MIDDLETOWN, Pa. — A light bulb that went off a decade ago now has some 135,000 end users paying bills online through their credit unions, with Mid-Atlantic Corporate CU providing the back-end engine and carving a niche for itself in the corporate CU space.

“It was way back in 1995 or 1996 when we first saw bill pay as a small but growing opportunity,” said Jeff Stoner, vice president of payment services for Mid-Atlantic whose responsibilities include management of the corporate’s successful MY CU Services CUSO.

“We knew checks wouldn’t be around forever, and we’re always mindful that we would need another business avenue. Then around 1998, the bulb went off and we realized we could support starting bill pay for our member credit unions. It took about a year and a half to develop and launch after that.”

That was around the same time that Mid-Atlantic became the first corporate to be granted a national field of membership by NCUA. Since then, Mid-Atlantic has gathered a coterie of 13 partners, other corporates that resell the service to their own member CUs. Together, working with MasterCard and Online Resources, MY CU Services now pays the bills for about 135,000 members of credit unions ranging in size from under $2 million to more than a billion dollars in assets and located in every state of the union but Hawaii.

Mid-Atlantic has a membership of about 1,000 natural person credit unions. Seven hundred credit unions use its bill pay services, including about 300 of its own members. The other 400 are nonmember credit unions processing through other parties, typically their own corporates.

Building on its experience in the payments space–other services include EFT, ACH origination and receipt, share draft processing, forward collection and Check 21 batch services–Mid-Atlantic built its own in-house bill pay warehouse.

“We call it an in-house decisioning system,” Stoner said. “It looks at a payment and then decides where to send it. We partner with MasterCard and Online Resources to source our payments through.”

Stoner said his corporate’s relationship with Online Resources is an example of cooperating with competitors–co-opetition as it’s sometimes called.

“Obviously ORCC and we are going after the same contracts at times. Same thing here in Philly with Wachovia. We’ll fight with them on the sales side for the correspondent check business and then partner on the back end for processing,” Stoner said.

“No matter how it went on the sales side, once we get the contract, we’re going to end up partnering with the same people we just competed with to make sure that payments get processed quickly and efficiently,” Stoner said.

As for new partners, he said “We’re very comfortable where we are with our market share and with our success in bill pay. And, as far as corporates go, we’re always looking for more partners, but with mergers going on, we don’t really know if those numbers will be going up or down.”

As for new services, Currently, Stoner and his staff of a dozen or so people supporting bill pay at Mid-Atlantic are working on account transfer technology.

“Credit unions can move money for members between other institutions right now, but it takes a two-day paper transfer,” Stoner said. “We’re working to leverage our knowledge of the ACH industry to make that an overnight process.”

He said such transfer tools are “in the research and development stage right now” and declined to predict when they’d be launched. Until then, Stoner said, Mid-Atlantic will continue working comfortably in the space it’s already carved out.

“We don’t compete with CheckFree or Metavante, but we have made a nice business for ourselves. Our main focus is credit unions that we in Pennsylvania would call mid-size, in the $20 million to $200 million range.

“That’s where the meat of our business really is. It’s difficult for them to afford the service from a large provider, and we’re able to come in at a better price point because we’re a member-owned cooperative,” Stoner said. “We’re not fee driven for shareholder value, but fee-driven to provide value to the credit union and their members.”

–mrapport@sc.rr.com