The following is a transcript of the podcast episode.
PaymentsJournal:
Welcome to the Payments Journal podcast. I’m your host Ryan Mac. On today’s episode, we are going to be talking about global payments acceptance standards, and to help me with that discussion I have Claude Brun, the Chairman of Nexo Standards.Claude, welcome to the show.
Claude:
Thanks to you.
PaymentsJournal:
Let’s give our audience a little bit of an introduction. Can you first tell us a little bit about yourself and then talk about Nexo Standards.
Claude:
I am Claude Brun, Chairman of the Board of Nexo Standards. In fact, I am a junior. I had a different position in the past. I was at the end of my career. I was running the payments strategy for the Credit Mutuel CIC Group. Maybe you don’t know, but Credit Mutuel CIC is considered as between the third and fifth acquirer in Europe. I am working in Europe, and we have to follow the new requirements, regulations, and so on. But nevertheless talking about standardization, the idea is to work for the world. Nexo Standards, the company, enables fast, interoperable, and borderless card payments by standardizing the exchange of payments acceptance data between merchants, acquirer, payment servicers or payment service providers, and other payment stakeholders. Nexo messaging protocols and specifications adhere to ISO 20022 standards and are universally applicable and truly available globally. That’s quite important to know. Nexo Standards is a not for profit organization.
PaymentsJournal:
Thank you very much for that. Let’s jump into the global payments acceptance part of things. The first question is: Why do we need global payments acceptance standards?
Claude:
I have a nice question to you. Why do you say “Why do WE need..?” I would say, “the market.” Why does the market need?” Do you agree with that?
PaymentsJournal:
Yes, I would agree with that statement.
Claude:
Thank you. That was a joke! First thing, today we have to think about cards payments. The first remark, cards remain the first priority, whether that be card-present transactions (face-to-face transactions), card stored on a digital wallet, or card on file, having one global card payment acceptance system which standardizes the exchange of payment information, literally we can realize huge benefits for all players in the ecosystem. We are using ISO standard 20022 as the language, the global language for the whole financial ecosystem, so Nexo Standards specs and protocols for card payments acceptance on the ISO 20022. Standardization puts the needs of the ecosystem on equal terms. So simplify, consolidate the market, removing complexity. Empowering the industry to tackle its challenges quickly and efficiently. In other words, time to market is very important and things are moving very fast today. And now I have to talk about interoperability and harmonization. Nexo enables a true plug-and-play approach to payments acceptance. All Nexo-compliant systems speak the same language of interoperability. That’s key. Protocols allow integration of innovative products and services reducing time to market and lowering implementation and deployment costs. And lowering integration deployment costs, benefiting the end users—by the way, the end users or customers. For international retailers, payments requests can also be consolidated globally, empowering them to associate volume-based deals with a smaller number of acquiring banks. So the reason why and the fact that Nexo is a standardization company, we are providing building blocks and we know that some of the blocks are being used all over the world. We will consolidate or try to consolidate that for a Nexo exhibition, a Nexo show in Paris in October. We will have a map of what’s used all over the world this summer. It’s quite interesting to know that in different parties, different countries, different regions of the world, Nexo is used today, so Nexo is an answer to requests or needs coming from stakeholders.
PaymentsJournal:
Excellent. Ok, now let’s put a finer scope here on Nexo. Who really benefits from the adoption of Nexo’s protocols? And also, what can the key stakeholders achieve from them?
Claude:
Very good question. We, in fact in the title, the theme we say, “Enabling a new age of customer centricity with global payments standards.” I will certainly not forget the benefit for the customers. Having said that, standards add value to the offering of all payments stakeholders whoever the customer may be. It could be a processor working for a retailer and so on. But the fact that they are using standards benefits everybody. They have to focus on their offering not on the standards or the different standards, and that’s a big progress for them. Merchants—it makes it simple for them to facilitate a consistent user experience at the point of interaction, the point of contact, between multiple payments types and crucially across borders too. And that’s another key question today. That really strengthens a merchant’s brand. If I consider Europe as an example, more and more small and medium companies are expanding in different countries–three, four, five countries. And the fact that they are using the same standards in different countries, they benefit from that. They benefit from resources, they benefit from time, and they benefit from costs. Vendors—they can market themselves as globally interoperable. Today in every country, we have, say, two big vendors and a lot of others entering the market, and they are jumping directly to new standards. So again, vendors themselves benefit from that. Acquirers–they can consolidate payment requests from international customers, enabling them to strike bigger deals that offer better value for merchants. For sure, merchants they want to accept each method of payment. They have business models for that, so they need to get benefits. Payments schemes—can adopt a true plug-and-play approach to payments acceptance, enabling custom onboarding of customers and rapid support of rollout of new innovative payment types like, today, mobile payments.
PaymentsJournal:
Taking a look at the global payments acceptance market, unfortunately global payments acceptance is not as simple and easy as switching on a light switch, so what are some of the issues that the global payments acceptance market faces today?
Claude:
I would not be totally fair with vendors, but nevertheless in the past, there was really a vendor lock-in. In any industry where standards proliferate, greater innovation and a fairer playing field are defining factors. And in payments there is no difference–same thing. Nexo enables retailers to avoid vendor lock-in and promotes a level playing field for payment acceptance vendors to compete on the same level playing field. And they will focus as I said before, they will focus on the offering. They will use standards, and doing that, they will be able to develop value-added services. This approach benefits all, promoting innovation, more competitive pricing models, and opening up new business opportunities for vendors, especially overseas. Today all the vendors, the biggest vendors, are global, and that’s a key approach. Now if we consider growing pains. Expanding internationally. Payments players with international ambitions face a number of integration challenges, inflated costs. We have to consider costs, resources, business models, and time to market. Standardization dramatically simplifies global expansion. Uniquely Nexo specs and protocols enables international retailers to implement fully interoperable cross-border payments acceptance in general. I do prefer “cross-border payments acceptance ecosystem.” Retailers for example can grow internationally uninhibited by payments acceptance complexity. It’s true that in Europe, some companies, big companies, are deploying, implementing Nexo in their country and having done that, immediately they are deploying, implementing the same solution in other countries very soon and very internationally. Nexo protocols are truly international, meaning that Nexo-compliant retailers can partner with any Nexo-compliant stakeholder globally. So we are enabling interoperability around the world.
PaymentsJournal:
Thank you very much for that. Now, what from your viewpoint is next for Nexo Standards within the coming years?
Claude:
If I consider what happened the last two years, we had huge membership goals. We started with 50 members, and now we have 82 and some big companies are asking for more details and I think are ready to join Nexo because they fully understand the interest with that. We have already seen strong adoption and interest. Nexo was located as a nonprofit company in Belgium, but now we’re focused on communicating our benefits to stakeholders across all regions. North America is a very good example. Desjardins Groupe joined Nexo at the very beginning, and now we have retailers and processors coming from the U.S. joining Nexo. We can support these players to realize international ambitions. Recent partnership with FIS to develop a test tool. So again, we have a number of exciting implementation projects underway. This is just one way we are helping to support our members to get to service launch quickly and effectively. In other words, today we are able to deliver a full package with S2 certification. We are ready to help companies to develop Nexo implementation. And we are thinking about the future strategy for Nexo, not for choosing only a card approach. Behind that is the fact that at the point of interaction, point of contact, customers have a lot of alternative means of payments and Nexo has to take this into account. We launched a strong strategy working group on that, and we are producing some papers today. We will continue to answer the needs of the market.
PaymentsJournal:
From a personal approach here, a bit of personal question: As we look at 2018 and beyond, what would you say really gets you excited that you see within the payments industry?
Claude:
That’s a pretty good question. I think we were talking about four centuries, we were talking about papers, check, cash, debit, credit transfers, cards payment. And now during the last years we see a lot of mobile, let’s say, payments. I don’t want to say it’s really a mobile payment. Let’s say payments initiated through a mobile or using a mobile. I think it’s quite exciting because we have to solve that. So if we consider that in the very near future we will have more and more means of payments used by the consumers on their mobile, Nexo has to deliver the standards for that. And I think when I considers some countries–I’m not talking specifically about North America, more in China, more in Asia–they are moving very fast, and it’s really exciting to discuss with them. If I consider some companies like China UnionPay or AliPay or Google Pay or Samsung Pay, and so on, they are providing more and more benefits to their own customers. On the other side, we have to help the ecosystem, retailers, acceptors, banks, all the stakeholders in this game, to accept very easily all the new means of payments, the new alternatives. At the same time, we need to be sure that the user experience is seamless and fully secure. This is very, very exciting.
PaymentsJournal:
Thank you, Claude, very much for taking the time today to speak with us about global payments acceptance standards and we hope to have you back real soon.
Claude:
It was a pleasure. Thank you.
