By Jeffrey Green (@epaymentsguy)
Co-op Financial’s Sprig digital wallet and real time account-to-account funds transfer service reportedly soon will potentially double its user base by the end of June as part of a deal Co-op signed in December with Fidelity National Information Systems Inc., or FIS.
Through that agreement, Sprig will incorporate FIS’s PayNet payment network (which uses FIS’s NYCE electronic funds transfer network) to facilitate out-of-network person-to-person funds transfers. Sprig currently is available to all credit unions on Co-op Connect, with no implementation or base monthly fees for the digital wallet service, according to Co-op.
Co-op introduced Sprig in January last year, dubbing it “a multi-institution ‘virtual credit union branch’ giving members the ability to make person-to-person (P2P) payments and aggregate their accounts in a single portal.” At the time, Northwest Resource Federal Credit Union in Portland, Ore., and Cal Center Credit Union of Ontario, Calif., were initial supporters of the Sprig service as part of a soft launch.
According to the Credit Union Times, Sprig now is a part of the Credit Union Service Organization's shared branching network, enabling some 20 million members to transfer funds immediately between accounts at participating institutions.
The Co-op agreement with FIS would enable Sprig users to transfer funds similarly among 48 million PayNet users, according to a Co-op Financial Services EVP Caroline Willard, whom Credit Union Times interviewed. She told the publication the enhanced service should commence by the end of June, with the final user total still pending negotiations.
“The final contracts still need to be signed, but 48 million end users is the expectation,” Willard said in the interview, noting the full 48 million users may not be enrolled until the end of the year.
Though the ability to use the network to pay merchants is not part of the plans at the moment, Co-op isn’t against that concept. “We are not closing the door on that idea,” Willard said. “But right now we aren't really interested in doing anything that could cannibalize credit union interchange,” Willard said.
Allowing merchants to be paid through Sprig could motivate consumers not to use their credit union-issued debit or credit cards, something Co-op would not necessarily support, she said. Founded in 1981, Co-op is a vendor and network provider for about 3,000 credit unions that issue some 30 million debit cards.
Sprig uses the so-called good-funds model, where it relies on visibility into the sender’s account to confirm funds availability and to help support the near real-time transfers. The service currently supports transactions between Co-op-member accounts, and its goal initially was to add out-of-network transfers by June 2013 through help from Dwolla’s FiSync service.
By December 2013, however, such activity had not yet begun, at least not publicly, and FiSync’s slow growth in building out its network may have been a reason why. That also may be why Co-op announced its deal with FIS, according to a PYMNTS.com research report “P2P Payments: Making a Loss Leader a Revenue Generator.”