Introduction

Auchan Retail is an international retail group headquartered in Croix, France, which has been established for 55 years. Employing 351,282 individuals, Auchan Retail is one of the world's principal distribution groups, with 3,778 points of sale including hypermarkets, supermarkets and convenience stores, together with a strong e-commerce presence across 17 countries in Western Europe, Central and Eastern Europe, Asia and Africa. The group is known for its spirit of collaboration and for putting its customers at the centre of its policies and operations. It combines the advantages of digital technology and physical stores, to create a customised experience that meets the needs of today’s purchase- and health-conscious, omni-channel consumers, with the goal of bringing change to their lives.

This case study explores how Auchan Retail is harmonising its payment acceptance infrastructure to support international requirements, lower development costs, stimulate the development of innovative payment solutions and promote a standardised approach to interoperability for its payment acceptance infrastructure globally.

The challenge

Since its creation, Auchan Retail's payment acceptance had been managed on a country-by-country basis by domestic payment processors and solutions. This structure required Auchan Retail to accommodate the integration specificities of each solution and adopt disparate country-specific messaging protocols, which resulted in the retailer having to establish, and pay for many different types of implementation processes. For one of the world’s largest retail distribution groups, operating hundreds of hypermarkets and thousands of supermarkets globally, this presented major challenges. Setup and maintenance costs were high because dedicated solutions were required in each country where the group had a presence.

Equipment costs for payment acceptance terminals, for example, were also significant because each entity of Auchan Retail was forced to negotiate with providers on a country-by-country basis. The fragmented infrastructure also resisted Auchan Retail's attempts to generate a group-wide view of all transactions because each system was managed by a different processor. Similarly, domestic resources were required to ensure dedicated PCI-DSS compliance and, despite its international status, Auchan Retail was forced to bank domestically, as a network of independent domestic businesses. The lack of a centrally managed card payment infrastructure, meant that the retailer was unable to build a clear picture of its global card payment transaction data and customer spending habits. The rollout of new and innovative services was also severely restricted by the specific capabilities and appetites of its domestic partners, and the lack of interoperability between each system.

Major issues:

• Cost of implementations
• No centralised view on cards payment transactions
• Vendor lock in approach
• No negotiation volume opportunities
• Lengthy development time-to-market
• No harmonisation of cash register software
• Complex PCI-DSS security approach with current protocols and legacy systems
• No global view on transactions, meaning no consolidated financial report
• No negotiation on multi-country and size opportunities on acquiring costs

Over recent years, Auchan Retail sought to create a payment acceptance strategy that would consolidate and harmonise its fragmented international payments infrastructure. Standardisation was the way to achieve it.

The solution

Auchan Retail was the first merchant to join nexo standards (formerly OSCar Consortium) and assisted in the development of universal payment acceptance messaging protocols for terminals, acquirers and retailers. nexo’s protocols and implementation specifications adhere to ISO 20022 standards and enable fast, interoperable and borderless payments acceptance by standardising the exchange of payment acceptance data between merchants, acquirers, payment service providers and other payment stakeholders.

Auchan Retail became the first member of nexo standards to deploy the protocols. The first deployments took place in France, followed quickly by further pilots in Portugal. nexo deployments are now accelerating throughout Auchan Retail's other European points of presence. After its initial deployment, it became clear for Auchan Retail that standardisation and the use of nexo standards’ specifications and protocols were key elements of its international payment strategy. In order to achieve its objectives and build this centralised payment infrastructure, Auchan Retail used a number of the messaging protocols provided by nexo standards.

When developing its POI application, for example, Auchan Retail adhered to the nexo FAST Specification. This specification is based on EMV® Chip and PIN technology and provides an unambiguous description of how a payment application should be designed to enable global interoperability. When focused in Europe, it details how to comply with the Volume Version 8.0 requirements of the European Card Stakeholders Group (ECSG). In December 2017, nexo standards became the first industry body to be labelled as conformant to the ECSG SEPA Cards Standardisation Volume Version 8.0.

The nexo FAST Specification has enabled Auchan Retail to develop a PCI-DSS and universally interoperable application, thereby mitigating the need to redevelop it according to the specific needs of each domestic payment acceptance infrastructure. Auchan Retail can also manage its terminals across countries more efficiently, especially in relation to maintenance and a fight against fraud patch.

To ensure the application can also seamlessly communicate with terminal management systems, acquirers and merchants’ payment systems globally, the following nexo protocols have also been deployed by Auchan Retail:

• nexo Retailer Protocol, which defines a set of interfaces between a card payment application and a retail point of sale system, has been integrated across the group with two cash management systems.
• nexo Acquirer Protocol, which allows the use of real time submissions as well as supporting direct connections from merchant to acquirer or via a payment service provider intermediary. Auchan Retail uses this protocol to send transactions to its bank partners.

The benefits

As a direct result of implementing nexo’s card payment acceptance specifications and protocols, Auchan Retail now has a fully standardised payment solution at the POS. Additionally, the retailer:

• Can easily assemble its standardised payment acceptance infrastructure using the building blocks provided by nexo standards.
• Has reduced the cost of POS terminal procurement.
• Has a 7% faster payment processing time.
• Can address Europe as a single market, realising significant operational efficiencies thanks to the elimination of domestic implementation specificities.
• Has embedded universal PCI-DSS compliance with Point-to-Point Encryption (P2PE) into its POS terminals eliminating the need for costly country-by-country compliance resources.
• Can negotiate lower per-transaction processing fees with acquirers by consolidating payments from multiple countries.
• Can support the fast and efficient rollout of innovative payment services, like mobile payments, thanks to European acceptance harmonisation.
• Can enable consistent integration between POS terminal, cash management systems and other payment applications, such as loyalty.

The future

Auchan Retail is continuing to expand with a single brand, a multi-format offering, new partners and new market-winning methods. It is accelerating deployment of nexo specifications and protocols across its remaining European markets and formats including Luxembourg, France, Italy, Hungary, Romania, Portugal, Spain and Poland. Once complete, roll out will continue globally to Russia, Africa, China and its other key locations.