Payment services: ACI Worldwide

When central banks upgrade their central infrastructure to round-the-clock, real-time payment (RTP) and settlement systems, reliable overlay services are vital in making sure banks, merchants, individuals and fintechs can be connected seamlessly. ACI Worldwide has emerged as a leading partner for a growing range of RTP services aimed at aiding the transition towards near-instantaneous transfer of funds being spearheaded by central banks.

In the past year, powered by ACI Low Value Real-Time Payments, Malaysia’s real-time retail payments platform, run by PayNet – in which Bank Negara Malaysia is the largest shareholder – hit its billionth transaction. In Europe, ACI now supports around 75% of the RTP ecosystem in Hungary.

The company also assists with higher-value payments. Last year, it teamed up with Thailand’s National Interbank Transaction Management and Exchange (ITMX) – a bulk payment system co-owned by the country’s largest commercial banks and governed by Bank of Thailand, handling $770 billion of payments in 2020 – to modernise Thailand’s bulk payments processing system and introduce ISO 20022 to support continued growth.

“ACI implemented our new bulk payments processing system in a tight timeframe to support high throughput and growing volumes, delivering the stability, accuracy and consistency needed to successfully integrate all 33 member banks with the mission-critical processing speeds required,” said Wanna Noparbhorn, managing director at National ITMX, in January 2021.

In North America, ACI says it is also supporting the adoption of The Clearing House’s RTP system, which is being used by BMO Financial Group to offer real-time cross-border payments to business customers. In the future, ACI will also participate in the US Federal Reserve’s pilot programme for its upcoming RTP system, FedNow. The US pilot will support the development, testing and adoption of the new service, which ultimately should enable thousands of smaller financial institutions across the US to provide RTP services to consumers.

“For every central bank, every government, when they are looking to implement these new payment schemes … it’s a huge payments modernisation effort for the entire nation,” says Bill Reboul, head of payment networks, ACI Worldwide. “The whole point is to make sure that the ecosystem participants – including banks and processors, but also merchants and consumers – are feeling a benefit. The rationale behind it might be financial inclusion, or it might be part of an economic policy to support small and medium enterprises via improved cashflow.”

Malaysia’s PayNet

Malaysia’s national payments network and central infrastructure for financial markets, PayNet, logged its billionth transaction in October 2020, four-and-a-half years after Bank Negara Malaysia unveiled its retail RTP initiative. Part of the central bank’s plans was a multi-year programme to provide merchants and consumers with a cost-effective and agile platform.

The Covid-19 pandemic put Malaysia’s RTPs into even sharper focus. QR code-based payment methods – one of the new services launched by PayNet last year, supported by ACI’s systems – facilitated contact-free payments that improve social-distancing measures. A longer-term goal is to extend the payment system across the Association of Southeast Asian Nations (Asean).

“ACI’s real-time payments solution gives us flexibility to make material steps towards greater Asean payments integration,” said Peter Schiesser, group CEO of PayNet, in August 2020.

ACI teamed up with Mastercard to help market participants connect to central infrastructure more quickly and easily, accelerating the adoption of RTPs. The ACI-Mastercard collaboration offers a layer that can be included in the hosted service infrastructure for RTPs. This allows for new services, such as QR codes, request to pay, and social media payments, to be launched in a short time.

“If a bank chooses to take the ACI real-time payment solution to connect to the ACI adaptor layer in a central infrastructure, they can be up and running in a couple of months, versus if they have to overhaul their entire payments engine at their site, which could take them a minimum of 18 months,” says Craig Ramsey, head of real-time payments at ACI. 

“So, it shortens the time to value for the central bank in terms of getting that usage and adoption growing.”

Hungary goes real time

Since the Central Bank of Hungary launched the country’s instant payment system in March last year, transaction volume has been growing. ACI claims it now supports about 75% of the real-time ecosystem in Hungary.

The central European country targeted earlier domestic deadlines than its continental peers, against the backdrop of the European Union’s Payments Services Directive 2 (PSD2) mandates, a reworking of payments rules to reflect rapid advances in technology.

“Hungary had to be live with RTPs and open banking under the PSD2 initiative. In fact, the government and the central bank decided to set a much more stringent domestic deadline for their domestic network,” says Ramsey.

Hungary’s national approach was an ambitious national launch, which left no room for error. ACI worked with its customers in the country to ensure that the go-live was smooth and successful.

OTP Bank, which already accounted for 40–50% of volumes in Hungary, adopted ACI’s full suite, including open banking and card fraud management. Another bank, Erste Bank Hungary, selected ACI to provide real-time balances in accounts.

“Consumers increasingly want new and innovative banking services. The advent of PSD2 and the launch of more real-time schemes will offer our customers more options, as well as greater control and flexibility,” says Tibor Johancsik, chief information officer of OTP Bank.

“ACI’s solutions will be a significant element of our architecture, playing a substantial role in our own open-banking strategy, enabling us to capitalise on the opportunities that PSD2 and real-time payment present.”

The Central Banking Awards were written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, William Towning and Alice Shen