Rancho Cucamonga, Calif.-based Co-op Financial Services will add credit card processing to its debit card transaction processing business line. 

The Credit Union service organization said its Co-op Credit Pass-Through Processing will be available for implementation by credit unions in January 2011. Pass-through credit processing also is known as internal credit processing. Co-op said the new service will allow credit unions to “maintain a high level of control and customization in servicing their clients, while implementing a less expensive processing solution than a fully outsourced processing solution.”

 Caroline Lane, Co-op’s SVP of business development and marketing, told Credit Union Journal Co-op is starting with pass-through credit processing because it is a “very cost-effective way for credit unions to process credit cards.” 

“Co-op has about 3,200 clients and we know about 1,000 of those issue credit cards. If credit unions wish to bundle a couple different products we can give them a better price,” she said.

 Jennifer Kerry, VP of credit issuer processing, said any credit union that is processing PIN and/or signature debit with Co-op today will be able to process credit cards under the new offering. “Even if a credit union does not process debit with us, we can process its credit cards,” she added. “The back-office support and service features will be the same, including dispute processing. This means one number to call for all credit and debit needs. This gives economies from a staffing standpoint, and relationship pricing advantages.” 

Co-op will add full-service credit card processing in 2011, Kerry noted. 

Lane said credit unions are looking for opportunities to build non-interest income as overdraft and interchange income have been impacted by laws and regulations in the last 12 months. Some credit unions moved away from credit cards, either selling their portfolios or not marketing them during the recession, “but this is a good time for credit unions to introduce a solution,” she asserted. “There are consumer needs because banks are not addressing credit cards. Credit unions have been clamoring for this. A lot of our clients would love to consolidate their processing and have a single point of contact. Credit unions are the ones touching the members and answering the phone calls, and this is a very personal service method.”

 Co-op Credit Pass-Through Processing is customizable, Kerry said, meaning if credit unions want to offer their members a balance transfer promotion or an introductory rate, “they don’t have to go through somebody else–they are in complete control.” 

Co-op Financial Services will provide the credit unions with MasterCard and/or Visa sponsorship and will secure Bank Identification Numbers (BINs) as required. BINs acquired on behalf of the credit unions will be defined for exclusive use by a single credit union. 

Using Co-op Credit Pass-Through Processing, the credit union carries credit card loan receivables and handles back-room functions, including cardholder member servicing, statement generation, payment processing and collections. As the processor, Co-op Financial Services will provide the switch between the credit unions and MasterCard and Visa networks, exception processing services (disputes, retrievals, charge-backs) and authorization, scoring, and fraud detection with 24/7 case management.

Lane said the CUSO also will be rolling out Co-op Revelation, which she described as a portfolio optimization tool that marries transactional data with demographic data. “It will make reporting an easier read on a monthly basis and allows a view of transactional data. It will be a great tool for credit unions and will allow them to tweak member behavior and make their card be top of wallet.”

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