ARLINGTON — NAFCU Services Corporation, a wholly-owned subsidiary of NAFCU, has named Fifth Third Processing Solutions preferred partner for electronic funds transfer services. Those services will include ATM and debit card processing, terminal driving and network gateway transaction processing.
"We look for solutions and partners that can assist our member credit unions with top-notch, quality programs, and Fifth Third has proven its ability to deliver comprehensive products and services our members can use," said David Frankil, president of NAFCU Services.
"EFT services lie at the heart of the delivery challenge facing credit unions today. The ability to increase the range of services offered to members, while enhancing productivity and efficiency, is critical to success. From our perspective, it was a solid choice–Fifth Third's selection as a preferred partner was driven by strong recommendations from among its existing credit union client base," he said.
As one of the five businesses operated by Fifth Third Bancorp, headquartered in Cincinnati, Fifth Third Processing Solutions processes 21 billion ATM and POS transactions per year for more than 142,100 merchant locations and 2,300 financial institutions worldwide, NSC said.
The company has gotten a black eye with some credit unions for its role in the card security breach suffered by the BJ's big box retail chain, a role that drew lawsuits from CUNA Mutual and other credit unions seeking compensation for their losses suffered in the breach.
It has also drawn praise for its relationship with Credit Union 24, the credit union-owned ATM and EFT network headquartered in Florida. Credit Union 24 has credited the savings gained from the relationship with Fifth Third for, in part, allowing it to cut rates and offer a higher patronage dividend.
NSC said it has conducted extensive research in order to best identify those that offer outstanding value and opportunity.
NAFCU CEO Fred Becker acknowledged that the relationship would be controversial with some in the credit union industry; if only because of the word Bank in Fifth Third's name, but he argued that the deal was strong from both a strategic and economic perspective.
In a Feb. 12 e-mail to NAFCU members, Becker revealed that, as part of the deal, Fifth Third assured NAFCU that Fifth Third "has committed to not taking a negative position with respect to the rights of credit unions in public forums, and refraining from direct lobbying efforts against credit union rights and powers," Becker wrote.
Becker believes that banks are not unified in their opposition to credit unions in the marketplace and that this deal will help make it clear that credit unions are not every banker's chief priority.
"I hope that Fifth Third's written acknowledgement of the legitimacy of credit unions' position in the 21st century marketplace will serve to answer any concerns you might have with this newest preferred partner," Becker added.
A spokesperson for Fifth Third confirmed the statement, but declined to comment more, citing it as a confidential part of the agreement with NAFCU.
But Stan Hollen, CEO of CO-OP Financial Services, a CUSO that provides many of the same services as Fifth Third, said he was "baffled" by NAFCU's decision, particularly since he contended that CO-OP Network was not invited to try for the designation.
"Given what is going on between banks and credit unions now," Hollen said, "it is a mystery why a trade association which represents credit unions would choose a bank processor as its preferred provider," he said. "Credit unions have contacted me to ask if we had been considered and I have had to tell them no, we weren't."
Hollen added that, in his view, Fifth Third's statement about not taking negative positions against credit unions didn't really mean anything.
"When was the last time Fifth Third said something negative about credit unions or lobbied against credit unions? They don't do that, they pay the ABA [American Bankers Association] to do that and they are still paying their ABA dues," he added.
But Frankil said that the organization had not put out a new request for proposals related to the service and that instead it had used responses to the last one issued three or four years ago. In that RFP, CO-OP Network had not responded and Fifth Third had been the second strongest candidate behind Elan Financial Services, the card-processing arm of U.S. Bank, which had been the previous preferred provider. –dmorrison@cutimes.com
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