KPPI 441 Non-Market StrategyNon-Market Story of the DayCopyright or confidentiality statementKPPI 441 Non-Market StrategySome Backstory: How does the ayments ecosystem work!Swipe debit card for $20 Tayor Swift ab!"Keep# $1$%&'Keep# $0%44Send# dataSend#$1$%&'Keep# Tayor Swift (b!"Pro)ide reward#*Why am I interested? I worked as a consultant for retail financial services on this issue I benefit from free checking and want it to stick aroundWhy it matters? $1. trillion is spent on debit cards in the !.". and that number is growing by 1#$ every year %his represents $ '( in revenue for the stakeholders) 'anks) (etworks *+isa, -C, .me/0) .c1uirers *2eartland, 3irst 4ata0Copyright or confidentiality statementKPPI 441 Non-Market StrategySome Backstory: "hy I care and why #t matters!"hat #s the D$r%#n amendment!Bas#cs: (ormally you5d e/pect merchants to negotiate effectively with networks to reduce these fees %his hasn5t happened historically, the duopoly of networks *+isa, -C0 have dictated terms to merchants and retailers, who are a vast and diverse group preventing group negotiation 6etailers asked sympathetic congressman to limit debit card interchange fees as part of the 4odd 3rank 3inancial 6eform law %he initial drafts included that fees be limited to cost per transaction *1& 0, a+serious reduction from the 77average in # +"#nners and &osersCopyright or confidentiality statementKPPI 441 Non-Market Strategy,e)en!e- $20 .N$& .N/o#t #a)ing#- $0 .N$1& .N44+12+4 I 'na&ys#sIssueT0e 1!rbin ("end"ent and it# i"it on debit card #wipe fee#Institution2S /ongre##t0en3edera ,e#er)eInterests4 Merc0ant#4 ,etaier#4 P!bic 5w0o 0ate bank#6- .ank#- Network#- (c7!irer#- P!bic 5w0o ike free c0ecking6Information- M!tipe 8p-9d# to infor" t0e p!bic b!t t0e topic i# e#oteric: #o p!bic knowedge of t0e tradeo;# in0erent i# "ini"aCopyright or confidentiality statementKPPI 441 Non-Market Strategy(he message from %oth s#des: %he bank5s message is about 8financial opportunity9, that these changes will make it impossible to provide free checking %he bank5s message is also includes that this is :ust to 8punish the banks9 and meanwhile hurting smaller credit unions %he merchant5s message is about passing on lower prices to the consumer ) Wal-art has credibility to deliver this message %he banks message is e/tremely ineffectual to the public given that they have lost significant credibility through the financial crisisCopyright or confidentiality statementKPPI 441 Non-Market StrategyHow can the %anks f#ght th#s!)ongress %he .'. and many large banks individually ; collectively lobby members of congress trying to kill the .mendment Change the coalition strategy is tried and failed