Pricing isn't everything when it comes to electronic funds transfer (EFT) processing, according to one network, which is counting on credit unions to place some value in cooperation.
When Fiserv acquired Plano, Texas-based EDS Corp.'s Consumer Network Services (CNS) unit in November, it created an enormous presence that the company is counting on to generate efficiencies of scale that it says will be translated into competitive pricing for EFT processing, reported The Credit Union Journal last month.
But even if Fiserv and other providers are able to undercut regional EFT processors' fees (see related story, page 1), the credit union-owned and operated ENCORE Electronic Services Cooperative Inc. in Falls Church, Va. is urging credit unions to keep their business in the family.
"Value is the highest consideration at ENCORE," said one information services director at a large credit union who asked not to be identifed. "ENCORE gets by on a shoestring and is very apolitical. It's run by people who have the interest of the collective membership at heart."
ENCORE has driven 12 ATMs and provided debit and ATM card products for two years at this CU. Formed in the early 1980s for the purpose of ATM-sharing, ENCORE is an EFT cooperative with more than 109 CUs in seven states. ENCORE provides ATM switching and direct routing of more than five-million transactions per month through Scottsdale, Ariz.-based eFunds Corp.
"ENCORE negotiated what we thought was a very good price with eFunds in 1990, better than any one credit union could have obtained," he said. "So even the smallest CU gets the benefit of our combined volume. That's been the advantage of ENCORE - cooperative pricing."
Paul Lucas, a credit union marketing consultant (ENCORE is a client) and former vice president at Newport News, Va.-based 1st Advantage FCU, said the cooperative can deliver savings.
"ENCORE has the lowest flat rate group pricing in the U.S. for ATM/debit cards," Lucas said. Many CEOs are unaware of the EFT processing fees they pay, added Lucas, who claimed that many EFT processors send transactions through a series of networks, each with a separate fee. In contrast, ENCORE provides direct routing with a flat rate of about three cents.
'Reliability Over Pricing'
But the systems manager interviewed could not verify that his CU was currently paying lower fees for EFT processing through ENCORE. "We have not recently compared prices," he said. "But we evaluated pricing two years ago. We looked at reliability before pricing and felt that ENCORE offered us a very good product for debit cards."
Operating on the idea that there's strength in numbers, ENCORE continues to focus its collective power, he said.
"Over time, ENCORE tries to bring the cooperative nature to other services," he suggested.
For example, services have expanded to include a network of surcharge-free ATMs, marketing resources, and shared branching. Shared branching provides more than 800 service centers and outlets in 36 states.
"The network of surcharge-free ATMs is a pretty rare commodity these days," he added.