This @paymentsjournal article explores the rise of instant cross-border #payments in Asia. One way to realize truly interoperable cross-border payments is through standardization which #nexostandards delivers through ISO 20022 compliant messaging https://t.co/BuEazq7MRn https://t.co/tEz1e23xet
Auchan Retail takes control of its global payments with nexo standards
Auchan Retail is an international retail group headquartered in Croix, France, which has been established for 55 years. Employing 351,282 individuals, Auchan Retail is one of the world's principal distribution groups, with 3,778 points of sale including hypermarkets, supermarkets and convenience stores, together with a strong e-commerce presence across 17 countries in Western Europe, Central and Eastern Europe, Asia and Africa. The group is known for its spirit of collaboration and for putting its customers at the centre of its policies and operations. It combines the advantages of digital technology and physical stores, to create a customised experience that meets the needs of today’s purchase- and health-conscious, omni-channel consumers, with the goal of bringing change to their lives.
This case study explores how Auchan Retail is harmonising its payment acceptance infrastructure to support international requirements, lower development costs, stimulate the development of innovative payment solutions and promote a standardised approach to interoperability for its payment acceptance infrastructure globally.
Since its creation, Auchan Retail's payment acceptance had been managed on a country-by-country basis by domestic payment processors and solutions. This structure required Auchan Retail to accommodate the integration specificities of each solution and adopt disparate country-specific messaging protocols, which resulted in the retailer having to establish, and pay for many different types of implementation processes. For one of the world’s largest retail distribution groups, operating hundreds of hypermarkets and thousands of supermarkets globally, this presented major challenges. Setup and maintenance costs were high because dedicated solutions were required in each country where the group had a presence.
Equipment costs for payment acceptance terminals, for example, were also significant because each entity of Auchan Retail was forced to negotiate with providers on a country-by-country basis. The fragmented infrastructure also resisted Auchan Retail's attempts to generate a group-wide view of all transactions because each system was managed by a different processor. Similarly, domestic resources were required to ensure dedicated PCI-DSS compliance and, despite its international status, Auchan Retail was forced to bank domestically, as a network of independent domestic businesses. The lack of a centrally managed card payment infrastructure, meant that the retailer was unable to build a clear picture of its global card payment transaction data and customer spending habits. The rollout of new and innovative services was also severely restricted by the specific capabilities and appetites of its domestic partners, and the lack of interoperability between each system.
- Cost of implementations
- No centralised view on cards payment transactions
- Vendor lock in approach
- No negotiation volume opportunities
- Lengthy development time-to-market
- No harmonization of cash register software
- Complex PCI-DSS security approach with current protocols and legacy systems
- No global view on transactions, meaning no consolidated financial report
- No negotiation on multi-country and size opportunities on acquiring costs
Over recent years, Auchan Retail sought to create a payment acceptance strategy that would consolidate and harmonise its fragmented international payments infrastructure. Standardisation was the way to achieve it.
Auchan Retail was the first merchant to join nexo standards (formerly OSCar Consortium) and assisted in the development of universal payment acceptance messaging protocols for terminals, acquirers and retailers. nexo’s protocols and implementation specifications adhere to ISO 20022 standards and enable fast, interoperable and borderless payments acceptance by standardising the exchange of payment acceptance data between merchants, acquirers, payment service providers and other payment stakeholders.
Auchan Retail became the first member of nexo standards to deploy the protocols. The first deployments took place in France, followed quickly by further pilots in Portugal. nexo deployments are now accelerating throughout Auchan Retail's other European points of presence. After its initial deployment, it became clear for Auchan Retail that standardisation and the use of nexo standards’ specifications and protocols were key elements of its international payment strategy. In order to achieve its objectives and build this centralised payment infrastructure, Auchan Retail used a number of the messaging protocols provided by nexo standards.
When developing its POI application, for example, Auchan Retail adhered to the nexo FAST Specification. This specification is based on EMV® chip and PIN technology and provides an unambiguous description of how a payment application should be designed to enable global interoperability. When focused in Europe, it details how to comply with the Volume Version 8.0 requirements of the European Card Stakeholders Group (ECSG). In December 2017, nexo standards became the first industry body to be labelled as conformant to the ECSG SEPA Cards Standardization Volume Version 8.0. The nexo FAST Specification has enabled Auchan Retail to develop a PCI-DSS and universally interoperable application, thereby mitigating the need to redevelop it according to the specific needs of each domestic payment acceptance infrastructure. Auchan Retail can also manage its terminals across countries more efficiently, especially in relation to maintenance and a fight against fraud patch.
To ensure the application can also seamlessly communicate with terminal management systems, acquirers and merchants’ payment systems globally, the following nexo protocols have also been deployed by Auchan Retail:
- nexo Retailer Protocol, which defines a set of interfaces between a card payment application and a retail point of sale system, has been integrated across the group with two cash management systems.
- nexo Acquirer Protocol, which allows the use of real time submissions as well as supporting direct connections from merchant to acquirer or via a payment service provider intermediary. Auchan Retail uses this protocol to send transactions to its bank partners.
Auchan Retail's Centralized Payment Infrastructure:
As a direct result of implementing nexo’s card payment acceptance specifications and protocols, Auchan Retail now has a fully standardized payment solution at the POS. Additionally, the retailer:
- Can easily assemble its standardized payment acceptance infrastructure using the building blocks provided by nexo standards.
- Has reduced the cost of POS terminal procurement.
- Has a 7% faster payment processing time.
- Can address Europe as a single market, realising significant operational efficiencies thanks to the elimination of domestic implementation specificities.
- Has embedded universal PCI-DSS compliance with Point-to-Point Encryption (P2PE) into its POS terminals eliminating the need for costly country-by-country compliance resources.
- Can negotiate lower per-transaction processing fees with acquirers by consolidating payments from multiple countries.
- Can support the fast and efficient rollout of innovative payment services, like mobile payments, thanks to European acceptance harmonization.
- Can enable consistent integration between POS terminal, cash management systems and other payment applications, such as loyalty.
Auchan Retail is continuing to expand with a single brand, a multi-format offering, new partners and new market-winning methods. It is accelerating deployment of nexo specifications and protocols across its remaining European markets and formats including Luxembourg, France, Italy, Hungary, Romania, Portugal, Spain and Poland. Once complete, roll out will continue globally to Russia, Africa, China and its other key locations.
Retail Auchan Retailis the 13th largest food group in the world, present in 17 countries. It represents all aspects of the food trade with 3,778 points of sale including hypermarkets, supermarkets and convenience stores, together with a strong e-commerce presence and ‘click and collect’ services. Auchan Retail puts its customers at the heart of its operations by offering discounts, choice and diversity in product supply, quality of service and by adapting its retail offer to the local market dynamics and variations in customer purchasing behaviours. Auchan Retailis the 35th largest employer in the world, with 351,282 employees.
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