If Iowa were the world, then Dale Dooley would most likely be quietly biding his time, his eye on retirement in a few years.
But Iowa is not, and Mr. Dooley, the head of the regional electronic banking network centered there, is making a bit of a ruckus.
The president of Shazam Inc., 23 years in the job and the dean of automated teller machine network executives, is raising his voice on behalf of community financial institutions' interests in the payment systems. With a populist suspicion of big banks, their trade associations, and even some regulatory institutions, Mr. Dooley appears prepared to kick, scream, and do anything else necessary to get policymakers to ensure small banks' access to a basic level of payment clearing services at reasonable cost.
"I'm just a little person out here," said Mr. Dooley, 58, in a recent interview. "I'm not sure I can make a difference, but I gotta try."
His arguments and concerns are not new. Small and large banks have tangled continually on payments issues, such as prices charged for check clearing and other services by the Federal Reserve System and rules of access to credit card and ATM networks.
But many such conflicts subsided in recent years.
When the ATM surcharge issue first flared, many community bankers disagreed with larger institutions' collecting an extra fee for cash withdrawals by noncustomers. Yet most community bankers also invoked free-market principles in arguing against a legislated ban on surcharging.
When two top Citigroup Inc. executives resigned this year from the Visa U.S.A. board after the card association did not bend to their desire to deemphasize the Visa brand name, the Independent Community Bankers of America loudly protested the apparent power play by the biggest bank holding company. In the end, Visa's board stood its ground, though still facing suspicions from Mr. Dooley and other critics that big banks wield most of the power.
When influential members of the Financial Services Roundtable, a big-bank association in Washington, began to perceive payment-system threats from nonbank companies such as Microsoft, they formed an interest group called the Banking Industry Technology Secretariat.
The secretariat, known as BITS, is one of the entities that concern Mr. Dooley. He worries that a few chief executives on its 17-member board -- from Citigroup, Chase Manhattan, Bank of America, Wells Fargo, and the like -- can come to an agreement on a new payment mechanism that bypasses the credit card and regional funds transfer networks and runs roughshod over the smaller banks.
The view from BITS is quite different. If nothing else dampens Mr. Dooley's diatribe, there is the fact that the organization has two community bankers on its board.
In this climate, a prosperous one for the banking industry and for many electronic funds transfer networks including his own, Mr. Dooley's is a lone voice.
But it is an insistent one, and it comes from a power base. Shazam, which began in the 1970s as ITS, or Iowa Transfer System, serves 1,400 financial institutions, 500 of them in Iowa. Mr. Dooley would not get away with a lot of his statements if this constituency were not behind him. Their average deposit size is between $80 million and $90 million. Less than 10% of the network volume is generated by what Mr. Dooley classifies as "major banks," which in his region include Firstar Corp. of Milwaukee and the Norwest Bank portion of Wells Fargo & Co.
Mr. Dooley contrasts his ownership and transaction structure with that of other networks that do a majority of their work on behalf of big banks, in some cases also their dominant equity owners.
It also happens that Shazam is a successful enterprise. Based in the Des Moines suburb of Johnston in a 25,000-square-foot building that may soon be doubling in size, Shazam processes 14.5 million transactions a month, making it 13th on the Bank Network News ATM network ranking. Belying that second-tier status is its revenue. At $33 million this year, Mr. Dooley said, the Shazam budget is one of the top three.
Buying in like other ATM networks to the need to diversify, 230-employee Shazam drives terminals in 38 states, though Mr. Dooley defines the core region as Iowa, Illinois, Minnesota, Kansas, Missouri, Arkansas, and Oklahoma. The company handles automated clearing house transactions -- another corner of the payment system that has Mr. Dooley wary, because the volume is increasingly concentrated among big banks and he sees them controlling the agenda of the National Automated Clearing House Association. Shazam/ITS has a Nacha board seat.
Shazam got out of the credit card processing business but still does merchant processing, and early next year it expects to activate ITS Bank, a state-chartered institution with $1.5 million in capital that will have a direct pipeline into the Visa and MasterCard networks.
Mr. Dooley may wonder about how community banks ultimately may fare as members of those associations, but soon he will be one of them.
Some of the community bankers around Mr. Dooley in Shazam's membership and on its board share his sense of activism. Shazam vice chairman D. Douglas Rice, executive vice president of Security National Bank in Sioux City, Iowa, recently visited Federal Reserve Bank of Chicago President Michael H. Moskow to make a case for policies ensuring small banks' access to payment networks.
The traditional Shazam bankers have gained an ally in Steven Ollenburg, president of Principal Bank, the Internet subsidiary of Principal Financial Group of Des Moines. Serving a national clientele electronically, the insurance company subsidiary supports payment systems that provide consumers with "equal and nondiscriminatory access," Mr. Ollenburg said at a payments workshop in October co-hosted by the Federal Reserve Bank of Chicago and the Illinois Institute of Technology.
He said he is on guard against creation of an infrastructure that does not allow all banks to participate or that requires "a franchise fee to gain access (that) would be so onerous it would preclude participation."
"I think the big banks' agenda is to control payment systems," Mr. Dooley said. If they are allowed to have their way, he fears, smaller banks will either be frozen out of the big banks' closed loop or will have to pay that steep price for admission.
The power-balancing solution, which to Mr. Dooley is a matter of simple fairness, would be Federal Reserve intervention. It might seem radical, with deregulation the prevailing preference, to ask the central bank to step in as a neutral "router of last resort" for banks of any size that do not want to opt in to private arrangements. But from its inception in 1913, the Fed was mandated to do just that in the checking system. It is also the leading processor in the ACH business, though Visa U.S.A. and big banks are trying to change that.
"We would like to have the same interoperability with bank transactions in EFT that banks have with checks," Mr. Dooley said. "It boggles my mind," he said, that entreaties to the Fed fall on deaf ears.
To close processing gaps that have prevented point of sale debit card networks from becoming as universally reliable as interregional ATM interchanges, "the Federal Reserve could serve as a national clearing exchange to assure delivery of all electronic POS transactions," suggested Shazam senior vice president and corporate counsel Richard S. Jenkins.
"We believe the fragmented electronic payment system existing today will not be altered unless the Federal Reserve serves as a national clearing exchange for electronic payment items," Mr. Jenkins added. "We need action to assure community banks and other small to midsize financial institutions are sustained in their ability to compete with larger institutions."
Those words come from a letter that Mr. Jenkins wrote in March to Rep. Jim Leach, the Iowa Republican who is chairman of the House Banking Committee, in a vain hope that such a provision might have gotten into the HR 10 financial modernization bill.
Mr. Jenkins said Shazam as always got a fair hearing from Rep. Leach, but it was clear that this was not the year for an expansion of the Fed's payment processing mandate.
The arguments are not traveling well even within the ATM networking club. One of Mr. Dooley's friends and neighbors -- James Martin, president of TYME Corp. in Wisconsin, an ATM and point of sale network with similar midwestern roots and hundreds of smaller institutions in its membership -- does not share the sense of alarm.
Mr. Martin said he is skeptical that big banks can successfully conspire as Mr. Dooley alleges they will, and he said the shared-network structure works well in bringing new technologies within reach of large numbers of institutions. As for government action, he said, "I'd prefer to see the Fed stay out of it."
Mr. Martin and TYME, which has 400 owners and 500 participating institutions, admittedly have a stronger big-bank component than Shazam. But he said, "We treat them all the same. All are equally welcome if they play by the same rules."
Mr. Dooley contends that a larger big-bank presence would have limited his management's flexibility in serving the membership. He blames bigness and bureaucracy -- things outside of Shazam's control -- for the difficulties of electronic benefits transfer, for example.
"We had a perfect model for EBT" in the 1980s, Mr. Dooley claimed. Because most recipients of food stamps did not have bank accounts, Shazam designed a voluntary debit-card-like system that was said to be cheap, simple, and functional. But it never passed muster with the Department of Agriculture, which proceeded to develop a more involved set of specifications revolving around banks. In the end, most states' EBT processing business was won by Citigroup.
Mr. Dooley also said retailers need to be better included in payment system discussions, both on EBT and debit transactions more generally. He contends that simple proposals get lost in political and bureaucratic confusion. He said debit card payments on the Internet, a current conundrum for many of his network peers, can be accomplished through a "single message flow" not complicated by such things as trusted third parties' issuing and maintaining digital certificates to verify identification on the Web.
"We don't need other intermediaries," Mr. Dooley said. "If the banking industry does its job, (the authentication function) is already in place. Instead of finding the simplest and best way to serve our customers, this is about people trying to corner the market."