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  • Writer's pictureW.B. King

A Mega Payments CUSO is Born: PSCU, Co-op Solutions Announce Historic Merger

By W.B. King


In early 2023, Co-op Solutions and PSCU’s board of directors began hushed discussions with the possible goal of merging the two largest credit union service organizations (CUSOs) in the payments space. On Monday November 6, 2023, a deal was announced.


“Both boards really came in with what’s best for both companies, the employees as well as the industry as their focus. They never lost sight of that throughout the whole process,” PSCU President and CEO Chuck Fagan said during a virtual press conference.

“[There was] a lot to work through: what this means to the industry, what it means overall in the landscape of the community of financial institutions around relevancy, around the ability to invest aggressively in innovation, to bring tools and technology to keep credit unions relevant and competitive in this fast moving and incredibly complex payments space,” Fagan noted, adding that the merger was a “milestone day for the industry.”


Collective History and Expertise


Founded in 1977, the St. Petersburg, Fla.-based PSCU has 2,400-plus financial institution (FI) clients with annual revenue of $871 million, and supports 3,400 employees and eight billion transactions, annually. The Rancho Cucamonga, Calif.-based Co-op Solutions, founded in 1981, has 2,650 FI clients with annual revenue of $527 million, and supports 1,940 employees and eight billion transactions, annually.


“The speed of change continues to accelerate, along with the need to deliver more complex technology and solutions for credit unions and their members,” said Dean Michaels, president and CEO of Co-op Solutions. “We believe this combination will offer an unprecedented opportunity to meet the demands of the modern credit union member, enable agile technology development and provide the scale to help credit unions compete and win in the financial services market.”


The new leadership team will be announced when the transaction is complete — slated for December, 31 2023. Fagan, though, will be the CEO of the new combined organization, which will be headquartered in St. Petersburg. Whether or not there will be a west coast office, or other regional outposts, remains undetermined.


“The decision to combine with Co-op comes at a time when the payments landscape continues to see rapid evolution, with innovation and technology reshaping the needs of our industry and financial institutions,” said Frank Weidner, chair of the PSCU Board and president and CEO of Wings Financial Credit Union. “With their collective history and expertise, PSCU and Co-op have an unparalleled understanding of the credit union space. We believe that we are stronger together, and we look forward to the new opportunities for success that this combination will provide for credit unions.”


Fagan explained that the combined Board of Directors will comprise credit union CEO representation from both current boards, including nine members from the current PSCU Board and four members from the current Co-op Solutions Board.


“Credit union growth and member experience are the shared central mission of PSCU and Co-op,” said Joan Opp, chair of the Co-op Solutions Board and president and CEO of Stanford Federal Credit Union. “Our combined Board of credit union CEOs reaffirms our commitment to credit unions, and credit union ownership of the key technologies and services needed to compete in the broader financial services space, ensuring that credit unions succeed and thrive. While both PSCU and Co-op are already leaders in the credit union space, together, we’re confident that this combination will help more credit unions sustain growth and meet the evolving needs of their members.”


Creating an End-to-End Payments Ecosystem


Michaels said that since both companies are known for their respective payments solutions, this merger will create a robust end-to-end payments ecosystem. “[It will] bring together our collective industry-leading credit processing, debit processing, but for me, what really makes this combination special and exciting is that we are also bringing together some of the unique assets.”


On the Co-op Solutions side, he said these assets includes ATM networks, shared branching, and its POS network, which will be complimented by PSCU’s digital banking, digital lending — everything around "money movement," he said.

“This combination is going to give us an opportunity to better integrate all of these solutions and really optimize our product portfolio,” he added. “At the end of the day, it’s going to create more than a payments ecosystem, but really a diversified technology partner for credit unions.”

Fagan added that both companies began as “scale” companies and over the years have added technology assets that will allow the new organization to compete effectively in the market, while allowing credit unions to be “highly successful” with the engagement levels of their members.


Conceding that for respective team leadership, employees and credit unions, the merger announcement is “a lot to digest,” Michaels said he has fielded a lot of questions and comments.


“There is uncertainty introduced with any combination but there has also been a lot of excitement,” he noted. “We both respected each other’s organization for a long time and I think employees can really feel excited about what these two companies can do together, and some of the opportunities it opens up for them to do different things going forward…We are not a public company so we can be intentional about how we go about making sure these changes are as least disruptive to our employees and clients as possible.”


On the client/credit union side, both Fagan and Michaels said there have also been questions and concerns as clients are happy with the services they are currently receiving form both organizations. They noted that many credit unions do business with both organizations and many are shareholders of both entities.


“The members’ owners we reached out to have been very enthusiastic — almost like ‘We’ve been waiting for this.’ We have a communications strategy from both sides to industry consultants and the reception from the consultants has also been very favorable,” Fagan said. “So, there is excitement from multiple fronts on how people have reacted to the combination.”

Names and Brands


With regard to what the new entity will be called, Fagan said that remains unclear. Until the deal closes, he thinks the two names will be interchangeable, but that could change in early 2024.


“Both brands are so strong in our industry and longevity that’s been there, I think we would be making a huge mistake if we didn’t take advantage of the strength there,” he said. “There is an effort to take a look at how the brand will be structured, but we can’t really do much about that obviously until the deal closes,” Fagan continued. “But just know we will be looking at it not only from a consumer perspective but also from the respective organizations’ structure as well.”


Michaels added that with both companies being more than 40-plus years old, there is a lot of “affinity” for both brands.


“Through this merger, [it has been] really important for us is to make sure our employees and our clients really feel like this is a merger representing the best form both companies and as part of that, we really think launching the new entity with a new brand really helps support that,” Michaels said.



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