By Arnaud Crouzet, VP Security & Consulting at FIME.
Standardisation is prolific in any digital sector and the payments world is no different. However, despite the existence and widespread adoption of global payment standards, we’ve still yet to achieve true standardisation. This is a pertinent and complex issue for today’s market. But what are the complexities making interoperability such a priority? And how can we achieve harmonisation in payment standards?
Innovation, globalisation, fragmentation
Payments has experienced rapid digitalization in recent years, witnessing the entry of a number of new payment types, players and form factors. Plus, globalisation has meant we’re all now operating, transacting, and trading on an increasingly international stage.
Combined, this fragmentation of the market has resulted in a number of technical headaches for the payment acceptance ecosystem. Domestic interpretations of existing global payment standards have prohibited interoperability across borders. So, despite being compliant, market-specific deployments leave retailers facing a new set of compliance challenges when moving into new geographies.
Stakeholders are at a loss as to how best to work together, and proprietary infrastructure upgrade costs are high. True standardization is key to ensuring all stakeholders sing from the same song sheet, and no player falls out of time. But how can this be achieved?
Harmonising payments acceptance
It’s no easy task to bring together the ecosystem’s players and define a set of truly interoperable, universal standards but thankfully, a lot of the hard work has already been done by industry association, nexo standards. Utilising the efficiency and interoperability potential of ISO 20022, it has defined a comprehensive portfolio of implementation specifications and messaging protocols that standardize the exchange of payment acceptance data.
ISO 20022 can be considered as ISO’s universal financial standard, defined as “a new way to develop message standards within the financial industry – a standard to develop standards,” nexo’s specifications can be considered as the card payment acceptance arm of these standards.
Retuning your focus: nexo and customer centricity
nexo’s specifications and messaging protocols enable stakeholders to benefit from a ‘customer centric’ approach, as each can retune focus from technical integration intricacies to better serving their customers.
Players can realize a ‘plug and play’ approach to payments acceptance, as all nexo-compliant systems interoperate seamlessly. This eradicates several of the complexities when expanding internationally, enabling the creation of truly universal offerings that can be tweaked and deployed cost-effectively, and on a global scale.
Standards create trust. New partnerships can be formed confidently with other nexo-compliant stakeholders, safe in the knowledge that integration will be dramatically simplified, future upgrades will be seamless and a high-level of security is pre-packed into each implementation.
Centralization, centralization, centralization
Whatever your position in the payments chain, centralization can enable huge efficiencies. International retailers can consolidate payment requests from multiple locations globally, enabling acquiring banks to process transactions in more cost-efficient ‘batches’. In turn, retailers can feel empowered to negotiate volume-based deals via a smaller number of acquirers.
nexo standards directly tackles the incompatibility of existing proprietary and domestic interpretations of past ISO standards by enabling merchants, PSPs, acquirers and vendors to create a single, streamlined cross-border payment acceptance infrastructure.
Speed up innovation and deployments
With internal resource freed from many of the historic challenges of payment integration, players can refocus on developing new, innovative services to meet rising consumer demands. Plus, on a standardized platform, roll-out of new products and services is generally much quicker, more efficient and borderless.
Levelling the playing field
Standards help to eradicate the age-old issue of ‘vendor lock-in’ – a significant and costly challenge that’s especially harming merchants. But standards offer benefits for vendors too, empowering them to compete on equal terms, globally in a nexo-compliant industry. This in turn encourages more competitive pricing models and enhanced offerings.
The next steps to harmonisation
nexo standards is changing the payments acceptance world, bringing seamless interoperability and efficiencies to each player in the industry. The scope and value of this synchronisation cannot be underestimated.
With deployments rising, getting ahead now is key to safeguarding investment and tapping into instant efficiencies. However, there are a number of obstacles that need to be overcome to ensure a timely, cost-effective launch. Partnering with an industry expert can help you to navigate the technical nuances of the industry and take the strain of ensuring compliance and interoperability. FIME is a leader in payments testing, with more than 20 years of experience in reducing risk and securing digital transformation projects.