Spicing up realtime payments

ACI Worldwide’s Craig Ramsey explains how it’s looking east to develop a new wave of ‘overlay services’ – the secret ingredients that make alternative payment rails irresistible

The urgent need for universal, realtime global payments has been recognised across the financial services industry and beyond for some time. And universal payments facilitator ACI Worldwide (ACI) has been helping to make them happen for some time.

Now, it is looking east, to India, for inspiration in delivering not just speed, but added value to those crossborder transactions, in order to promote wider adoption among banks.

Last June, ACI made a strategic investment in Mindgate, one of the solutions providers supporting India’s unified payments interface (UPI). It’s an example of how the rapid digitisation of payments in mobile-friendly Asia is becoming a lesson in how the rest of the world should do it.

Backed by all of the country’s main retail banks, and the government with its drive to take the country cashless, UPI enables anyone who holds an account with a participating bank to send and receive money person-to-person, or consumer-to-business, via their smartphone, using a unique identifier. Thanks to this ease of use, it is now handling more than half of all India’s realtime, mobile bank-to-bank transfers, with Google Pay the biggest initiator. It’s been an amazing success story, attracting 100 million users since 2016.

UPI provides an open architecture, allowing digital wallet apps, payment banks and startups to link freely to its platform, in contrast to the closed systems of China’s WeChat and Alipay. It simplifies transactions between apps and banks linked through a biometric ID system called Aadhaar. Regulated by India’s central bank, UPI allows the instant transfer of funds between bank accounts through a mobile device using a simple virtual handle, without sharing bank or personal details, and its creators are now looking to expand the platform beyond India, to facilitate payments in places such as Singapore and the Middle East.

Dilip Asbe, chief executive of the National Payments Corporation of India, the government-backed umbrella organisation that developed the system, was recently quoted as saying that UPI has had the fastest acceptance rate of any payment platform, adding that it aimed to expand the UPI base to 500 million users in the next three years. It is Mumbai-based Mindgate’s expertise, gained through supporting UPI, not just in providing simplified realtime payments but also by including added value information at the same time, that ACI has bought into.

According to Craig Ramsey, ACI’s head of realtime payments, it is this ability to ‘overlay services’, rather than the inherent transaction speed of the new rails, that will persuade more financial institutions to adopt them.

Its collaboration with Mindgate promises to be a powerful one, placing both Mindgate and ACI front and centre in what ACI describes as ‘a payments revolution’, potentially bringing enhanced transactions to more jurisdictions across the globe.

ACI already facilitates electronic transactions for more than 5,100 organisations worldwide, handling $14trillion in payments and securities each day for major financial institutions and merchants. It is well-established in India, providing solutions for eight out of the country’s 10 major banks and processing 60 per cent of its digital payments.

Through ACI’s electronic bill presentation and payment services, as well as a myriad of related software solutions hosted on customer premises or its own private Cloud (and in future on the public Cloud through its partnership with Microsoft Azure), it offers ‘realtime, immediate payment capabilities’ and enables ‘the industry’s most complete omnichannel payments experience’. But it’s the additional products and services those payments can potentially bring with them in the transaction process, that the ACI/Mindgate partnership is focussed on.

“What we are now going to see is the next stage; how banks will start to offer more products and services, or what we call overlay services,” says Ramsey.

“Banks look, every day, at how they can improve their customers’ experience and that’s one of the things that realtime payments, in itself, won’t do. Realtime payments is just a clearing and settlement mechanism. It’s a set of rails that supports the idea that you can do an instant account-to-account transfer, but it’s the digital overlay products and services that give the customers reason to want to use the realtime rails. So, that’s what we’re doing with our partner company, Mindgate.

“Mindgate has been instrumental in driving realtime payments and UPI adoption in India, so we’re going to take its experience to all of our 100-plus customers around the world, and show them what an accelerant to realtime payments can look like, whether it’s request to pay or merchant services, or mobile software development kits (SDKs), all of these things will give the banks’ customers reason to need realtime payments, and that’s when we’ll see the accelerant and the transaction growth that we’re all expecting to see with real time.”

ACI, which has been involved in SWIFT gpi from the outset, is also hoping to bring Mindgate’s experience in this area to that relationship, as SWIFT undergoes a sea-change in its payments offering.

“Initially, when gpi came to market, banks thought it was just another compliance requirement as part of the SWIFT network. But as gpi has evolved and added more services to its framework, they’re beginning to realise the benefits it gives to the customer, such as transparency of message flow, transparency for the initiating customer and the beneficiary around where the transaction is, and now, with universal confirmations coming next year, we’ll see every bank providing confirmation that the beneficiary has received their money,” says Ramsey.

“So, it’s a big shift in how the traditional, fire-and-forget model of correspondent banking existed; now we’re seeing transparency as well as transactions settled, in many cases, within seconds and minutes, across the globe. That really does improve the customer experience. The whole cross-border payments model has changed for the better.”

Adoption of faster payments is growing rapidly worldwide, confirms Ramsey.

“We’re seeing fantastic adoption across the world. There are now 60 countries that are either already on their realtime journey, or live, or planning. Australia went live last year, Hungary is now in its pilot phase, most of Europe is live. And there are some really standout countries, like India, where they’ve gone from a few transactions to almost a billion transactions a month, which is huge growth in realtime payments.

“I’ve seen commentary about realtime payments being the new normal. We all want a realtime experience –  no one wants a payment finally getting there, at some point in the future,” he adds. “But  people can now see where their payments have got to within the full, end-to-end processing – we’re giving more customers transparency of payments, and it’s that which improves the customer experience.”

SWIFT gpi is one of the biggest drivers for that change, says Ramsey.

“More transactions are gpi transactions than ever before, and now we’re seeing the next wave: interaction between gpi and instant payment schemes; corporates involved in gpi transactions; corporations doing self-service rather than having to phone the bank’s call centre.

“The next step, which is universal confirmations, is coming in 2020, and every bank in SWIFT will be required to send confirmation to the payee that the beneficiary has received their money. Every bank will have a part to play in providing that realtime tracking of data.”

ACI intends to remain at the cutting edge of such developments through its strategic partnerships. As former ACI president and CEO Phil Heasley put it at the time of its investment in Mindgate: “The global realtime and digital payments transaction opportunity is vast, and… we are well-positioned to capitalise on this growth opportunity – providing to banks, corporates, merchants and payments intermediaries the world’s leading realtime payments offering.”


This article was published in The Fintech Finance Magazine: Issue #15, Page 93.

Author: Yash Hirani

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