Corporates React to U.S. Central Closure Plans
The lights are snapping off at U.S. Central Bridge–probably on December 31, 2012, the last day the failed corporate will perform ACH processing, per a memofrom NCUA official Scott Hunt that was distributed to U.S. Central users yesterday.
Other functions have earlier shut down dates. Automatic settlement’s last day, for instance, is May 31, 2012, according to a separate memoissued yesterday by U.S. Central Bridge CEO Francois Henriquez. The last day for international wire requests is March 31, also per the Henriquez memo.
Bottomline, industry experts told Credit Union Times, is that the two memos made plain that NCUA in fact plans to shut down the bridge and hopes to finish the job this year.
A big stick waived by NCUA is imposition of an 80% price hike in ACH fees, effective July 1.
That raises two questions: Can the industry respond? At what price?
Experts indicated that the corporates most likely to be affected by the US Central closure will be the small groupthat unsuccessfully tried over the summer to create a payments corporate out of U.S. Central’s rubble. Corporates that had been identified as participating in those talks included Alloya, Catalyst, CenCorp, Corporate One, FirstCorp, Kansas Corporate, Kentucky Corporate, Missouri Corporate, SunCorp, TriCorp and VolCorp.
Asked to comment on their plans, only two of that group responded by press time.
At Catalyst Vice President Amy Fuller said, “The closure plan allows plenty of time for Catalyst Corporate because we already have alternative solutions in place for most U.S. Central products. With regard to ACH in particular, there is no reason a Catalyst Corporate member credit union should have to pay the increased fees given that we can transition them to our mature alternative solution before the pricing changes. More generally, I think it would be fair to say that though this may be a challenging time line, it is feasible. We are confident of the NCUA’s intentions to avoid disruption for natural person credit unions.”
VolCorp Senior Vice President Sandy Swofford said, “In anticipation of [the] U.S. Central closure, VolCorp has already chosen a new ACH provider, LendingTools.com, located in Wichita, Kansas. VolCorp will be converting to the LendingTools.com platform in the first quarter, 2012. After our in-house and beta testing, we will begin transitioning our members to the new ACH product. We fully anticipate having completed the conversion of our members from the APEX product prior to the June 30 deadline.”
Third-party experts indicated that the timeline imposed by the NCUA appears to offer credit unions ample time to convert out of U.S. Central Bridge.