Once again Politicians don't know WTF they're doing...

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You can imagine when I got the following from my Bank (and this would be the first time SAFE has ever sent me anything like this) it boiled my blood.

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At SAFE Credit Union, we work hard to help our members improve their financial well-being, through our products, member service, and consumer advocacy. Now, your support is needed. There is legislation in Congress that will negatively affect SAFE's Visa® Debit Card program and the card programs of other credit unions.

Last week, the U.S. Senate approved an amendment by Senator Richard Durbin to the Financial Reform Bill (S.3217) that would harm consumers and SAFE's ability to deliver critical financial services to our members.

The Financial Reform Bill was intended to deal with bank failures and the high-risk activities that led to the economic crisis. Instead, it has become a vehicle to deny revenue to financial institutions which had nothing to do with the crisis. This amendment will severely limit SAFE's ability to offer a valuable and convenient debit card program. Instead, the amendment assures higher fees for debit cards. At the same time, it does not require merchants to pass on their savings to consumers.

Background
Each time you use your SAFE Visa Debit Card, the merchant is paid immediately and SAFE receives "interchange" through the card payment system. This interchange reflects a merchant's fair share of the cost of this convenient and beneficial payment system. At SAFE, interchange reimburses the cost of serving cardholders, the cost of issuing cards, the cost of re-issuing cards compromised by merchant data breaches, the cost of producing statements, the cost of thwarting and responding to fraud, and the cost of call center resources to contact if your card is lost or stolen.

What Can You Do
The Financial Reform Bill is now pending consideration by a House and Senate Conference Committee. Don't let Congress pass legislation that will shift the costs of the debit card program from merchants to SAFE and its members. There is no free ride. SAFE and other financial institutions will have to pass these costs on to members if this bill passes.

Make your voice heard in support of SAFE and other credit unions. Contact your Congressional Representatives today and ask them to oppose the Senate-passed interchange provision. Sign on to connectforthecause.com and follow the easy instructions to identify your Representatives and send them a letter opposing this amendment. You may use the letter provided on the site or change it however you like. There is no cost to making your voice heard through Connect for the Cause.

Thank you for supporting SAFE Credit Union!

Henry W. Wirz
President and CEO

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This new amendment affects everyone so even if you are not a member of a credit union your support is appreciated. PLEASE help.

Your bank is trying to scare you into supporting their political causes. Businesses occasionally do this.

All Bank of the West did was ask people who have overdraft to sign up for it again. This is a pretty blatant attempt to get you to support their political causes; ie against financial reform. Telling you they'll hike the fees on your debit card if it passes is a pretty blatant attempt at blackmail. I'm with Orwell, they're trying to blackmail you into supporting their political cause.

TCF also printed loads of these and distributed them. However, TCF, as a for-profit bank, would not waste money. It costs money in terms of the supply of paper and ink and payroll for the people who write and review. If they had no benefit from this, then they would not extend the cost, so they have some form of benefit. Recently at TCF, they got rid of their "totally free checking" marketing slogan and replaced it with a $100 minimum balance, costing them customers at the benefit of increasing their lending ability, so they aren't too concerned about losing customers thus there would be another benefit to them in the printing of their propaganda.

That letter gives little information on what this “interchange” is but it sounds like a fee they charge the merchant for accepting the card. Accepting a debit card is effectively the save as accepting a check except it is effectively certified at the time it is accepted. This is a benefit to the merchant but also to the bank because it is less expensive to process electronic transfers than paper checks and I don't see why the merchant should be charged for it.

What your bank is telling you is if they can't charge the merchant for the expense of issuing your card they will charge you. My bank didn't send me such a letter, perhaps because they are afraid that rather than paying the fee I will either write a check or withdraw cash to pay the merchant and they wouldn't want me to do that.

In the interest of honesty I did a little more digging around to find out if there's anymore to this. I found the following

There is something wrong with treating debit card sales the same as credit card sales. The fees charged for the use of a credit card are understandable because the bank is extending credit to the consumer (and paying the proceeds directly to the merchant) thus allowing the merchant to make sales on credit without the risk and expense of extending credit themselves; however this is not the case with debit card sales where the money is simply transferred from the consumers bank account to the merchants. Why should the merchant have to pay for that?

It matters little to the merchant if the customer uses a credit or debit card and most will pay the fee (even if it is unfair) rather than risk loosing the sale. I agree with Kxmode that it would be better if the government didn't get involved particularly in the case of debit card sales since it has nothing to do with credit. It would be better though if merchants and consumers understood the difference.

This, it seems, would be one of those newly instilled benefits from the Supreme Court: the ability of corporations to appeal to their customers and other voters to be able to levy against unfavorable legislation.