Tuesday, December 17, 2024
Nexo standards is an open, global association dedicated to removing the barriers present in today's fragmented global payment acceptance ecosystem. Headquartered in Brussels, its members represent the full spectrum of payments stakeholders, including acceptors, processors, schemes, payment service providers and vendors.
The following Q&A explores the future of digital payments over the next five years, focusing on evolving trends, the role of standardization, and how technology can enhance both security and user experience while addressing global challenges like interoperability and cross-border transactions.
How do you envision the future of digital payments evolving in the next five years, particularly in terms of user experience and security?
Over the next 5 years, I believe that we will mostly see an evolution rather than a revolution, and we'll still be using cards in five years time … mostly. But there are some trends that are unstoppable. Account to account, instant or fast payments will definitely have grown by then. We can see that in Europe already with the rise of wallets like Wero. Additionally, Central Banks are pushing hard digital currencies. In the United States, cryptoassets as a means of payment in-store can be expected to grow also.
Ingenico's role is to provide secure payment acceptance on a form factor which merchants can trust. Today, when a terminal confirms that a payment is accepted, merchants are confident that the transaction will result in them being paid. That's a huge responsibility! And no matter what the type of payment, we believe there is a need for that reliability and confidence which are two key pillars of security.
Nexo-standards' role is to standardize how this happens for merchants so they can have simple, one-stop-shop integration between their ECR and their EPOS. This standardization means that it needs to anticipate the modifications to existing protocols that will support these new types of payments.
Cross-border transactions remain a challenge for global commerce. What role do Ingenico and nexo standards play in addressing these challenges, and how do you see the landscape evolving?
Nexo standards through its acquirer connections simplify connections for retailers. Implementing nexo protocols allows them to benefit from a universal, non-proprietary ISO-based standard and the ability to split sales and payment functions, thus reducing the scope for PCI certification as well as multiple-acquirer support and cross-border compliance.
What do you see as the next big security challenge for payment providers, and how are standardization efforts helping to mitigate these risks?
Within 15 years, quantum computing may well have killed off the sort of cryptography we're using today. So, for instance, if you consider the recent joint statement from partners across 18 EU members – or Google's 'Willow' chip announced recently, it's time to start thinking seriously about the implications of this technology.
In nexo standards, we are anticipating this move and will initiate it at ISO 20022 next May. The aim is to provide specifications for solutions that will be able to seamlessly move from classical cryptographic algorithms to post quantic ones.
Can you share some key benefits nexo standards offers to merchants and acquirers when it comes to reducing complexity in payment acceptance systems?
Nexo standards enables fast, interoperable and borderless payments acceptance by standardizing the exchange of payment acceptance data between merchants, acquirers, payment service providers and other payment stakeholders. Nexo standards' messaging protocols and specifications use ISO20022 standards, are universally applicable and are freely available globally.
Facilitating this interoperability between systems helps accelerate innovation and reduce costs for merchants. There will always be a trade-off between harmonized standards and companies who believe that proprietary protocols give them a competitive advantage. And that's a good thing. Where you position yourself on the payments value chain is what matters.
While connectivity is obviously key to value, the value of a proprietary connection is questionable. Nexo standards removes this pain point, allowing stakeholders to deliver greater value on other points on the value chain. Additionally, as said previously, it helps to lower hidden costs of ownership for players in multiple geographies.
In essence, you reduce the number of product references you have to manage and consequently the costs of corrective or evolutive maintenance, training, etc. And bear in mind that the reliability of a solution is directly linked to the number of live solutions, regardless of countries. The more there are, the more complexity there is, the more cost there is, (and the less secure they are).
With rapid innovation in fintech, how important is interoperability between systems, and what challenges do you see in achieving true global standardization?
Well, in an ideal world everything would be interoperable … or would it? I think interoperability is important provided it facilitates rather than blocks innovation. You have to leave space for firms to develop what's specific to their solution and helps them drive value.
If you think of it like a power socket and an electric plug, it makes sense for the plug and socket to be as standard as possible because that's what allows companies to develop great products. Achieving global standardization is possible, but it means explaining the benefits and the industry coming together to promote standardization where that matters.
We do it in other industries like aerospace and telecoms and in payments, schemes like Mastercard and Visa, as well as standards like EMV are a form of global standardization. At nexo standards we are contributing to that standardization at a very operational and practical level.
It's also very satisfying to see people coming from a wide variety of industries, with different cultural perspectives and professional experiences, moving as one and showing that everything is possible.
In your view, how can payment providers leverage technology to not only enhance security and compliance but also improve the overall consumer payment experience?
Well, if we consider that the first appearance of cards or contactless payments were in science fiction books, I'm tempted to say that the answer is to read more. But seriously, I think there is a lot happening already.
The mobile wallet experience is a case in point. These rely on standards for much of how they function, (EMV payment specifications), on top of which the mobile manufacturers have created a great user experience. And this was made possible because enough people in the payments industry got together and knew that was the right thing to do. 
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