The forthcoming divorce of the majority of Australia's mutual ADIs from their long-standing payments' provider is proving a strained affair.By late this year the bulk of credit unions and mutual banks that rely on Cuscal for payments switching, ATM support and other services will receive those services directly from the credit union-owned service provider rather than through the industry's sub-contractor, First Data.Affiliates of Cuscal use First Data to process around five per cent of electronic retail payments in Australia. The loss of this business represents around a quarter of volume (though a much smaller percentage of revenue) of First Data in this market.The relationship between Cuscal and First Data stretches back more than 20 years, with the latter buying a switch developed by the then Credit Union Services Corp at a time when credit unions lacked the capital to invest in its development. Two years after learning of the shift in strategic direction for Cuscal, the incumbent is still fighting to win the direct business of credit unions.Over recent months, the clash of commercial interests on the part of Cuscal and its affiliates, on the one hand, with First Data, on the other, has generated a legal skirmish over contract terms, along with sniping over the progress of the switching project.While Cuscal has had its switch (licensed from Alaric) in "production" since October last year, the sector is only now approaching many critical milestones in the project. One milestone is the implementation of the switch this month at Police Credit Union in New South Wales. PCU is the first of the "early adopter" sites that Cuscal is using to help refine its migration plan. The credit union is also a user of Ultracs, the most widely used core banking system in the sector.The actual transition of customer payments to the new switch, however, cannot begin until July. (The following article has more on the evolution and legal background to the present migration plan.) Craig Kennedy, managing director of Cuscal, said that customers representing more than 90 per cent of current volume (and more than 60 credit unions) had made the decision to switch."When we went to the market the last couple of times [in the early and mid-2000s] you always test the market, and test the range of offers and services."Kennedy said that in 2009 Cuscal decided to break down the bundle of services it had historically sourced from First Data. These included some call centre and lost card services, alongside the switching services."When we put that tender into the market, we broke it down into components. We did not want one bundled offer."First Data declined to respond to that tender. They were invited... [by] the board to come and present under what circumstances they would like to work with us in the future."John Tait, managing director of First Data for Australia and New Zealand, puts the history differently."Cuscal chose not to request a proposal from First Data for the continued provision of all of the services we have successfully