NMI’s Payment Playbook Podcast – Episode 16: Debbie Guerra, Chief Product Officer at ACI Worldwide

Greg Myers: That was Debbie Guerra, the Chief Product Officer of ACI, and she is my special guest on this episode, episode 273 of the Leaders in Payments podcast, and I’m your host, Greg Myers. As we continue our deep dive into the Be Solid campaign brought to you by NMI, Debbie and I discuss Omnichannel Commerce as part of our six-part series on Anytime Anywhere Payments. Debbie and I talk about the history of Omnichannel Commerce, where it’s heading in the future and the role ACI is playing in the payments ecosystem. We’ve got a great episode ahead, so let’s get started.

Hi, Debbie, and welcome to this episode of the Leaders in Payments podcast, where we’re going to be talking about Anytime Anywhere Payments and, of course, the concept of Omnichannel Commerce is a big part of that. So, thank you so much for being here and welcome to the show.

Debbie Guerra: Thanks, Greg. It’s a real pleasure to be with you today.

Greg Myers: Great. So, let’s start out by having you tell our audience a little bit about yourself, maybe a little personal and professional background information.

Debbie Guerra: Sure well, I’m Debbie Guerra, Chief Product Officer at ACI Worldwide. I have more experience, I think, in consulting IT services, financial technology and payments than I’d like to admit to, but that encompasses really understanding payments, not just in North America but in Latin America, where I’ve had the opportunity to lead some merchant acquiring businesses. I’ve worked with some of the largest processors and now at ACI, I’m really honored to be able to lead product strategy and product marketing and management for the original Fintech, a company with more than 45 years of experience in providing payment solutions to the world’s largest financial institutions, processors, enterprise merchants and here in the U.S. also to direct billers.

Greg Myers: Okay, and do you want to tell us a little more about ACI and what ACI does?

Debbie Guerra: Sure. So, as I mentioned, I like to call us the original Fintech in payments, because our software solutions have really powered for the last 45 plus years the abilities for financial institutions to switch, to process, to authorize and to settle payments across multiple channels. For enterprise merchants, we offer Omni-commerce payment orchestration platforms. We are not an acquirer, we don’t move money for merchants, but we do provide orchestration solutions that help them achieve and deliver the experiences that they want for their consumers in the most effective way. And then also in North America, we have a direct biller business. We’re one of the largest bill pay providers for a variety of corporate organizations.

Greg Myers: Okay, and what makes ACI unique in the marketplace?

Debbie Guerra: I think ACI is unique in that, given our experience and how embedded we are across so many different payments capabilities, we have the scale, the reliability, the performance and the knowledge of complex payments that really is unrivaled. At the same time, because of our history, we are at the forefront today, for example, in driving real-time payments globally. We are very adept at how to rapidly shift our solutions so that we can accept new payment methods, new channels, new structures, and that we’re highly integrated across various participants in the payments infrastructure. I like to think of us as the network for networks, in terms of all that we can enable in the payment space.

Greg Myers: Okay, all right. Well, let’s dive into the topic at hand and you mentioned it, which is Omni-Channel Commerce. So, can you give us kind of that 50,000-foot level definition of Omni-Channel Commerce?

Debbie Guerra: Sure, when we think about Omni-Channel Commerce, it really is, and more focused, I would say, on merchants, but it is that ability for a merchant to be able to engage with their consumers across modes so think in person, online, via mobile, right at a kiosk, accepting whatever payment method that consumer chooses to engage with, and to then be able to provide a common experience for the consumer across the channels. Additionally, being able to safely, securely route that payment transaction to the appropriate end point so that the merchant themselves is able to process and settle revenue funds and to do so in a way that really is secure, allowing them to have the highest levels of authorization and the lowest level of losses due to fraud and chargebacks.

Greg Myers: Okay, great Thanks for that definition, and you mentioned it earlier and, like me, we’ve both been in payments for a few years now. Can you give us sort of a quick history lesson on Omni-Channel Commerce, sort of how did we get to where we are today?

Debbie Guerra: Yeah, I think the origins of the concept around Omni-Channel really started with the in-store experience of consumers paying right, and for many years that was our only way to pay, whether it was cash or card. But it was an in-store, in-person experience. But as both technology and payment opportunities have evolved, consumers have really driven and pushed merchants to be able to accept other types of payment and for while they were separate channels. So, you think online e-commerce and then you had mobile payments, and then you had wallets and you have new types of payments coming on board. So, I think now we tend to think about Omni-Channel as having some combination of multiple channels in play, supporting multiple payment types across those channels and fundamentally being able to meet the consumer and accept the consumer’s payment preferences where and how the consumer wants to shop.

Greg Myers: Okay, and I recently read on your website and, by the way, I love this quote and I love this positioning that says today’s consumers don’t see channels, they see brands. So, can you kind of speak to that concept?

Debbie Guerra: Sure, in our Primetime for Real-time Report, which is something ACI publishes annually based on some primary research, we’re really looking at the shifts in consumer preferences and in this idea of brands. As a consumer, I think you know, if I’m engaged online, I may want to pay with, say, Amazon Pay, right on my mobile. I may want to do more of my payments through Apple Pay or through wallets, right. So, this idea of brands, you know customers or consumers are looking to engage with familiar brands and that could be a retail brand, a travel brand, a grocery brand, and they want a common experience with their interactions with that brand. So, they don’t always think about it, as I’m going to go shop today online for grocery delivery from Albertsons, right, and I want to have that delivered by a third-party to my home. My interaction, my experience, is with the brand, but it might have multiple participants in the way I engage and I may want to pay one time with Apple Pay, another time I’m going to put it on a debit card. In the future I may want to use real-time payments. So, when we look at the consumer, we’re really seeing how are they approaching their commerce experience and their engagements with brands, right? They don’t think, oh, I’m going to go today and make a mobile commerce purchase right, so they don’t think of the channel.

They really think of the experience.

Greg Myers: Yeah, and I mean, it wasn’t too long ago that your experience in a store and your experience online it was like it was the same brand, it was the same company, but it was almost like two different companies because the experiences were so different. And then, how do you return an item when you buy it online versus in store, and so there’s so much of that that has changed over the years. And you bring up another point it’s not just the retail versus mobile versus online, it’s also how do you want to pay, right?

Debbie Guerra: Exactly, and I think too and you just mentioned this, Greg is the different use cases, and what’s also interesting is globally, we’re seeing different trends in different countries, and what we see in Europe might be more focused on click and collect right.

In the U.S. it might be buy online, pick up in store right. You now have to be able to have common experiences for a consumer across the channels so I may shop in my mobile, right. I may order online, I may pick up in store, I may have things delivered to me, but I want to return it in store, and so it becomes really important that that consumer experience across the actual channels is something that can be seamless, and what is required underneath the workings of the payment solution to make that viable is not magic, right. It’s a lot of hard work, and one of the things that we see with our payment orchestration solutions is that token right. That token that actually can help us identify a shopper, a card or a payment method and then will allow the merchant to orchestrate unique payment journeys for their consumers is really, really important. It’s a rapidly changing complex underpinnings in order for a consumer to have the best experience.

Greg Myers: Yeah, and you kind of mentioned this earlier, but want to dive a little deeper into it and it’s sort of this was it driven by consumers? Was it driven by merchants? How big did COVID play a part in this? I mean, it’s gone from when you just think of the restaurant vertical right, just used to go inside and eat and now order online, pick up, pay at the curb, pay in advance on mobile, on your phone. I mean, there’s so many different experiences to your point. So, do you feel like the consumers really drove this because of COVID or do you think the merchants drove it? What’s your kind of view on that?

Debbie Guerra: Yeah, I mean I think we had started to see a lot more robust omnichannel opportunities occurring prior to COVID. I think COVID acted as a catalyst, particularly on a more pervasive deployment of contactless payment types, of the quick and rapid shift to e-commerce for many merchants that hadn’t as fully adopted e-commerce solutions for their customers. I would say that we also saw COVID as a catalyst for third party aggregators or intermediaries. You know, think delivery solutions as an example that worked with many of the merchants to expand their reach post COVID. So that was an accelerator and I think we don’t see that fundamentally turning around.

I think consumers are happy now to have in many situations, an in-store shopping experience and with the acceleration that came with COVID and, I would say, the new Fintechs offering unique payment options for consumers, it’s creating a lot more opportunity for merchants to differentiate and reinforce their brand, their experience and their business with a consumer by being able to quickly adapt to changing consumer trends. Fundamentally, we also see the mobile phone and some of the younger demographics and how mobile forward they are and all they do, and that has really been a driver not just in North America but really globally in terms of changes in shopping behavior. I think it’s a combination of factors. Consumers, definitely a driver. COVID was an accelerator. Merchants now, as they look to reinforce their own brands, their own loyalty programs, their own engagement with a consumer and to differentiate between their competition, they are looking at payments as a component of that.

Greg Myers: Yeah, I recently saw some statistics that are quite interesting. The Gen Z group 98% of them have a smartphone, which that probably surprises no one. 91% of them had a smartphone before they were 16 years old. So, you’re talking about a group of consumers that everything is done on their smartphone. But the interesting thing, I think, from a payments perspective, is those are future business owners and business leaders right. So, there’s that expectation that that’s how people want to buy things and interact with brands. So, I don’t know if your research is seeing that too, but I thought that was an interesting stat that I found.

Debbie Guerra: Absolutely, and I think that all of us often feel shamed by our children that are younger, that are beating us to the punch in terms of their digital fluency right, but I don’t see that it will be going backwards in payments, whether they’re getting embedded in the way we engage with businesses and merchants. It’s only becoming more and more seamless, and it’s part of your experience and you expect it to be easy.

Greg Myers: Well. What do you think is next for Omni-Channel Commerce? So, maybe what do you see happening in the next five to seven years?

Debbie Guerra: We see it in probably maybe three key trend lines. The first, I would say, is really around as we see more of a shift to digital engagement. That is creating an opening, unfortunately, for a lot more fraud, and I think it is becoming more and more essential that effective fraud detection and prevention solutions are in place, leveraging artificial intelligence and machine learning and, at the same time, appropriately addressing digital fraud. So being able to ensure who is that buyer, what is their digital identity and how does a merchant optimize their authorizations because that’s important to their revenue flows but at the same time, do so smartly so that they can minimize chargebacks and fraud losses. And that becomes more and more important when you see the shift from that in-person, in-store, card-present engagement to a more digital world. So, I think this focus on fraud and then particularly having fraud solutions that take advantage of the strength of a lot of AI and ML, becomes important. The second trend we’re seeing and it’s already more pervasive in some other global economies, but in North America now, with the launch of FedNow for account-to-account real-time payments, what was already in place but now is getting a little bit of a boost with the Clearinghouse, I think, the opportunity for real-time payments, whether it’s pay-by-bank or request-to-pay, that can be available for merchants is going to be a game changer.

There’s merchants and we hear a lot about what’s happening today politically in how much merchants spend related to interchange costs. The high cost of credit and debit is something that is on merchants’ minds, and so, as we see some demographic shifts and uptake of real-time payments and the ability for those to work at them, for a consumer to business payment, I think that’s going to be another important trend and I think we’re going to see merchants enabling it as a new payment method as there’s more and more adoption, expansion of the account-to-account real-time options. And then I think the third trend that we’re seeing is really something that we call intelligent payments orchestration. It’s how do you accept securely let’s call it orchestrator route a payment transaction to the appropriate endpoint, and that could be based upon cost authorization, speed choice and how does a merchant take more control through orchestration of their options. So those, I think, are three of the big trends that we’re seeing in the Omni-Channel space.

Greg Myers: Okay. Well, let’s circle back to ACI on these three trends. So, can you talk about fraud, real-time payments and this orchestration concept? Can you talk about those and what ACI is doing and plans to do around those?

Debbie Guerra: Sure. So, I think you know. First, on the fraud space, we have an industry leading merchant fraud solution very focused on card not present fraud. We have some of the highest payments acceptance rates in the industry, outperforming averages across various industry segments. And you know, once again, as I mentioned, underpinned for years now with AI/ML models and even some patented incremental learning models that extend the life of a lot of the rules engines and decisioning that is adhered to those solutions. So, from ACI’s perspective, our investments over the last 10 plus years in the fraud solutions is now paying dividends, particularly as we see the shift to digital payments, real-time, as I mentioned earlier on.

I would say we are the leader globally in real-time payments and that shows up in several ways. One is we enable many central banks and central infrastructures with the infrastructure to support account to account real-time payments, we enable low value real-time payments. So, banks that connect to real-time payment infrastructures and we are already a leader in the think of it as the high value money transfer business and what we see is all of that is coming together to be delivered via payment hubs. So how does that relate to merchants? So, first you have to get the structures in place. You have to get the capabilities available for financial institutions and for consumers to take advantage of real time payments.

So, we’re at the heart of that and when we look at that in the merchant space, we have launches for instant payments, both in North America and Europe that have happened in 2023. And we’re going to be at the forefront of working with our enterprise merchant customers so that they can enable their solutions, at the right time, to take advantage of account-to-account real-time payments. And then I think, in terms of intelligent payment orchestration, this is really in the merchant space, that is the crux of our solutions and we really serve merchants that want to own, orchestrate and really take control of their payments infrastructure. And when you think about things like being able to do multi-acquiring, to embed that common consumer experience across channels, to leverage point-to-point encryption and tokenization all through the orchestration engine and to link that to the fraud solutions, you know that’s the core of some of the things we’re doing today.

Greg Myers: Okay, and on that orchestration thing, I mean, it’s always been intriguing to me. Does it also give the merchants the ability to add more payment methods and that’s one question. And then also, does it give them the ability to more easily go into other countries or other regions of the world?

Debbie Guerra: Absolutely. I think the first thing is payment methods. They’re proliferating now wallets, alternate payment methods. It’s not just the standard card payments that have been the bread and butter for many of the acquiring processors for years, but also the proliferation of alternate payment methods and the connections that support those, as well as the mobile wallets. Right and when you look at orchestration, right now cross border commerce is becoming a bigger deal and very often we look at our merchant business within a single geography. But increasingly, particularly in the retail space, some of the services areas travel, transportation, hospitality becomes very important to support a lot of cross border commerce, which means you’ve got to be able to expand to other countries and know how to route the right payment method, the local payment method, to the local acquirer as appropriate.

Greg Myers: Okay. So, Debbie, we’ve obviously covered a lot of ground about ACI and what you’re doing in this space, and obviously about Omnichannel Commerce in general. Is there anything else you’d like to add before we wrap up the show?

Debbie Guerra: Well, I think I would encourage anyone that’s interested to tap into ACI’s Prime Time for Real-time Report. There’s some just great primary research and really looking at the trends for the proliferation of real-time payments by country, by demographic, by size of financial institution and where we see the trends going for merchant adoption. So that might be of interest. And I would just also encourage those as we come up on peak season in the next month in North America to look out for our holiday predictions and I would give you a heads up on three of them, in that we are expecting about a 14% increase year over year in globally commerce transactions, with the gaming sector really leading that growth. We think buy now pay later transactions are going to triple this year, particularly as consumers are looking to stretch dollars under inflationary pressures and unfortunately, we do see fraud attempts expected to grow to about 3% of all transactions, with friendly fraud making up about 20% of that. So be on the lookout for some of the trends that are expected in the 2023 holiday season.

Greg Myers: Okay, great, I appreciate you sharing those and look forward to seeing that. So, Debbie, thank you so much for being on the show today. I know your time is very valuable, so I really appreciate you being here.

Debbie Guerra: Well, thanks, Greg, it’s a pleasure.

Greg Myers: And to all you listeners out there. I thank you for your time as well, and until the next story.

02:31 – About Debbie Guerra

03:29 – About ACI Worldwide

05:19 – Definition of Omni-Channel Commerce

06:30 – History of Omni-Channel Commerce

07:45 – Consumers See Brands Not Channels

11:24 – Consumer Driven or Merchant Driven

15:03 – What's Next for Omni-Channel Commerce

18:09 – Fraud, Faster Payments and Payment Orchestration