The rise of digitisation has been accompanied by the unprecedented growth of real-time payments. In an exclusive interview with CNBC-TV18’s Shashwat DC, President and CEO of ACI Worldwide Philip Heasley weighs in on why this is a good thing, and what it means in the Indian context, and much more.
Excerpts from the interview: What gives real-time payments an edge over conventional methods like credit and debit cards, especially in our digital-first world?
Cards are very efficient; they’re very global. They’ve got acceptance all around the world, but they’re a fairly expensive way of doing business. You know, ACI is a 44-year-old company. We have been committed to real-time payments our entire existence. Depending on the market, we tend to find which of our products the market embraces. We’ve been in it a long time, and our positioning is that we are not committed to any digital scheme, any real-time scheme. We’re there to facilitate every scheme because we believe that money will be fungible over time. So, if you go and put the right pipes together, you are able to execute a payment, regardless of what type it is.
President and CEO of ACI Worldwide Philip Heasley.
If you notice from 2010, all the way to 2016-2017, everyone underestimated the growth of digitisation. I will tell you that the payment infrastructure world was forecasting even less than the economists that underestimated it, and suddenly everyone realised that these payments are bigger than the merchants they support. Now, we have digital commerce and it’s real, and platforms like Alibaba and Amazon have a global footprint.
What does this mean in the Indian context?
I visited with the Indian banking community around 10 years ago, and listened to one of the governors talk about the Unified Payments Interface (UPI) and – shame on me – but I said that’s a wonderful concept. I don’t think they’ll ever execute it in India.
We’ve since watched the progression and six months ago, when I was talking to Wall Street, we were talking about immediate payments, and they said, “Where’s the volume?”. I said, “You know, any time you go through a transformation, if it works and you’re not patient, you’re just going to end up being the loser.” If you believe this works and you just keep sticking to it, you’re not going to get a return… But then all of a sudden, that S-curve is going to kick in, and you’re going to see the volumes. And that’s what we have seen in India.
How did the strategic partnership with Mindgate Solutions come about?
We saw real-time payments gaining traction in India. We have been talking to Mindgate Solutions for a while, and we had just started from scratch in Malaysia. It had been a year, maybe 15 months, since we got it up and running, and it’s going, and we were very involved on the commercial side in Australia. We watched that one come alive, and there were some other countries we were going to be involved in. Then we looked at India and thought that we’d do it ourselves. Then I said that I don’t think we can do a better job than Mindgate.
We’d been having conversations, and we couldn’t build a better structure than they have, so it made a lot of sense for us to partner with them. What I will tell you in retrospect, the Indian system of social media-to-social media and bank-to-bank – and I said this to Wall Street about four, five months ago – is the most intelligent system in the world at this point. I don’t know a better system than that.
Which stakeholder, in your opinion, is going to lead the pack, when it comes to transitioning to real-time payments?
I think all three have very strong positives. One is the government itself, and they’ve already explained it. From an input standpoint, there’s tremendous benefit to it. And, of course, the government is just a collection of the people. The second one, especially in this economy, there’s a huge amount of entrepreneurs. Real-time payment mechanisms enable them to set up shop in a much more effective way, because they don’t have the money to set up a POS terminal. So, I think that there’s real value on the P2P business side, and that’s not unique to India. I’m sure this would also be true in the United States and Britain. On the personal side of checking, how much of this is small business? I bet it’s close to 20-25 percent of it, so I think there’s a huge amount of value in terms of that. The third constituency is not people, in my mind. It’s place. It takes distance out of the equation. It takes personal contact out of the equation. I can transact with you, but I don’t have to personally confront you to do that. I think there’s a huge democratisation to that. I think, in one word, what’s going on is democratisation of the payment system.
With operations in 39 countries, ACI brings a global perspective to every market it enters. Is there something about India that you would like to take to the rest of the world?
I’d like to take the social media-to-social media and bank-to-bank payments scheme. I can think of ten other countries in which that would work because then they don’t have to build out the social medium. Moreover, it would actually be somewhat of a solution to the heavy lifting that these banks have to do in some of these countries. Now, I’m told that there are places like Bangladesh or Africa, where it might be more difficult for this to work, but I actually believe that’s fairly temporary. I think it would get critical mass. There’s also another way that other countries will embrace it, which I think is another way you get the globality because you don’t want a payments system that’s just confined to the country itself, especially when you want to export as much as you’re trying to export, and you’re importing as much currency back into the nation. You want a more global mechanism.
Shashwat DC is Features Editor (Special Projects) at CNBC-TV18.
Read Shashwat's columns here.