LOS ANGELES The new digital payments network being formed by credit unions is poised to choose a mobile platform and is seeking credit unions to invest in the project.
Paul Fiore, the founder of Internet banking pioneer Digital Insight who is heading the initiative, said the network has reviewed more than 100 mobile wallet models in existence and expects to choose one to use as a white label solution in the next few weeks. This model, according to Fiore, will enable credit unions to keep their own name and brand with their members.
“I was involved in two myself,” Fiore told Credit Union Journal Monday. But Fiore said most mobile payments initiatives, including Tabbedout, a mobile platform for restaurants he helped develop, are function-specific. Tabbedout, for example, was created to help bar and restaurant customers close out their bills. Fiore also was involved in the start-up DoubleBeam, a cloud-based payments system for retailers.
Fiore financed the 1995 start-up of Digital Insight himself, then brought in investors from Silicon Valley, including venture firm Menlo Partners, before selling the company to Intuit in 2006 for $1.35 billion. Earlier this year Intuit sold the company to private equity fund Thomas Brava for $1.025 billion and revived the name Digital Insight.
Partnering with Fiore on CU Wallet is Kirk Drake, who founded Ongoing Operations, a disaster recovery CUSO.
CU Wallet has signed up 15 credit union partners so far, which are expected to pledge an initial $100,000 subscription to an initial fundraising campaign.
The aim is to have the project, which Fiore is financing himself initially, owned and controlled by credit unions, which have always chafed at the big bank control over Visa, MasterCard and other payment networks.
The partners include some of the most tech-savvy credit unions in the country: Quorum FCU, Affinity FCU, One Nevada CU, Workers CU, Arizona State CU, University FCU, Kinecta FCU, Washington State Employees CU, Northwest FCU, Community America CU, DFCU Financial, City & County CU, TwinStar FCU and Digital FCU. The partners are expected to participate in the first funding stage and the pilot testing of the new payments system.
CU Wallet will be organized as a CUSO, owned by Fiore and credit unions as a limited partnership. The CUSO plans to issue a formal offering prospectus soon to accelerate fundraising. They hope to raise $5 million in the initial fundraising stage.
The pilot phase of the project is expected to be rolled out in the first quarter of 2014, according to Fiore.
Paul Parrish, chief financial officer for One Nevada CU, said the credit union project does not signal an end to the close relationships credit unions have with Visa and MasterCard. “We’re not about to kick those people to the curb,” he said. “They [the Visa and MasterCard digital wallets] are just not the solutions for us at this time, in terms of electronic wallet.”
