Business Risk of Customers Using Debit Cards by sxn42276


More Info
									Financial Institution Email to Employees

Employees can play an important role communicating your organization’s point-
of-view to U.S. Representatives and Senators. The following call to action
employee email provides a template that outlines why and how employees should
contact their Representatives and tell them to eliminate the Durbin amendment
from the financial reform bill. Financial institutions that are opposed to the
legislation are encouraged to customize this email and send it to their employees.

To: All Employees
Re: Help Protect Our Business from Harmful Legislation

As a valued employee of [FINANCIAL INSTITUTION], I am writing to ask for your
assistance in protecting our ability to continue providing our customers with the high-
quality, affordable debit card services they have come to expect.

As you may have read, the U.S. Senate recently passed an unrelated amendment that
got attached to the financial reform bill in a late-night vote with little debate and no full
hearing. If it becomes law, the amendment would impose government price controls on
the fees merchants pay to accept debit cards.

While price controls may sound ok, they are actually a bill of goods. Debit card
acceptance fees are collected from merchants for a reason: they are important to
[FINANCIAL INSTITUTION], and other financial institutions as a source of revenue that
allows us to issue debit cards, maintain the technological infrastructure of the debit
system and cover the risk of guaranteeing payment to merchants.

Government price controls would make it challenging for us to continue providing the
same service at the same price. I think it is fundamentally unfair that the Senate is
helping the retailers pay less and asking our customers to pay more for the benefit of
using a debit card – especially since retailers enjoy big benefits from debit card
acceptance – including faster checkouts, increased sales, increased security and
guaranteed payment.

I hope you are as concerned about the direction of this important legislation as I am, and
respectfully ask for your help to protect all debit cardholders, including our customers
and yourself, from higher fees.

If you are concerned, please send an email to your Senators and Congressional
Representatives who are about to vote on this legislation and express your desire for
them to side with debit cardholders like our customers and yourself and not big-box
retailers. You can easily send them a ready-made email by visiting the following website
link and following the instructions:


Thank you very much for your efforts and support.

Letter to Vendors/Partners from Financial Institutions

Dear Vendor:

I’m writing to let you know about an aspect of the financial reform bill before Congress
that, if it remains in the final bill, could have an enormous negative impact on your
business, and on the consumers we both serve.

The language, inserted by Sen. Richard Durbin (D-IL) at the behest of big-box retailers,
would regulate debit card interchange rates. The federal government would gain the
power to set prices for debit interchange, overturning the market-based rate setting that
takes place today. In addition, retailers would gain the power to set minimum purchase
amounts for credit card transactions, meaning all consumers could face inconsistent and
arbitrary thresholds where their cards could be denied for use.

Should this language become law, it could turn the funding mechanism supporting debit
cards on its head. It could seriously impact the revenue stream that financial institutions
and other stakeholders in the payments industry use to provide debit cards and operate
the processing networks that handle the transactions. Instead of retailers paying their fair
share of those costs, in exchange for the many benefits they get from acceptance, the
bill could load those costs onto the backs of consumers.

Consumers could see an increase in fees for checking accounts and online banking; a
marked decline in rewards programs; and the potential disappearance of vital programs
like zero liability protection. They could pay more to have a card and to use it.

By making debit cards more costly and less attractive to consumers, the Durbin
language could actively discourage consumers from obtaining and using debit cards,
including prepaid cards. That directly affects businesses like yours that rely on the
growth in debit card usage.

It could also affect the growing number of government programs that distribute benefits
via prepaid debit cards as a way to do so more efficiently and securely. Price controls on
debit interchange may force financial institutions to make prepaid debit programs more
expensive for government users and thus curtail them.

Visa is committed to leading the industry’s efforts to strip this dangerous language out of
the final bill. It’s important that we all act now, while the measure is being debated in
Conference Committee, and tell Members of Congress about the harm this language
could do to consumers and to businesses.

To help your efforts, I’m attaching a sample letter you could consider sending to your
Senators and Members of Congress, as well as to members of the Conference

In addition, you should also be aware that the Electronic Payment Coalition has created
a web site that makes it easy to send a personalized email to your Senators and
Members of Congress. Simply visit the following link and follow the instructions:

I urge you to take action today to preserve the part of your business that depends on the
debit card, and to help Visa protect consumers, community financial institutions and the

Visa Inc.
Letter from Vendors/Partners to Members of Congress

Protect Consumers: Strip Durbin Amendment from Financial Reform Bill

Dear [Congressperson/Senator Name]:

On behalf of [organization name], I am writing to share my disappointment regarding
Senator Richard Durbin’s amendment (#3989) that was forced into the financial reform
bill (S. 3217).

It is disappointing that our Representatives would allow such a harmful proposal to be
included in such a complex bill with virtually no hearing or debate.

The financial reform bill is supposed to deal with banking failures and the high-risk
activities that led to the economic crisis. This amendment does nothing of the kind.
Instead, by regulating the fees merchants pay for the benefits of accepting debit cards, it
would create damaging consequences to consumers. Rather than any lower prices at
retail stores, consumers would likely see things become more expensive for them. They
would pay more to have a card, more to use it, and have retailers in a position to dictate
which form of payment they choose.

Organizations like mine would be harmed along with consumers, because we would
have to absorb costs that are rightfully the merchants to bear in exchange for the great
value they receive from accepting debit cards. This loss of revenue through unfair and
unwarranted cost shifting would limit [organization]’s ability to offer financial access and
services to my customers, and to the people of this state.

The essence of the amendment has already been tried in other places around the world,
such as Australia, with harmful consequences. In Australia, where price caps were
imposed, consumers have not seen any savings. What they have seen are higher costs,
fewer rewards and reduced benefits from their cards. Merchants have not reduced the
prices they charge consumers, either.

Make no mistake. The U.S. Senate adopted Senator Durbin’s amendment, crafted by
big-box retailers for their own benefit, without taking the time to understand the complex
issues at play. As a result, we are now faced with a piece of seriously flawed legislation
that offers nothing but a huge step backwards for consumers, financial institutions and
the economy – and an undeserved windfall for retailers.

I respectfully ask that you help your constituents avoid these consequences by
immediately demanding the elimination of the Durbin amendment from the financial
reform bill.



To top