A frequently long and complicated process to change credit and debit card processors will likely limit the impact of a recent federal supervisory letter on card processor FIS, according to some industry observers.
But others counter that the security concerns outlined in the letter, which prompted the NCUA to advise credit unions to evaluate their relationship with the card processor for 5,400 credit unions, are sufficiently grave that they will be enough to lead some CUs to leave the processing firm.
“This will cause reputation concerns for FIS and their Group Service Providers, but likely will be corrected by FIS and result in too almost no short-term changes by their processing clients,” wrote Tim Kolk, founder of TRK Advisers, a card portfolio consultancy that helps credit unions improve their credit card performance.
“Most of their clients are happy with their products and servicing, they have a good team in the field, and the lead time to making a switch is at least six months and more typically a year of analysis and conversion planning,” Kolk said.
But other observers noted that it's become more common for credit unions to consider other card processors routinely as part of their contract renegotiation process.
For those credit unions in particular, especially if they already have issues with FIS, the concerns raised in the supervisory letter could lead them to switch, according to one processing specialist who declined to speak for the record, citing company policy.
One thing working in FIS's favor is the longer time lines required to make this sort of switch. “In the long term it may make a difference here and there but otherwise for credit union card issuers I expect tomorrow will look much like yesterday in the processing world,” Kolk added.
Card Services for Credit Unions, the association of credit unions that process their credit and debit card transactions with FIS, has not yet revealed how it is advising its member CUs about the concerns raised by the supervisory letter, but CSCU CEO Robert Hackney said it planned to do so soon.
“In light of regulatory feedback last Friday about the topic, we are revising our letter to our member CUs,” Hackney wrote in an email response to a request for information. “Communicating directly to our member CUs is our first priority. Following that, we will issue a PR (press release).”
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