Payments Talk with Arnaud Crouzet, Auchan Group/nexo standards

29th November 2018

Arnaud joined Auchan Group in 2010 as Global Head of Payments Means, in charge of the merchant payments strategy for Auchan Retail International. He is also Secretary General of “nexo standards”, the open and global standardisation organisation. We invited Arnaud to featured in our ‘Payments Talk’ section of Payments Intelligence magazine and talk about nexo – an open, global association dedicated to removing the barriers present in today’s fragmented global card payment acceptance ecosystem. 

Why has nexo standards chosen the ISO20022 standard?

As card payments have developed, we’ve witnessed each country and card scheme developing its own rules and specifications to carry out payments by card in a fast and secure way. So, while compliant, standards such as ISO 8583 have yet to be truly interoperable and harmonised across borders.

ISO 8583 was developed specifically for low-speed modems and the channels of communication available in the 1980’s based on a bitmap technology. Now, adjusted to the capacity of the modern world and relying on a more appropriate, structured approach for the design of messages, ISO 20022 is the future for the card payments, and the financial industry more broadly. It defines a whole host of transactions including card payments with the potential to create more as the industry’s needs evolve.

ISO 20022 has made significant progress globally. In Europe, the European Payments Council (EPC) issued specific implementations of ISO 20022 for SEPA (Single Euro Payments Area) in 2009 and is realising huge efficiencies and seamless interoperability as a result. Moreover, ISO 20022 is also gathering momentum across North America as central to both Payments Canada’s payments modernisation strategy and the U.S.’s Faster Payments program.

The card payments domain of ISO 20022 has defined ‘a single standardisation approach, including methodology, process and repository’. The standard, however, relies heavily on actors in the payment ecosystem agreeing on a universal interpretation, together with a consistent mode of implementation and testing. This has been the goal of nexo standards since its inception.

Today, nexo standards enables fast, interoperable and borderless payments acceptance by standardising the exchange of payment acceptance data between merchants, acquirers, payment service providers and other payment stakeholders. nexo’s messaging protocols and specifications adhere to ISO 20022 standards, are universally applicable and are freely available globally.

How does nexo standards work with other standard setting bodies in the payments industry? Do you see this as competition or collaboration?

nexo standards’ vision is to create a unified global card payments acceptance ecosystem that harnesses the efficiency and interoperability potential of the ISO 20022 standard. This vision is only possible due to the collaborative work efforts of numerous global standards setting bodies developing the required specifications and protocols necessary to achieve a globally interoperable and secure payments ecosystem.

In February, nexo became the first industry body to be labelled as conformant to the European Card Stakeholders Group (ECSG) SEPA Cards Standardisation Volume Version 8.0, which supports card harmonisation in SEPA. The resulting achievement means retailers, banks and vendors can expand across borders seamlessly and centralise payments acceptance, while consumers benefit from a consistent POS user experience across Europe.

In addition to the collaborative efforts of nexo’s members, the association engages with other global standard setting bodies to share ideas, insights and discuss areas of mutual interest, including IFSF/Conexxus and IFX. It also participates actively in the ISO 20022 RMG, Payment SEG and Card SEG. We were proud to welcome EMVCo, GlobalPlatform and W3C to our annual conference this year to present their respective agendas. Sharing knowledge is a core principle of any standardisation body and, as such, collaboration should always champion over competition.

There are a number of key acquirers and merchants still not signed up to nexo standards. Do you have a recruitment strategy for these firms?

While it isn’t necessary to be a member to implement the protocols, being a member of nexo standards enables companies to actively contribute to the development and evolution of the messaging protocols and specifications. This ensures that they remain relevant and agile enough to respond to the rapidly evolving payments landscape.

As global acceptance of our standards continues to grow rapidly, we predict that our merchant and acquirer membership will follow.

Arnaud Crouzet, nexo standards

nexo standards has identified significant time and cost benefits for merchants with respect to switching acquirers. How exactly are these delivered?

The current lack of interoperability in today’s complex global payments acceptance world is proving a major obstacle for merchants looking to expand into new international markets. In addition to navigating each individual country’s domestic payment protocols and coordinating the operational and technical headache of managing payment acceptance integration across multiple territories, one of the key things for merchants to consider is the need to establish relationships with new, local acquiring banks and integrate the necessary payment acceptance systems every time they expand into a new country.

This need for merchants to work with acquiring banks on a country-by-country basis means that there is no scope to centralise and streamline their global payments acceptance and also removes the possibility of negotiating favourable volume-based deals with acquirers.

By migrating systems to standards such as the nexo protocols, international merchants can consolidate all their payments into one centralised payment platform. This empowers merchants to negotiate volume-based deals via a smaller number of acquiring banks, driving down their total cost of payment acceptance.

By migrating systems to standards such as the nexo protocols, international merchants can consolidate all their payments into one centralised payment platform. This empowers merchants to negotiate volume-based deals via a smaller number of acquiring banks, driving down their total cost of payment acceptance.

By utilising international open standards, merchants are no longer tied to specific acquirers per market plus, in a standardised ecosystem, integration with different players is dramatically simplified. As such, acquiring banks are encouraged to deliver more competitive offerings, resulting in more cost-effective solutions for merchants to choose from and a more level playing field for acquirers to compete on. 

Crucially, supporting a standardised mode of exchange can also reap benefits for domestic systems too. Free from vendor lock-in, merchants are free to work with as many nexo-compliant partners or suppliers they like, simplifying integration and the exchange of data between them. In short, dramatically reducing the costs of existing legacy system upgrades and streamlining time to market.

The UK Payment Systems Regulator recently issued a merchant acquiring consultation that included the cost of switching acquirers. Is there a role for regulation in promoting the uptake of common standards?

I believe it is important for payment regulators to promote the value of open and non-proprietary standards that encourage uninhibited expansion, support for global payment innovation and healthy competition in which all stakeholders compete on equal terms.

nexo’s messaging protocols and specifications are collaboratively developed and managed by our members, which includes representatives from the entire payments value chain, including processors, payment service providers, schemes, vendors, acceptors and merchants. They are also the only card standards based on ISO 20022 that fully align with the requirements for all financial payments. Today, nexo standards’ specifications and protocols are considered to be the card payments acceptance arm of ISO 20022.

Moreover, as the UK Payment Systems Regulator has already shown its support for ISO 20022 for Payments (Finance), its members already implementing UK Payment directives and ISO 20022 would automatically benefit from nexo standards ISO 20022 card messages, as they harness the same founding language.

What are the benefits of standardisation for merchants, aside from reducing the cost of switching acquirers?

As it has done across a number of other industries, standardisation offers huge potential to deliver greater operational efficiency and meet a variety of core business challenges that when overcome, enable all payments industry stakeholders, including merchants, to get ahead of the competition in both domestic and international markets. The benefits are wide ranging and include:

  • The ability to provide a consistent consumer experience – For merchants operating across multiple territories, it is crucial that they can deliver an internationally consistent user payment experience to consumers. Payment standards offer a simple way to deliver a consistent user experience at the point of interaction between multiple payment types and, crucially, across borders too. Even such subtle markers of familiarity can improve perception of a merchant’s brand. 
  • Overcoming vendor lock-in – Innovation and a fairer playing field are defining factors of any industry where standards are prolific. In payments, this is no different. Merchants struggle to resist vendor lock-in, which leaves them prohibited by, and vulnerable to, high costs. An open, standardised market lets vendors compete on equal terms, meaning merchants get a fairer deal and vendors are encouraged to deliver more innovative, competitive offerings.
  • Increased innovation – International standards enable merchants to easily and simply integrate new products and services on a global scale, reducing time-to market and lowering integration and deployment costs.
  • More diverse partner choice – Adopting truly international standards, such as those developed by nexo, mean that any nexo-compliant merchant can partner with any nexo-compliant payments stakeholder globally. The facilitation of fast, simple and borderless integration will increase confidence in new partnerships with acquirers and terminal manufacturers, for example.

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