ISO 20022: A New Era of Card Processing

nexo standards enables fast, interoperable, borderless, and global card processing by using ISO 20022 to standardize the exchange of data between merchants, acquirers, payment service providers and other payment stakeholders. nexo’s specifications and messaging protocols are advanced through its member community, free to download, and globally implemented.

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Last year Steve Cole, Director of Tech Engagement at MAG, took A Closer Look at ISO 20022. The standard is a significant step forward for the payments sector as it presents a financial messages framework that promotes interoperability between financial institutions, market infrastructures, and customers.

This single standardization approach offers new automation and interoperability opportunities that are set to deliver unparalleled efficiency and innovation to merchants.

Within his article, Steve detailed how ISO 20022 has a much richer data set than ISO 8583 and asks if the industry can support both standards long-term.

While I don’t have an answer to Steve’s question, what I do know is that ISO 20022 offers advantages to merchants and the ability to retain control in areas that matter.

1. ISO 20022 represents a unique opportunity to truly address the fragmentation challenges of processing point of sale payments.

The retail industry is facing incredible payment challenges. From new and evolving regulation, advancing security threats, and multiple consumer payment options to support, it is hard for merchants seeking to expand globally to comply, compete, and even thrive in this environment.

This is further compounded by the challenges merchants face updating legacy POS solutions. As payments and sales are currently divided into two specialist industries, integration between sales software and payment processors is difficult. The result is today’s complex, proprietary, and vast maze of requirements often unique to individual countries.

Regardless of these complexities, merchants must continue to innovate to support new payments use cases, install security updates, and achieve frictionless checkouts. While the card payment industry has numerous standards, with even major industry players developing their own proprietary specifications, it lacks standard protocol specifications that all groups can take advantage of.

Fortunately, that’s starting to change, thanks to the introduction of common open and royalty-free protocols.

2. nexo standards ISO 20022 messages bring value, benefits, and control to merchants.

In 2005, Groupement des Cartes Bancaires (CB) in France led a group of card schemes, merchants, and payment solution providers to address the interaction between electronic payment terminals with other systems in the card processing ecosystem. Over time, the group evolved to develop new card processing standards and protocols, and was renamed as nexo standards in 2014. Today, it creates a standardized global payments acceptance ecosystem by defining a common language that embodies the efficiency and interoperability potential of ISO 20022. And, as a recognized submitting organization to ISO 20022, it is the body responsible to enhance and advance the 81 card payment acceptance and processing messages submitted to ISO 20022.

Merchants are the main beneficiaries of nexo’s work. They can use these standards and protocols even if they haven’t used or implemented other types of ISO 20022 messages. The standards allow merchants to envision a single global card processing solution that operates seamlessly regardless of processor or platform.

For example, a point of interaction (POI) – whether that’s a physical terminal or an online checkout cart – adhering to the nexo Financial Application for Standalone Terminal (FAST) Specification provides for seamless processing by allowing a terminal or payment application supporting all major card schemes to interact with a sales system and send these transactions to any payment service provider, payment gateway, or processor in a standardised format (ISO 20022). This enables merchants to streamline acceptance processes into a single, consistent approach while meeting local, national, and regional market requirements.

Another example is the nexo Retailer Protocol, which is exclusively developed to standardize the link or exchanges between the sales system and the payments POI with the goal to operate seamlessly between, and independent of, any specific platform. In addition to financial transaction needs, the protocol supports loyalty, rewards, QR Codes, and soon instant payment/wallets.

Using these standards, merchants can benefit from:

Card processing cost reductions through lower operational and maintenance expenditure achieved by using a consolidated, standardized payments system. This removes vendor lock-in and enables a ‘plug and play’ approach.
Enhanced interoperability across borders with seamless global payments system integration. This is crucial for North American merchants with a diverse international customer base.
Agility to adapt to market innovations including new payments technologies and methods, such as contactless payments, mobile wallets, and digital currencies.
Enhanced security and compliance with international payments regulations, safeguarding customer data.

3. The global trend towards migrating financial services to ISO 20022 is underway, and particularly evident in North America.

By developing ISO 20022 payments acceptance and card processing messages, nexo is leveraging the appetite for this standard. Deployed across six continents, nexo specifications offer the market a proven, international, universally harmonized, and consistent means of transferring payments transaction data.