The world of cashless payments is characterised by a range of standards, technologies and protocols – especially when it comes to cross-border transactions. The Nexo Standards consortium has taken on the task of advancing the interoperability of technologies for cashless payments. To do this, the organisation has developed its own standards.
But who is behind the consortium? How important are these Nexo protocols today, in particular when it comes to connecting POS terminals to POS systems? What potential does the Nexo protocol offer? And what are the limitations? treibauf provides expert and independent information.
Nexo Standards: the organisation behind the Nexo protocols
Nexo Standards is an open consortium of different companies from the field of cashless payments that aims to develop, establish and disseminate international standards for payment technology. All of the organisation’s developments comply with the technical ISO 20022 standard.
The companies behind Nexo Standards
The Nexo Standards consortium includes many industry leaders, which together bring great importance to both the organisation and the Nexo protocols it has developed.
The consortium membership is divided into two categories: «Principal Members» and «Associate Members». The table below gives an overview of the best-known Nexo Standards members:
What does Nexo Standards want to achieve?
The primary aim of Nexo Standards is to develop a series of state-of-the-art standards that meet the requirements of the EFTPOS sector. These open standards should be made accessible free-of-charge and are seen as an important step towards a standardised payment market from which all stakeholders can benefit, especially multinational trading companies.
The Nexo standard: the key Nexo protocols at a glance
Nexo Standards is seeking to standardise, at an international level, all technical interfaces used in cashless payments through state-of-the-art, open protocols. We have briefly listed and explained these key protocols here for you:
ISO 20022: the technical standard that forms the basis for all Nexo protocols
The ISO 20022 standard was developed as a common standard for the finance industry to bring uniformity to the communication of information across various segments of the sector.
The logic behind this standard is based on a strict separation between the basic principle of how information is portrayed (the actual standard) and the actual portrayal of the information in a programming language (the syntax). This makes standards such as the Nexo protocols independent of any coding conventions. ISO 20022 therefore forms an important basis for the interoperability of different systems in the field of cashless payments.
However, as this allows for differences in the specific software implementation, a change can still entail significant complexity and expense.
The Nexo Retailer protocol in detail
The integrated operation of the payment terminal requires communication between the POS device and the terminal, in which the POS device informs the payment terminal of the transaction type and the amount. Upon completion of the payment process, the terminal returns the results to the POS device. This communication takes place via a defined protocol.
The status quo: internationally different protocols
Within Europe, each country has its own predominant communication protocols. In Germany, for example, the ZVT protocol is an example of an attempt at national standardisation. However, a whole range of other protocols are also used in addition to this. What’s more, some acquirers also develop their own, new POS interfaces.
This makes it very costly and complex for retailers to switch terminal (and thereby change acquirer). The lock-in effects that this leads to for retailers are explained in our article about multi-acquiring.
The Nexo POS interface: an attempt at international standardisation
The aim of the Nexo protocol for communication between payment terminal and POS is to make it easier for retailers to switch between terminals from different providers without problems – meaning they are no longer bound to specific acquirers.
Although the Nexo protocol has not been to the market for long, it already offers users a very wide range of functions. As it is based on the ISO 20022 standard, it also enables both the range of functions and the communication sequence to be changed in a later version without affecting existing systems.
How is the Nexo protocol for communication between payment terminal and POS device structured?
Each message exchanged between the payment terminal and the POS device via the Nexo Retailer protocol follows a strict structure:
- Message header
- Message content
- Security section
How are the data packaged in the Nexo protocol?
The Nexo protocol is deliberately designed to be very open and allows for three different options for the format of the data used:
How are the packaged data sent in the Nexo protocol?
The Nexo protocol also allows for three different options for the transfer protocol:
What does this Nexo protocol openness mean for retailers?
Acquirers and terminal integrators can choose which data format or transfer protocol they want to use. On the one hand, this openness may, of course, help to accelerate the spread of the Nexo protocol.
But for retailers, this also means that one Nexo option is not the same as another, as the different implementation options often prevent plug & play capability when changing terminal. The complexity and expense when changing can quickly become (almost) as high as with other communication protocols.
The benefits of universal POS interfaces
So, what are the alternatives if internationally designed API concepts like the new Nexo protocol cannot guarantee absolute interoperability and flexibility?
The answer is Pepper – smart integration middleware that acts as a “universal interface”: it not only “handles” more than 150 different communication protocols, but is also compatible with all common interpretations and expansions that go beyond the standard version of those communication protocols.
In the Nexo context, this includes the Adyen Terminal API, the UniCredit Bank Austria ePOS Payments API (from Fiserv) or the Worldline Terminal API.
The benefits are obvious with middleware that has evolved over the years like this: in the agile retail environment, it not only accelerates the integration of new terminal models at home and abroad and thereby reduces the time to market. Due to ongoing support and maintenance for all communication interfaces, it also simplifies operation and maintenance. The consequence? Fewer failures and more transactions.
Another benefit comes with the flexibility and independence that companies get from such middleware: specifically, there is suddenly no more lock-in effect – and companies can now freely choose the acquirers they want to work with.
