yes

[The Tyro]

Traveled to Houston recently. my rental car charge was DOUBLED by taxes and extra fees... to the tune of around 400$ for the week.

I don't know what the hell they are building in Houston that justifies that level of extra tax and local fees, (airport tax, use tax, local tax, etc, etc).

That kind of nonsense kills me... "Oh, did I mention that a few additional charges and taxes are added... that'll be DOUBLE what you thought it would be! Thanks for doing business with us!"

Yeah, thanks... it was good for me too.

I noticed this..

[James_G]

With my bank, Washington Mutual.. It was kind of amusing. They have all these ads on the radio about their "No fee checking!". Yep, no fees on some things. Fees on absolutely everything else. I moved to a credit union shortly afterwards and haven't looked back since.

It definitely makes you think though. I noticed all the extra taxes and fees and such on my phone bill, but like the article says, I never paid a great deal of attention to them. Now I'm going to start shopping around and see what better deals I can get.

Re:Car-rental extras...

[moop]

It wasn't until I read the article and began to think about it. But there are so many cases, and not even in the industries mentioned in the article. The two examples that came to mind was first McDonald's were if heaven forbid you can't have a 20piece McNugget with 2 sauces they get you for a dime a piece for a extra sauce. And at the local university, if you want just a cup for water its a dime, unless your purchasing something. Its kind of amazing if you stop to look around and see how many places have little addon prices.

Cable Companies

[evilviper]

The local Cable co has been running an ad over and over for the past couple years that criticizes satelite companies for tacking on extra fees... One example is the extra monthly charge for a second reciever. Of course, they don't mind being blatanly hypocritical.

Their new Digital Cable package sounded a lot cheaper, but adding in the little extra charges that they include, I was paying even more per-month... I canceled on the spot.

Most people may not notice, but I notice, and I reject it on principal alone, not to mention that going with the seemingly more expensive options usually save you money in the end.

Re:UK seems a little better.

[Alan Partridge]

you seem to be living in a different UK than me. I attempted to pay my BT bill at HSBC (THEIR FUCKING BANK!) and was told I'd need to pay a £5 fee for paying my bill; I attempted to pay my MBNA bill at the Royal Bank of Scotland (THEIR FUCKING BANK!) in CASH and was informed that I'd need to pay a £20 fee and that the payment "could take up to four days" to be registered on my account; I attempted to pay another credit card account £500 in cash over the counter at a nationwide branch only to be refused because "we don't have the facilities to deal with large amounts of cash at this branch". What?? A bank that can't deal with money? Fuck them all, I now bank with smile - and they haven't tried to fuck me over YET.

Be Careful

[vor]

Adding the 3% to the bill if the customer is paying by credit card is a sure way to piss off the credit card company. They might even revoke your ability to accept credit cards.
I know of many restaurants in NY which rather than take the 3% loss on transactions (which at busy places can cost tens of thousands at the end of the year), have an ATM installed on site. Wanna pay by CC? Sure, go use the ATM. Now instead of losing 3% on the sale, the business gains $1.00 (other $1.00 goes to ATM vendor).

Paying a surcharge for a "surcharge waiver"

[JaredOfEuropa]

When I booked a trip to Florida last summer, my travel agent offered a special deal on a car rental (with Dollar). I could rent the car for a high daily rate, but there would be no extra surcharges, and that was guaranteed! I took one look at the list of possible surcharges and decided to go with the all-inclusive deal. Did I get a good price? I don't have a clue, probably not... but I paid no additional surprise fees to Dollar, the airport, or any additional taxes.

The article is dead-on: people are willing to pay for convenience.

ADDONS!!!!

[b96miata]

Fees like this particularly infuriate me. I am currently looking into other banks after first union(wachovia now?) decided to start charging 50 cents every time you pay with something with your atm card. This after they'd finally dropped their 1.00 fee in addition to the 1.50 you pay to atm owners for getting money at a damn 7-11. The article does make one good point though - companies that play their marketing off consumer frustration with fees can make a bundle. I recently stayed at a wyndham, the hotel chain listed in the article. It sounds stupid, but the fact that I signed up for a free program and now can count on free internet access, free ld phone calls (!), extra pillows, and a free (as in beer) beer whenever I walk into my room there will make me choose them over just about any other chain. Other hotels could take a big lesson from them, especially certain "luxury" hotels whose idea of "business services" is putting analog jacks on the sides of the phones so you can pay 10 bucks in service fees to check your email over dialup, and allowing you to receive faxes for a dollar. Give me broadband in the room and I'll stop bitching about how there's only 5 non-pay channels on the tv.

Ahhh, the old screw you foreigner tax.

[El Camino SS]

My mother in law was in Mexico on a tiny little island, and as the plane was about to take off, the military and police stopped it for not having the official duties paid, this amounted to going seat to seat and getting 15 USD for every person. Needless to say they all had the cash to pay, but never told a soul that there was an issue about it until the plane was ready to take off. No one ever saw one official document. Hmmmm...

*Cough*. B-S. *Cough*.

My boss, who worked for CNN for decades was recently in Mexico, and he just keeps a wad of cash with him when he pulls out his news camera to work down there. I'd say about 1/3 of the people that I have talked to about Mexico have been shaken down by the police because they are foreign.

Needless to say, I went to Mexico. Great place. Same place as the relatives. No plane fee for me leaving. Surprise. But you can bank it that I had at least 50 USD for me and my wife when we got on the plane.

After all, in Mexico policing is a for profit business. You should assume like I do that the police are massively crooked whenever you go to a foreign nation, and be surprised when they are not.

while in USA everything is a for profit business?

[fantomas]

I kind of assumed in USA *everything* was a "for profit business".

Certainly US-slashdot posters often indicate a preference for no government unless avoidable, no taxes where possible, etc. I read this as one of the messages from the original article, that local authorities were collecting income from people through indirect taxation rather than direct taxation.

Maybe things just cost money, and paying for them ultimately comes down to each of us, but it simply boils down to how the organisations get the money out of us.

(BTW I find your assumption that "police are massively crooked whenever you go to a foreign nation", i.e. the whole world is crooked apart from the USA, naive and xenophobic to say the least. Some of your police hardly have an international reputation for integrity).

Re:TicketBastard

[Rich0]

If you buy your ticket AT THE BOX OFFICE at the front door of the venue at the time of the event?

You guessed it. You pay a convenience fee.

Makes you wonder about scalpers. When they go to arrest one, could they present the argument that the exta $100 they charge for a $30 ticket is just a convenience fee?

Re:They have the right?

[Phroggy]

My question, how does Visahave a right to determine what retailers charge their customers.

Can you say "oligopoly", boys and girls? Just like a monopoly, but instead of having just one company controlling everything, there's two or three, and they all set the same fees and policies and don't actively compete against each other.

You'll never hear an advertisement that Visa is better than Mastercard - just better than American Express. You'll never hear an advertisement that Mastercard is better than Visa either. In fact, I don't really remember Discover ads mentioning either Visa or Mastercard. Hmmm.

Paper vs. electronic airline tickets

[aquarian]

Airline costs have "risen rather dramatically" over the past two years, and paper tickets are "more costly to administer than electronic tickets," American Airlines spokeswoman Sonja Whitemon said in explaining the airline's decision to impose a $20 fee on customers who insist on old-fashioned tickets. Fewer than one-third of American's passengers opt for them, she said.

And "since there is only so much space and weight an aircraft can accommodate," there's "an additional fee for passengers who require more than the average."

This is bullshit. What they should say is that it's more costly to offer the same level of service/guarantee that they offer with a paper ticket -- which they don't.

There's a lot more to the ticket fee issue than meets the eye. The public is aware of it, and it's why they still insist on paper tickets. What's the deal? Well, if you read the fine print, you'll see that an electronic ticket is a completely different class of ticket. It's a different contract. Basically, they have the right to bump you first if the plane is overbooked, or even if someone shows up at the last minute and is willing to pay full pop. With an electronic ticket, you're the low man on the totem pole. Of course airlines are pushing these, because it gives them carte blanche to do what they want with you, overbook flights, etc. Some e-tickets even have fine print about not being responsible for delivering checked luggage, etc.

Be really careful with e-tickets. Read the fine print. I do, and I've always found it well worth it to pay the difference, and even to wait in line.