Corporates Create Payment System CUSO
Credit unions may soon have another alternative for their payment system processing through a new CUSO scheduled for launch by the corporate credit union network.
The Association of Corporate Credit Unions recently made the announcement on the new entity, which aims to capitalize on the various core services utilized by more than 7,200 credit unions, including products such as ACH, national settlement, automated settlement, international services, and custody and safekeeping, as well as services offered through subsidiaries of U.S. Central Federal Credit Union.
It is not known how many or which corporate credit unions are participating in the launch of the unnamed CUSO. Larry Harmon, executive director of the ACCU, initially told Credit Union Times he would provide more details but later said, "We are going to hold off on additional comments for [now]. I will be in touch as we are prepared to release additional information."
In a statement, the ACCU said "Corporates are in agreement that the payment systems developed and operated by U.S. Central-systems both supported and distributed by the corporates-are an invaluable resource for the credit union network. Consensus is that these systems are critical to keep intact, as they represent significant scale and offer a great example of industry collaboration."
Mid-Atlantic Corporate Federal Credit Union in Middletown, Pa., said it took a proactive approach a year ago, working independently to find the best service solutions for its members as it began to move away from U.S. Central.
"So, we already have a plan in place that enables us to continue providing members with the payment systems they need," wrote Jay Murray, president of Mid-Atlantic, in an e-mail. "In fact, other corporates have reached out to us about providing assistance with their back-office needs. We'll watch developments at the national level and support cooperative efforts where they make sense, but we are well-positioned now to help our members succeed."
A source who is familiar with the venture said the ACCU may also be considering partnering with CO-OP Financial Services. The corporate credit union network would form a CUSO and jointly own it with CO-OP. The source said those corporate participating in the new CUSO "just gave away a large percentage of their payment systems platform." CO-OP was not available to comment.
News of the ACCU's CUSO launch came a week before the NCUA announced the creation of two new bridge corporate credit unions assuming the operations of Members United Corporate of Warrenville, Ill., and Southwest Corporate of Plano, Texas. NCUA Chairman Debbie Matz said the creation of the four bridge corporate-U.S. Central Bridge Corporate Federal Credit Union and Western Bridge Corporate Federal Credit Union were the first two-ensures that 4,600 member credit unions continue to have access to essential liquidity and payment services. The two newest bridge corporates are Members United Bridge Corporate Federal Credit Union and Southwest Bridge Corporate Federal Credit Union.
Meanwhile, at least one corporate is concerned with a nondisclosure agreement required by U.S. Central Bridge Corporate Federal Credit Union, which assumed the operations of the U.S. Central Corporate Federal Credit Union in September. The executive with the corporate said it seems information should be allowed to be shared with members if they choose to see it.
The disclosure makes sense since the NCUA/NCUSIF/Stabilization Fund owns the U.S. Central Bridge and all federally insured credit unions own the fund, the executive reasoned. The corporate chose not to sign the NDA saying it is committed to keeping its credit union members involved and informed regarding how services are provided to them.
Credit Union Times Senior Correspondent Jim Rubenstein contributed to this article.