Mark the calendar: The NCUA aims to turn off the lights at the conserved U.S. Central Bridge no later than Dec. 31, 2012, and now it has announced the specifics of its plan.
Included is a big stick to motivate corporates and credit unions to make new arrangements. Effective July 1, 2012, ACH fees will jump 80% for corporates and credit unions still making use of U.S. Central Bridge.
Long before then–no later than Feb. 24–NCUA wants U.S. Central Bridge members to have filed a written plan and timeline for exiting the bridge.
Other functions have earlier shut down dates. The last day for automatic settlement, for instance, is May 31, 2012, according to a memo issued last week by U.S. Central Bridge CEO Francois Henriquez. The last day for international wire requests is March 31 per Henriquez’ memo.
Other, dramatic changes at U.S. Central include an end to “grace” daylight overdrafts that took effect Jan. 12. Thereafter, “U.S. Central Bridge will impose a $1,000 penalty each time a corporate’s overnight share balances are not sufficient to cover settlement,” wrote Henriquez.
Bottom line, industry experts told Credit Union Times, is that the NCUA made plain that it in fact plans to shut down the bridge and hopes to finish the job this year.
That raises two questions: Can the industry respond? At what price?
Experts indicated that the corporates most likely to be affected by the U.S. Central Bridge closure will be the small group that tried–and failed–in the summer to create a payments corporate out of U.S. Central’s rubble. Corporates 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 had 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. Those same experts indicated they believed users of U.S. Central Bridge will find similar services priced at or below what U.S. Central Bridge had charged. One very senior executive said, “I see this as good news for corporates. Nobody will be left high and dry.”