ACI Worldwide’s mission is to deliver universal payment solutions that provide control, choice and flexibility to its customers while maintaining their peace of mind.
ACI Worldwide is a payment systems company. The firm operates three reportable business segments based on geography: the Americas, EMEA (Europe/Middle East/Africa), and Asia-Pacific.
In 1975 Dave Willadsen, Dennis Gates, and James Cody founded Applied Communications Inc. (ACI for short) in Omaha, Nebraska. The company’s purpose was to develop software for NonStop server computers used by banks and stock exchanges. Initial projects involved developing solutions to handle ATMs and other banking systems that required high uptimes.
In 1981 ACI obtained its first foreign client, an Australian bank. In 1982 it released its first official product, BASE24, short for “Baseline Software for 24 hour-per-day system operations”. Over the next few years the product began handling service transactions from POS terminals and branch systems. The company also began developing solutions for functions as such settlement and fraud detection.
Due to its success, hardware suppliers such as HP, Sun Microsystems, IBM, and Stratus began supporting ACI’s software. This in turn led to an increase in wire transfers, wholesale banking payments, and automated clearing house transactions. ACI grew significantly, and by 1986 it had 131 clients in 14 countries, as well as sales offices and partners worldwide.
In 1995 ACI went public and began trading on the NASDAQ uner the name Transaction Systems Architects (TSA). In the early 2000s it began supporting card and merchant management, retailer solutions, and online banking. In 2007 its corporate name was changed from TSA to ACI Worldwide (ACIW). In 2012 its services extended to governments, education institutions, and charities.
Business model of ACI Worldwide
ACI Worldwide has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at financial institutions (including community banks and credit unions), billers, retailers, and electronic payment processors.
ACI Worldwide offers three primary value propositions: accessibility, performance, and brand/status.
The company creates accessibility by providing a wide variety of options. It has acquired several firms since its founding, including PAY.ON AG, Retail Decisions, Official Payments, Online Resources, Distra, S1 Corporation, ISD Corporation, P&H Solutions, and MessagingDirect. This strategy has enabled it to greatly expand its capabilities and diversify its portfolio.
The company demonstrates strong performance through tangible results. Specific positive outcomes for its clients include the following:
- Privilege Underwriters Reciprocal Exchange (PURE) used ACI’s solutions to introduce an electronic payment option, resulting in a 30% adoption rate among its customers
- Utility provider LCEC used ACI’s solutions to provide multi-channel options for bill payment, resulting in a reduction in usage of mailed checks and $3 million in annual cost savings
- Horizon Healthcare Services used ACI’s solutions to introduce a new insurance payments system, resulting in a growth in enrollment of 400% between 2014 and 2016
- Washington Gas Light Company used ACI’s solutions to improve its electronic bill payment services, resulting in a reduction in service disconnections and posting errors
The company has established a strong brand due to its success. It maintains 66 offices in 35 countries. It powers electronic payments for over 5,100 organizations in more than 80 countries. These include the following:
- 1,000 of the largest financial institutions and intermediaries
- 18 of the top 20 banks worldwide
- Over 300 of the world’s top retailers
ACI’s solutions enable payments processing for:
- 125+ billion consumer transactions annually
- $14+ trillion in payments and securities transactions per day
- $117+ billion in electronic bill payments per year
Lastly, it has won many honors, including the following:
- International Award for its UP eCommerce Payments solution at the Merchant Payments Ecosystem Awards
- Ranking of #18 in the IDC Financial Insights 2016 FinTech Rankings
- Ranking of #16 on the list of top Cloud Applications Vendors by Apps Runs the World
- Awards for Best Payments Flexibility, Open Architecture, and Large Customer Base for its Universal Online Banker product in Aite Group’s 2016 Cash Management Vendor Evaluation
- Selection as Judges’ Choice at the 2016 CNP Awards for its PAY.ON eCommerce Payments gateway product
ACI Worldwide’s main channel is its direct sales team. It also utilizes distributors, resellers, and referral partners to sell its products. The company promotes its offerings through its website, social media pages, direct marketing programs, and participation in expos, summits, and conferences.
ACI Worldwide’s customer relationship is primarily of a self-service, automated nature. Customers utilize its products while having limited interaction with employees. The company’s website enables customers to receive self-paced training on its products in the form of eLearning content. It also features an “Insights” section that includes useful resources such as case studies, a document library, a video library, webinars, and eCommerce fraud insights.
Despite this orientation, there is also a personal assistance component. The company offers phone, e-mail, and online customer support on a 24x7x365 basis. It also offers a premium support option that includes regular system health checks and performance tuning. Moreover, it maintains the ACI UP Training Academy, which offers instructor-led training at ACI offices or client sites.
There is also a community element. The company operates “User Communities” that enable customers to network, share ideas, and collaborate with each other and advisors from ACI. The groups are divided into the following categories:
- Retail Banking – BASE24-eps, CMM, Netherlands, and Postilion User Group
- Transaction Banking – Enterprise Banker, Money Transfer System, and Universal Online Banker User Group
- Payments Risk Management – Proactive Risk Manager User Group
- Merchant Retailers – Postilion for Retailers User Group
ACI Worldwide’s business model entails designing and developing its software products for customers.
ACI Worldwide maintains the following types of partnerships:
- Alliance Partners – The company integrates its software with the solutions of other software providers in order to provide enhanced offerings to its customers. Specific partners include ACE Software, Bell ID, Faircom, HP, IBM, iPay Technologies, Lean Industries, MShift, and Oracle.
- Technology Partners – The company offers products and services from other technology firms to its customers to provide them with additional options. Specific partners include Andera, Diebold, FutureX, Gemalto, Microsoft, NCR, Thales, and Wincor Nixdorf.
- Channel Partners – The company works with firms that deliver its products in markets where indirect sales, support, and implementation models are preferred. Specific partners include DataOne Asia, Korea Computer, Microtec, P.T. Abhimata Persada, and Syscom Computer Engineering.
- Industry Associations – The company joins and takes leadership positions in industry associations, and also works to develop and improve industry specifications. Specific partners include American Express, BIAN, CFCA, Electronic Transactions Association, and Emerging Payments Association.
- Bill Pay Partners – The company works with leading bill payment providers to deliver integrated service solutions for mutual clients. Specific partners include ACH Payment Solutions, BS&A Software, Ellucian, Interactive Intelligence, Megabyte Systems, R.R. Donnelly, Shaw Systems, and TransCentra.
- ACI ReD Shield Partners – The company works with industry suppliers to provide integrated services for its clients. Specific partners include Alliance Data, Bank of America Merchant Services, Cardinal Commerce, Inseva Technologies, Merchant e-Solutions, OutReach Sales Consultancy, and Paymate.
ACI Worldwide’s main resources are its human resources, who include the engineers that design and develop its products, the sales employees that promote them, the training employees that provide instruction, and the customer service personnel that provide support.
ACI Worldwide has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of maintenance/services/hosting.
Other major drivers are in the areas of research/development, sales/marketing, and administration, all fixed costs.
ACI Worldwide has four revenue streams:
- Initial and monthly license fee revenues
- Maintenance revenues
- Service revenues
- Hosting fee revenues