• Arnaud Crouzet, VP Consulting at Fime


• 20.11.2023 09:30 am
#payments #banking

In the constantly evolving payments landscape, technological developments move fast, and stakeholders need to keep up with changing consumer demands. However the reality of payment acceptance can be much slower. Many stakeholders work with proprietary messages to enable acceptance. These can be costly to maintain, complex to update, and differ by country and or use case. Therefore, a lack of interoperability remains across the industry.

nexo standards exists to solve these challenges. The not-for-profit industry association brings together different payment stakeholders to develop technical specifications that remove complexity from payment acceptance. These specifications offer a harmonized approach to transferring payment data, enabling the payments community to speak the same language.

Its ISO 20022-based global specifications streamline payment transactions anywhere in the world. As a result, its specifications are being adopted globally to save costs and power innovation.

Evolving with the payment landscape

nexo standards were established almost 10 years ago in 2014, and the first transactions based on these principles took place even earlier. Over the years, its vision has remained the same: to create a unified global card payments acceptance ecosystem. But since its inception, the organization has had to adapt in line with new technologies, consumer preferences, stakeholder requirements, and regulations.

For example, nexo’s remit has expanded beyond card-based payments in recent years to cover different ways to pay. These include mobile wallets, instant payments, request-to-pay, and QR codes; and new payment scenarios such as open-loop transport payments. Recently, nexo has collaborated with the Berlin Group to support the implementation of a CBDC payments ecosystem. By supporting emerging technologies, nexo is helping payment stakeholders to meet evolving consumer demands. This also allows the significant operational benefits of nexo to be realized across multiple transaction types, payment methods, and technologies.

We’ve come a long way since the first nexo standards pilot in France and Portugal in 2013, which demonstrated the feasibility of deploying European solutions. Since then, an increasing number of players have recognized the importance of utilizing universal industry standards. For example, some merchants specify that any prospective payment partners must provide solutions that adhere to the nexo protocols to ensure a harmonized, cross-border payment acceptance solution.

Enabling flexibility for all stakeholders

For many stakeholders, no alternative can meet the requirements of different players, geographies and regulations in the same way. For example, payments and banking heavyweights Ingenico, Credit Mutuel, Castles Technology, Fiserv, and Groupe BPCE base all their software solutions on the nexo specifications. After recognizing the challenges that merchants face when setting up and maintaining a multi-country payment acceptance infrastructure, these companies are now dramatically reducing costs and simplifying the process of accepting payments for their customers.

What’s more, players can simply implement the protocols and specific elements that are most relevant to them. It’s not necessary to take an all-or-nothing approach. As all nexo-compliant systems speak the same language and interoperate seamlessly, new elements can be added over time as needed easily and cost-effectively,

Payment fragmentation is a challenge on a global scale, across the entire value chain. To ensure that the specifications are flexible enough to meet the needs of the whole ecosystem, nexo is committed to involving all stakeholders in the process. It has evolved from an industry initiative composed primarily of European stakeholders, to a community of over 100 members across six continents. By welcoming acquirers, issuers, merchants, payment processors and card schemes, the protocols are created by the industry, for the industry.

Debunking common misconceptions

While some organizations have embraced nexo standards with open arms, there are still some misunderstandings within the payments community on who nexo is for, and why migration should be a priority. These include assumptions such as:

1. “nexo standards are only needed by international merchants, not domestic merchants”

While some merchants do not yet operate on an international scale, domestic merchants can nonetheless benefit from implementing nexo standards. Globalization has meant we’re all operating, transacting, and trading on a broadening international stage, whether that’s by moving into new geographies or working with international partners. Domestic solutions are therefore costly to maintain.

2. “Only big retailers can benefit from nexo standards”

Small merchants are less likely to have in-house payment expertise than their larger counterparts. However, they are still accepting payments every day and therefore need to have secure and cost-efficient payment management systems. Implementing specifications that have been developed with their needs in mind can ensure operational excellence across all retailers, from major international players to the small businesses next door.

3. “Merchants don’t think nexo standards are necessary”

As mentioned previously, many merchants specifically include a requirement in their request for proposals (RFP) that any potential payments partner must adhere to the nexo protocols.

However, for those merchants that don’t, it doesn’t mean that nexo standards wouldn’t be a game-changer for their payments acceptance infrastructure. Merchants might not make specific requests for these technical protocols but will be in favor of anything that saves time, reduces costs, and improves the customer experience.

While some stakeholders are still yet to realize the value of nexo standards, the good news is that the tides are turning. More companies are implementing the standards, understanding that there is no need to be constrained by domestic protocols. The work has already been done to create standards that are flexible enough to meet the needs of all players. For many, realizing the benefits of standardization is a key component of their strategy – and those who do not get on board will be left behind.

As with any migration, it’s hard to know where to start. The nexo specifications are technical, so clearly defining business requirements and the strategic deployment plan to achieve them is essential. Fime has extensive experience in supporting customers at every stage of their nexo journey. We can help you enhance the customer experience, grow your business, enable harmonization, and ensure interoperability. Learn more about nexo standards here.