The Indiana Credit Union League sold its card processing operation to PSCU, according to documents from the card processor and the league.
"The league's focus on supporting credit union success is in complete alignment with PSCU," said John McKenzie, president of the Indiana league. "Our goal was to select the best long-term solution for the card processing needs of our credit union clients, and PSCU is a proven technology partner that can help credit unions expand the scope of services provided and grow their payment programs."
The deal, which the Indiana league anticipated being finalized by May 31, brings 109 credit unions processing roughly 286,000 cards to the payment CUSO. Both the Indiana league's Credit Union Card Center and PSCU process their card transactions on First Data Corps' card platform.
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The Indiana league did not immediately commented on the change, but in a message to participating credit unions, McKenzie noted the league had been using credit card client credit unions for some time, and was finding it harder and more expensive to compete in the processing space.
"ICUL Servicecorp's Credit Union Card Center began providing card processing services to credit unions in 1984," McKenzie wrote. "At one time, CUCC processed over 340,000 cards for approximately 130 clients. During the past few years, some larger clients have converted to other card processors and today CUCC serves 109 clients with approximately 286,000 cards. With decreasing revenues, reduced margins, and increasing competition, CUCC has become challenged in offering a comprehensive and highly competitive card solution for credit unions."
The Indiana league also indicated that that the deal would benefit the 109 credit unions.
First, PSCU will make its "comprehensive analytics program" available for free for five years, which the Indiana league estimated would save the credit unions, collectively, $1 million.
Second, the league's ServiceCorp said it will provide the 109 credit unions, on a pro-rated basis depending on their number of card accounts, with a "financial incentive" payment of $500,000 for making the change.
Finally, the league the sale will qualify the 109 credit unions for PSCU dividend payments, which the league observed have run 10% recently.
"For example, the past two years PSCU has declared 10% dividends, which means a patron credit union booked 10% of the revenue it represents to PSCU as dividend income. So, the total financial benefit over a five-year period to CUCC client credit unions is estimated as $5 million in aggregate," the league wrote.
The Indiana league added CUCC would remain open for five to six months after the change to facilitate the shift, but shut down afterward. The league has not yet said whether existing CUCC staff would be laid off or reassigned in the league or its Servicecorp.
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