Introduction

With more than 11,500 stores in over 30 countries worldwide, Carrefour Group is the leading retailer in Europe and the second largest in the world.

The group has a turnover of €104.4 billion and 13 million customers passing through Carrefour checkouts every day. It is crucial that the group’s payment management systems are secure, cost-efficient and interoperable. 

While Carrefour’s operations are worldwide, this case study relates to its activities in Europe and specifically its recently established payment entity, ‘Market Pay’, which helps the Carrefour Group brands ensure operational excellence in their payment services.

The challenge

Like all major retailers that operate across Europe’s borders, negotiating the fragmented nature of the pan-European payments acceptance infrastructure has been a challenge for Carrefour.  The group expands into new countries by acquiring third party businesses and by independently establishing new stores. Historically, both models have presented operational, technical and administrative challenges.

Every time the group set up in a new country, it found that it needed to start again from the beginning, building and managing a country-specific terminal-to-acquirer acceptance infrastructure which was both time and cost intensive.

This level of fragmentation, and the lack of cross-border interoperability that it created, also prevented Carrefour from negotiating volume-based deals with terminal manufacturers, rolling out consistent cross-border loyalty schemes and developing innovative new payment solutions.

In order to realise cost and process efficiencies, Carrefour Group took the decision to become its own acceptor and acquirer in the form of Market Pay. This enabled it to centralise payments from many of the smaller companies within Carrefour Group and pass a higher volume of payments business to Market Pay, realising greater cost efficiencies as a result. Despite the benefits, this caused yet more interoperability headaches relative to the exchange of cross border payment acceptance data between its stores and its centralised acquiring function.

Market Pay needed a way to standardise the group’s activities across borders.

The solution

Market Pay took the decision to create a centralised European acceptance and processing platform to overcome the costly administration headaches that Carrefour was facing. In an effort to address these challenges, Market Pay became one of the first acceptor members of industry association, nexo Standards and, by 2015, had begun the process of implementing nexo’s international messaging protocols and specifications across its group-wide payments infrastructure.

nexo develops messaging protocols and specifications which 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.

Market Pay has adopted a number of the nexo protocols and specifications to facilitate the standardisation of Carrefour’s payment transactions at every iteration.

·        nexo Fast Specification, which is based on EMV® chip and PIN technology and describes unambiguously the financial application on a terminal which is compliant to the SEPA Cards Framework of the European Payments Council.

·        nexo Acquirer Protocol, which allows the use of real time or batch submissions as well as supporting direct connections from merchant to acquirer or via a payment service provider intermediary.

·        nexo Retailer Protocol, which defines a set of interfaces between a card payment application and a retail point of sale system.

·        nexo TMS Protocol, which provides an interface between a terminal management system (TMS) and a payment system. It supports the functions for configuring, managing and maintaining the application parameters, the software and the security keys of a payment system.

As a first step, the above standards and protocols were implemented across Spain, France and Belgium. By standardising the exchange of its payment data across these countries, Carrefour has been able to create – as part of Market Pay – a central processing network based in Paris which, using the Acquirer Protocol, consolidates all payments data produced across these geographies.

This enables Market Pay to increase its engagement with its current suppliers. All partners adopted the nexo protocols, thereby ensuring that the entire payment chain, from terminal to acquirer and back again is nexo compliant, making it fully interoperable, borderless, secure, efficient and cost effective.

Benefits

Market Pay has experienced a number of significant benefits for the Carrefour brand since adopting nexo:

Significant cost savings as a result of centralisation

·        Since its creation, Market Pay has managed 800 million transactions for Carrefour across Europe, totalling 27 billion Euros. This higher volume of payments processing requests has enabled Carrefour Group to pass more business to Market Pay (the central acquirer), lowering the per-transaction price and saving Carrefour money as a result.

·        nexo’s Acquirer Protocol has enabled Market Pay to offer acquirer services to Carrefour Group’s various businesses, removing the cost to each of dealing with their own acquiring bank, locally. Thanks to the standardised and interoperable cross-border approach, Carrefour has realised extensive time and cost savings through increased operational efficiency.

Simpler global integration

·        As all Carrefour’s stores now operate on a harmonised payment acceptance infrastructure, the roll out, setup and maintenance of new stores (both acquired and organic) can now occur quickly and cost effectively. The group’s business expansion is no longer inhibited by its payments technology.

Ongoing domestic support

·        While Carrefour’s preferred mode of operation is to use Market Pay as its central acquiring bank, there are circumstances when it makes sense to maintain a relationship with a domestic acquirer, too.

Rapid innovation

·        Carrefour’s centralised and fully interoperable cross-border acceptance infrastructure facilitates the fast and simple roll out of new innovative payment solutions across multiple countries. Apple Pay integration, for example, has now been rolled out in France and Spain, with Italy and other countries planned for the near future. The nexo protocols and specifications are already developed to support a variety of new innovative payment services, like Apple Pay, Carrefour Pay, C-zam, enabling Carrefour to simplify deployment across its terminals and other points of interaction (POI).

Consolidated cross border and cross-brand loyalty schemes

·       Market Pay now has the technical capability to support cross-border and cross-brand loyalty schemes that consolidate value added services across the Carrefour Group’s various brands, delivering a new level of customer engagement.

The future

Following the success of its nexo roll out in Spain, France and Belgium, over the next three years, Carrefour plans to implement nexo’s protocols and specifications across its stores in Europe. This will enable its central Paris payment unit to consolidate and standardise the exchange of payment acceptance data across Europe.

Implementing nexo’s protocols has also helped Market Pay and Carrefour to work towards their goal of being PCI DSS compliant by the end of 2018. The consolidation of its payments partners dramatically simplifies the task of achieving compliance.

The interoperable nature of Market Pay’s payment platform has now opened the door for the Carrefour Group to invest in more innovative payment solutions for its customers. The roll out of any future mobile payment initiatives will now benefit from a reduced time-to-market, manageable development costs, cross border interoperability and adherence to international standard ISO 20022.