Cross-border real-time payments are the way forward: ACI Worldwide CEO Thomas Warsop

ACI Worldwide, a US-based real-time payments company, sees India as a crucial market for talent and customers. The company aims to achieve 7-9% global business growth by focusing on the Indian market. The company boasts of an impressive clientele in India, with eight of the top ten banks in the country using its payments technology. With sales and servicing teams in Mumbai, ACI also has around 700 technical staff members in Bengaluru and Pune dedicated to developing innovative solutions for regional and global customers. In an interview with TechCircle, ACI's President and CEO, Thomas Warsop, and CTO, Abe Kuruvilla, discuss the state of digital payments in India, the company's growth plans, and the technologies used to enhance the security and reliability of real-time payments. Edited excerpts.

What distinguishes India from the rest of the world in terms of real-time payments?

Thomas Warsop: India leads the world in real time payments, with 86 billion transactions in 2022. Brazil is second but lags in transaction volume. There are a few factors that contribute to India's thriving market. One of them is the proactive approach taken by the reserve banks to encourage adoption. They have been relentless in their efforts to drive adoption and increase transaction volume. Real time payments offer easier and quicker access to financial services, including payment capabilities, which is a major advantage. Even the smallest vendors in India, like roadside fruit sellers or sellers of inexpensive jewellery, now display signs with QR codes for UPI payments. This widespread adoption has been remarkable. India also has an edge over the United States when it comes to embracing real time payments. Unlike the US, where credit card usage is deeply ingrained in the culture, India's economy relies more on cash transactions. The focus on credit card rewards is not as prominent in India, creating a favourable environment for the adoption of real time payments. The Central bank's support and effective marketing have also played a significant role. India is a crucial market for us, with eight of the top ten banks using our payment switch.

ACI Worldwide has partnered with Microsoft for faster instant payments. Any plans to partner with other major companies soon?

Abe Kuruvilla: Through the Microsoft partnership, we are expediting instant transactions via ACI’s Real-Time Payments Cloud (RTPC) platform, which is hosted in the Microsoft Azure environment. Going forward, we plan to expand partnerships with others too in 2024. We are already working with various vendors and will continue to focus on a partner strategy. While I can't disclose specific names due to our structured evaluation communications strategy, we are looking at partnering with around a dozen companies that have a strong presence in India, if not headquartered there. We aim to continue growing our partnerships in India through our partner network and also explore opportunities to expand our teams.

Artificial intelligence and machine learning (AI/ML) is creating a lot of excitement in the tech world. How do you think these advancements will affect your business?

Abe Kuruvilla: While AI/ML has been a hot topic globally in the past couple of years, ACI has actually been involved in the AI/ML industry for about a decade now. Our fraud solution, which is used in India and other places, heavily relies on AI/ML technology, and our goal is to continue using it and enhancing it through risk-based fraud analysis. AI/ML presents a great opportunity for us to improve our fraud prevention efforts. But it doesn't stop there. We are also incorporating generative AI into our next generation strategy for engineering. It's not just about moving to the cloud and being cloud native, but fundamentally changing how we approach engineering. If I may use the trendy buzzwords, we are positioning ourselves as an AI and automation-first engineering organization.

How large is the technology team at ACI Worldwide, globally as well as in India Also what kind of work the team does in India?

Abe Kuruvilla: ACI Worldwide's technology team is quite large, with a global footprint of around 3000 people. In India, specifically, about one-third of our team is based there. The team in India handles a wide range of work, including support, call center operations, and even core product engineering. Essentially, it's a comprehensive technology organization that covers everything from operations and infrastructure to internal support and data center practices. India plays a crucial role in providing 24/7 support to our customers.

How do you ensure the security of real-time payments, and what technologies are helping to enhance payment security?

Thomas Warsop: We believe that real-time payment systems should incorporate fraud detection and prevention measures right from the start. It shouldn't be an add-on or an afterthought. As the infrastructure is being built, we prioritize the integration of robust fraud detection and prevention tools. We provide our customers with various tools, including our own proprietary fraud management solutions. I must say, we take pride in running our tools alongside other fraud management solutions and demonstrating to our customers that our system detects more fraud while minimizing false positives. This is crucial because we want to prevent unauthorized payments while allowing legitimate ones. False positives can disrupt the payment process, so it's important to strike the right balance. Unfortunately, fraud exists in the world, and there are individuals who engage in malicious activities. This also applies to real-time payments. However, if we look at the statistics, the incidence of fraudulent transactions in real-time payments seems to be lower compared to the overall payments ecosystem. This is great news, especially considering the expected increase in real-time payment volumes worldwide. It's crucial for everyone to remain vigilant and proactive in preventing fraud.

ACI Worldwide made an investment in Mindgate, an Indian company in 2019. Do you have similar plans to invest in other Indian companies working in digital or real-time payment technologies?

Thomas Warsop: We do not comment on specific acquisition targets until we have something to announce. But what I can say is that we are always open to partnerships and opportunities for growth. This could take the form of joint ventures or other paths, as long as they help us achieve our goals faster and vice versa. We have not announced any specific acquisitions yet, as we are a public company and must do so when we have active deals. However, this does not mean that we would not consider partnering with an Indian company in the future.

In which areas in digital payments is India lacking, and where do you think improvements need to be made?

Thomas Warsop: There are always complexities and challenges in any market, especially during the pandemic and post-pandemic times. Right after things started to calm down, we certainly saw a lot of competition for the best talent. This has always been the case in India, but I think it intensified, particularly in India. We need to constantly think and stay ahead of the desires and needs of our team. As Abe mentioned earlier, India plays a crucial role for us, both from a customer perspective and a team member service perspective. It is super important, and we must stay ahead of it. This is not unique to India, but we did observe it here.

Also, is there any areas where you need to pull up?

Thomas Warsop: ACI has a significant place in the global payments ecosystem, and it holds a very important position in the Indian payments ecosystem as well. However, I don't think we have done a good enough job of making that known. When I mention ACI's name to someone in India who is not in the financial services industry, they typically don't know the company. Our customers, especially the big banks, are aware of us because they are our customers. However, for those who are not closely connected to financial services, we are not well known. We need to do a better job of changing that perception because we are a highly interesting company doing remarkable things. We want to make that clear and be vocal about it. This will also help us address the issue of attracting the best talent. Ultimately, the most important thing is to have access to the best talent and do an excellent job for our customers.

What can we expect for the future of real time payments in India? 
Thomas Warsop: India has made a great stride with real-time payments, becoming the largest market globally. The next big development here will be cross-border payments, allowing real-time transfers between countries. While there are currently limited examples of this, it is not a technical limitation. The regulator should consider the facilitation of easier, quicker, and more cost-effective cross-border payments. If the Federal Reserve Bank and the Reserve Bank of India collaborate to establish the necessary rules, it would be a game-changer. This would lead to a rapid increase of real-time payment use cases, making the future even more exciting.