Co-op Financial Services just finished an active week, announcing separate deals with MasterCard Inc. and The Members Group that built on past investments.
The California-based credit union services provider announced it would distribute MasterPass, MasterCard's new mobile wallet. It also is offering a reloadable prepaid card from The Members Group, also a payments provider to credit unions.
"We made a strategic investment in The Members Group last year and we are in a mode of 'choose the best of breed' with our services," says Caroline Willard, executive vice president of markets and strategy for Co-op Financial.
Co-op Financial will "lean on" The Members Group for prepaid products in the future, Willard adds. Willard doesn't foresee any conflict with promoting The Members Group card at the same time as other prepaid products.
"There are so many niches within the prepaid space [such] as school, budget or travel tools," Willard says. "We could have 12 different products and they would not cannibalize each other because of the different segments and users."
As for its connection with MasterPass, Willard says Co-op Financial took "a long and winding road" to work with the product. The opportunity arose from its recent acquisition of Financial Service Center Cooperative Inc., through which Co-op obtained digital shared branching technology.
The shared branching service, announced in late January, facilitates the use of digital wallets and person-to-person payments.
"An asset we developed through the FSCC purchase is called Sprig, an online shared branching service, basically a closed loop person-to-person payment ecosystem," Willard says. "We love that, but we were also looking at other partners to create a bigger network."
To do so, Co-op Financial reached out to MasterCard about its mobile wallet. Co-op was also looking at half-dozen other potential partners for digital wallet technology, Willard says.
"We encourage our institutions to participate in as many digital wallets as possible, but to be sure they establish their branded card as top-of-wallet," Willard adds.
Co-op Financial views mobile payments, person-to-person payments and digital wallets as its three main projects this year, Willard says.
And the U.S. transition from mag-stripe cards to the EMV chip-card standard "is hovering over everything," she adds.
The timing is good for Co-op Financial's services because credit unions and smaller banks need to take advantage of programs that, at one time, only larger banks could offer to customers, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.
"What's really important here is that small and regional banks don't have to be left out of the game," Riley says. "They can attach to models already being serviced, and there is so much available now that is just as good as what the larger banks are offering."
Credit unions will find Co-op Financial's recent additions of a digital wallet and a reloadable prepaid card as "very easy to integrate" and establish with their customers through face-to-face relationships, Riley adds.
"MasterPass operates as a big wallet, so what Co-op Financial is offering with the prepaid cards wedges nicely into that whole process," Riley says.