Nexo

Implementing nexo standards

Today Europe is leading the implementation of nexo standards after some key European tier-one retailers active in both the petrol and retail domains requested their banks to support the nexo standards as a replacement for or in addition to the current domestic ones. In June 2015 nexo released a study entitled "Understanding the benefits of adopting nexo standards" (paper copies available on request). This white paper dedicated to retailers and commissioned to Edgar, Dunn & Company (EDC) outlined the benefits of relying on nexo standards to overcome the interoperability hurdles that exist today, especially in Europe, as regards crossborder card retail payments.

The adoption of nexo standards as part of new payments platform could generate cost savings in excess of 20%, would reduce implementation time by at least four months and significantly improve retailers' purchasing negotiation positions and would reduce processing charges and lead to a market of cheaper point-of-sales terminals.

Edgar, Dunn & Company clearly stressed in its study the benefits for retailers to rely on open, universal and royalty-free international standards since the retailers interviewed by EDC considered those standards as the natural choice for next generation card payment processing systems. The study also revealed that the adoption of nexo standards as part of new payments platform could generate cost savings in excess of 20%, would reduce implementation time by at least four months and significantly improve retailers' purchasing negotiation positions and, last but not least, would reduce processing charges and lead to a market of cheaper point-of-sales terminals.

Several French banks are currently in the process of implementing nexo standards and major retailers such as Auchan and Carrefour have already announced their commitment to rely on the implementation of the nexo standards for their international cross-border operations. Retailers have reported that nexo would additionally generate efficiency improvements and increase competition across the different touch points of payments processing.

The revised Directive on Payment Services (PSD2) issued in late October provides the legal foundation for the creation of an EU-wide single market for payments. The revised regulation aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union. The target is to make crossborder payments as easy, efficient and secure as 'national' payments within a Member State. The PSD also seeks to improve competition by opening up payment markets to new entrants, thus fostering greater efficiency and cost-reduction. At the same time the Directive provides the necessary legal platform for the Single Euro Payments Area (SEPA).

Not a case of 'if' but of 'when' EPASOrg's initial choice within the ITEA programme to target SEPA requirements and opt for ISO 20022 - the choice of today's global universal financial industry - was a wise decision since there is a general consensus today to consider that there are no serious alternatives to using nexo card payment standards in the future. Major international card schemes such as Visa, MasterCard, AMEX and Discover have ultimately come to the conclusion that ISO 20022 in the card payment acquirer-toissuer relationship would lead to a replacement of the ISO 8583 industry standard that is currently extensively used by networks and other industry stakeholders for card transaction processing worldwide.

It is now more a question of when to move to nexo card payment standards than whether to do so. The ITEA framework has therefore given to this European initiative the necessary incentives and impetus to initiate this important standardisation work which has become today the reference for card payments not only for Europe but also worldwide.