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Ohio Legislature considers campus cards: Bill proposes mandating off campus merchant use.

CampusIDNews Staff   ||   Sep 01, 2002  ||   , , ,

If one member from the Ohio House of Representatives has his way, the business in many of the state’s campus card offices could change radically. House Bill Number 626 was filed last month with the purpose of amending the Ohio Code to, “require that if a state university provides students with a financial transaction device issued through the university, the university must make the opportunity to participate in the program available to off-campus vendors.”

On the surface this concept makes sense. Most of us have an ingrained belief that it is un-American to curtail free enterprise. Rep. Shawn Webster, a Republican from Millville, Ohio, who sponsored the bill is likely no exception. As most auxiliary service and card program administrators will attest, however, a vendor-inclusive campus-operated debit card program could be a daunting implementation. Many campuses struggle just to get card readers deployed and paid for in the primary campus retail, dining, and service locations. Most are not trying to compete with banks or payment card issuers by capturing all of a student’s financial purchases. They are simply trying to provide a service to the students and make paying for items on campus easier and more efficient.

Okay, not all motives are that altruistic. There certainly is a bit of the ‘keep the dollars close to home’ mentality at work in some of our programs. Like meal plan systems, many early campus debit programs were born of the food service operator’s desire to keep mom and dad’s money exclusively in their dining halls. But the reality of an open system–in which any vendor can accept the campus card for payment–would derail many campus programs.

A fundamental problem is that one cannot limit the types of vendors accepting the card if the system is open to all. Liquor stores, strip clubs, and other locations considered less-than-appropriate would be a part of our campus card community. The window sticker on the local massage parlor might advertise “Use Your U-Card Inside.”

From a technical perspective, such legislation would greatly curtail the ability of the on-line debit system providers–by far the dominant technology in the campus market–to operate. A bank operated debit system based on traditional point-of-sale network infrastructure and mass-produced, inexpensive readers would likely feel little impact from the bill. That is because the financial institution or third-party company signing the merchants and providing the terminals is equipped to handle this effort.

But an on-line debit system in which theschool is responsible for deploying a vendor-specific reader, could be overwhelmed. Staffing, costs, service, and support would likely outstrip the resources of even the best-funded program.

The proposed Ohio legislation adds yet another challenge to this mix by limiting the fees that an institution could charge the vendor to 4% of the gross transaction volume. At these rates, not significantly higher than those charged for traditional debit and credit card acceptance, nearly any merchant might consider accepting the card. Cost would not be a significant deterrent. Further, the bill makes no allowance for the cost of the terminal. Typically, a merchant pays for the terminal via a purchase, a lease through a monthly fee, or a lease by paying a higher percentage of each transaction (called a discount fee). With no mention of this fee, one could argue that the campus must provide the terminal at no cost, while another could argue that the campus could choose an exorbitant fee and purposely undermine the bill’s intent.

Representative Webster’s district includes Oxford, Ohio, the home of Miami University. It is likely that Miami’s card office was the original target of the legislation. At the request of students, Miami recently extended the debit card function of its campus card to include the university-run bookstore. Prior, this account had been used for minor incidental purchases only (e.g. photocopies, laundry, vending).

According to Adolph Haisler, Senior Associate VP for Auxiliary Services and Associate Treasurer at Miami University, “we did not intend to extend this service to merchant locations ,however we did so at the request of students in this isolated case.”

The local independent then bookstore approached the university about accepting the card. The institution declined suggesting that they were not willing to support the debit card program off campus. The institution suggested that the bookstore become a part of the privately-owned student debit card program called Uptown Bucks. According to Mr. Haisler, “we have a very good relationship with Uptown Bucks. The owner is a Miami grad and they provide a great service to the students and the merchant community.” Apparently, the bookstore representative was not satisfied with this and felt that the card’s use in the campus bookstore could jeopardize their business volume. This was a likely catalyst for the legislation.

This is not the first time that this type of legislation has been proposed. A similar attempt failed in Alabama, another passed in Illinois, and others have been discussed at various times in the past decade.

Luckily for card programs in Ohio, it isunlikely that House Bill 626 will pass into law this session. Several things are working against the bill. First, its sponsor is a first term member of the legislature, and though he sits on the House Education Committee, his junior standing does not play in favor of the bill’s passage. Additionally, no co-sponsors have signed on to the bill–typically, a sign of weakness. The bill was introduced late in the legislative session and there are, in fact, just 8 scheduled meeting days remaining in which the bill could reach the floor for a vote. To make it to that stage, it would need to be referred to committee, heard in and passed out of committee, then passed on the House floor, sent to the Senate, and passed there as well. There is little, if any, hope of accomplishing all of these steps in the time remaining in this session.

It is common, however, that a bill that is introduced but not passed in one legislative session, be refiled in a subsequent session. Carrie Colosimo, Administrative Aide to Representative Webster, told CR80News that it is their intent to refile the bill in the next session. Ms. Colosimo noted that they had done a great deal of research in preparation for the bill and stressed that the bill’s intent is not to hurt the campus card programs. “Some of the programs, like Ohio State and Kent State, are doing great. Our intention is not to curb these efforts.” She added that it is Rep. Webster’s concern that some other programs are competing unfairly with local businesses–businesses that rely on the students for their livelihood.
Ms. Colosimo stressed that they are extremely open to input on the issue. She encourages those with suggestions and concerns to contact her so that their input can be considered as they move forward. You can contact Ms. Colosimo at the locations detailed at the close of this article to request a meeting with Rep. Webster or you can send your comments via letter or email.

Regardless of the final outcome, the lesson for all of us in the campus community is important. We must be aware of the perceived threat that our programs and services can have on the local merchant community. If we are blind to this perceived threat, we are likely to create animosity. This can be played out in the media, in the marketplace, and sometimes even in the courts and the legislature.

Stay tuned to CR80News in the coming months for updates on this issue.

Carrie Colosimo, Administrative Aide to Rep. Shawn Webster, can be reached at [email protected]; 614-644-5094; 77 South High Street, 13th Floor; Columbus, OH 43215-6111.

124TH GENERAL ASSEMBLY • REGULAR SESSION
2001-2002H. B. NO. 626 • REPRESENTATIVE WEBSTER

A BILL: To enact section 3345.51 of the Revised Code to require that if a state university provides students with a financial transaction device issued through the university, the university must make the opportunity to participate in the program available to off-campus vendors.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 3345.51 of the Revised Code be enacted to read as follows:

Sec. 3345.51. (A) The board of trustees of a state university that establishes a program to provide students enrolled at the university with the option to obtain a financial transaction device issued through the university shall allow a participating student to use the financial transaction device to purchase merchandise or services as follows:

(1) From the university, as determined by the university;

(2) From any private vendor authorized to sell merchandise or offer services on campus who elects to participate in the program;

(3) From any private vendor who sells merchandise or offers services off campus who elects to participate in the program.

(B) A university that administers or sponsors a financial transaction device program for students may charge a private vendor who is participating in the program a service fee not to exceed four per cent of gross program card transactions at the vendor’s business. A university shall allow any private vendor who sells merchandise or offers services off campus to participate in the program under the same or equivalent terms applicable to a private vendor authorized to sell merchandise or offer services on campus.

(C) No state university shall administer or sponsor a financial transaction device program for students that does not comply with this section.

(D) As used in this section, “financial transaction device” includes a credit card, debit card, charge card, or prepaid or stored value card.

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