EFT giant Concord EFS plans to make its planned acquisition of the Credit Union 24 EFT network the centerpiece of a dedicated nationwide network for credit unions, rivaling credit union-owned CO-OP Network for the loyalty of credit unions.
Concord said it has signed a letter of intent to acquire Credit Union 24, the second-largest credit union-owned EFT network, which provides its 410 credit union members with access to more than 14,000 ATMs and 30,000 point-of-sale terminals around the country.
Melinda Mercurio, a spokesperson for Concord EFS, said the client relationship that Credit Union 24 has with its credit union members and retailers was the main focus of the deal. "Basically, what we're acquiring is the contracts of the financial institutions," she said.
Those contracts, along with those of the 2,800 credit unions already served by Concord's Star Systems network, will form the nexus of a new credit union network that will maintain the surcharge-free and deposit-taking attributes of the Credit Union 24, she said.
The new network "will uniquely serve credit unions and be uniquely designed by credit unions," said Mercurio. "We have a desire for credit unions to be actively involved."
It has yet to be decided whether Concord will retain the Credit Union 24 brand name, she said.
James Park, president of Credit Union 24, said there were several bidders for the network, but they felt that Concord would provide the best opportunities for credit unions going forward by offering expanded services and greater access to EFT services. Park said the credit unions that own the system discussed an offer from The CO-OP Network, the largest credit union-owned EFT system, but agreed that Concord has more to offer in the long run.
"We just came away feeling there was more value to credit unions, in terms of accessibility and reach," he said, of Concord's service to more than 6,800 financial institutions and access to 224,000 ATMs across the country.
In comparison, The CO-OP Network provides about 1,200 credit unions with access to about 15,000 ATMs in the U.S. and Canada.
Robert Rose, head of The CO-OP, expressed regret at result of the bidding. "We respect the decision of the Credit Union 24 board but we're obviously disappointed," he said. "It's a shame that another valuable asset of the credit union movement is being sold to a non-credit union entity."
Over the last five years Concord has built the largest EFT network outside of credit card giants MasterCard and Visa USA through the acquisitions of the MAC, Honor, CashStation, then Star Systems networks. The latter deal proved a windfall for several credit union organizations that were early investors in Star Systems. Five credit unions and The CO-OP Network earned more than $92 million in Concord EFS stock from the $1 billion deal. But because Credit Union 24 does not own any ATMs or any of the infrastructure, beside its Tallahassee, Fla., offices, there will be no such payday for the 362 credit union and credit union-organizations (leagues, CUSOs) that own stock in the system.
Neither Concord or The Credit Union 24 would disclose the purchase price but industry observers put the purchase price at less than $10 million.
The acquisition of The Credit Union 24 leaves only a few credit union-owned EFT networks of what was once more than two dozen. Among the surviving systems are: The CO-OP Network; ENCORE (see related story); Member Access Illinois, a network of 250 ATMs owned by the Illinois CU League; Alaska Option, a network 373 ATMs owned by six financial institutions, including Alaska USA FCU; and CU Anytime, 135 ATMs owned by 19 New Mexico credit unions.
The deal still awaits a definitive agreement and a vote of The Credit Union 24 shareholders.
Park, who joined The Credit Union 24 as its first employee in 1982, said he plans to stay on for the near term and help guide the integration.