Operations
02 March 2023
Payments enter the era of 'optionality'
ACI Worldwide has tools that allow merchants to accept hundreds of digital wallets, and real-time payments.

ACI Worldwide has tools that allow merchants to accept hundreds of digital wallets, and real-time payments.

When it comes time to pay for an item, the question “How much?” has long been front and center.
Increasingly, another consideration isn’t far behind:
“Which one?”
Alongside credit cards, fintech tools have ushered in a rapid expansion of ways to pay, meaning consumers have to check which payments are accepted right alongside the pricetag.
Just one of the areas where that’s true is digital wallets, which allow consumers to pay directly through their mobile devices.
“Normally, people only think of Apple Pay, Google Pay, or PayPal,” Daniel Coates, principal solution evangelist at payment systems company ACI Worldwide, said from the floor of NRF Big Show 2023. “There are hundreds of wallets around the world, and what we've discovered is consumers love using them. Why? Because it means that they don't have to memorize a 16 digit card number, a three digit CVV code, and possibly an expiration date, and then forget half of that or get one number wrong, and everything's gone sideways.”
As consumers have more choice, brands and retailers must keep pace to ensure they offer what’s in a consumer’s digital wallet.
That’s why ACI recently launched WalletHub. Designed for merchants and payment service providers (PSPs), the product offers access to more than 200 wallets across more than 70 countries. It can be used to transact payments offered through the web, an app or a QR code.
“It's a single integration, single contract. You get settled the next day, and it's paid out in your preferred currency,” Coates said. “This is a huge thing for merchants to be able to meet the consumer where they are.”
It comes at a time when mobile wallets are growing. According to research conducted by the company, 53% of consumers held and used a mobile wallet in 2021, marking a 33% increase over the last five years. For merchants, that might bring to mind a mountain of integrations and a list of contracts that will be required. But ACI’s product is designed so that merchants can accept the large and growing number of payment options through a single vendor relationship.
The product is one of a number of features offered through ACI’s payment orchestration platform. It aims to go beyond a payment gateway.
“Whether that's fraud orchestration, whether that's 3D secure, whether that's smart routing, whether that's tokenization, whether that's point-to-point encryption, payment analytics – all of these things come as part of our payments orchestration platform,” Coates said. “So that's where the true value is, and then giving the merchants the ability to pivot.”
With tools like Wallet Hub, Coates said the goal is to be able to provide “optionality.” Merchants can add the tools that allow them to serve customers. In the meantime, the team at ACI is looking out and building for what’s next.
Looking forward, Coates sees a near future where there is greater demand for real-time payments in the U.S., especially after they have become more popular in countries like Brazil and the U.K. in recent years.
There’s good reason: The Federal Reserve is preparing to launch an instant payments system called FedNow by midyear. That will serve as the infrastructure layer for financial institutions to accept real-time payments. With this in place, ACI forecasts that the annual volume of real-time transactions in the U.S. to reach 8.9 billion by 2026, up from 1.8 billion in 2021 for a compound annual growth rate of 37%.
Familiar through services such as Venmo and Zelle, real-time payments bring change at the level of how transactions are settled. While payments are completed at checkout, money is typically moved between a bank account and a retailer after the fact. This has long been a feature of the system. In the days of checks, it was understood that balancing the checkbook meant factoring in a lag between when a payment was made, and when the money would clear. People planned accordingly. As mobile banking replaced the checkbook, instant access to the most up-to-date financial information has become the priority. That changes how the lag time is viewed.
“This has moved from a benefit to a hindrance for Gen Z and millennials because they're constantly checking their bank balance, and then they don't see the pending transactions, or they don't click in to see those pending transactions, it becomes a really big frustration. So the floor has moved from something positive to something negative,” Coates said. “And from that perspective, real time payments is here to help them because they get a very clear view of what's going on in their account, just like that.”
ACI released an additional new tool called Instant Pay to allow merchants to accept mobile payments online, in-store or via mobile.
As payment types grow, so, too, will providers behind them. Consumers will have their own preferences for how they pay, just like they do for products. Giving merchants an easy way to offer a wide variety isn’t just about infrastructure. It can also help them serve customers.
“Especially in this economy, giving consumers a choice, giving them options, making it flexible is a big advantage to merchants, allowing them to increase their basket sizes, and increase the number of transactions,” Coates said.
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.