Canada’s Desjardins Group has implemented an open standards payments architecture from nexo to facilitate its clients’ international payment card acceptance. It is looking to offer the architecture to other financial institutions via its Monetico acquiring joint venture with France’s Crédit Mutuel. Robin Arnfield reports.
Desjardins (Mouvement des caisses Desjardins) is an association of savings and credit cooperatives (caisses) located mostly in Quebec. It is the largest Canadian cooperative financial group and the sixth largest globally with assets of C$258.4bn in 2016 and over 7 million clients and members.
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nexo standards
As a payment service provider (PSP), Desjardins found it was spending too much time and money managing the integration of new payment solutions with high-maintenance legacy infrastructures.
So Desjardins joined Brussels-based nexo standards (www.nexo-standards.org) which was formed in 2014 from three European payments standards bodies, EPASOrg, OSCar, and CIR SEPA-Fast.
The global association’s ISO 20022-based protocols are designed to remove the barriers in the fragmented card payment acceptance ecosystem. It facilitates interoperable cross-border payments by standardising the exchange of payment acceptance data between merchants, acquirers, and PSPs.
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By GlobalDataAcross Europe there is a lack of harmonisation between different domestic payment acceptance standards and messaging protocols. nexo says in a presentation that a multinational oil company operating in 12 European countries, for example, would require 10 different interfaces between its terminals and acquirers, and 20 different interfaces between its terminals and its host systems.
nexo said in September 2017 that BNP Paribas has begun offering nexo’s acquirer payment acceptance messaging protocol across 14 European countries.
Multinational merchants
“We’re using nexo to deliver payment acceptance services to our merchant customers who operate in multiple countries including Canada and Europe,” says Normand Provost, Desjardins’ head of international card payment standards. “Most of our merchants are Canada-based.”
Working with nexo, Desjardins is harmonising its payment acceptance infrastructure and simplifying its exchange of card acceptance data to support its merchant customers’ domestic and international requirements.
“nexo creates a level playing field for all stakeholders and a better ecosystem for sharing payments data internationally, which is needed by larger stakeholders,” says Provost. “Desjardins wants to move to the ISO 20022 messaging standard, as it’s more XML-oriented, which is why we joined nexo – not just because we want to be international but also to make it easier for merchants to interconnect with POS terminal managers and payment processors via ISO 20022.”
ISO 20022-based messaging protocols enable companies to standardise how their payment acceptance information is exchanged globally.
Desjardins’ payment application adheres to nexo FAST POS terminal specifications, which are based on EMV chip-and-PIN technology and comply with the European Payments Council’s SEPA Cards Framework. The financial institution says the nexo FAST specifications have enabled it to develop a universally interoperable application, mitigating the need to redevelop the application according to the specific needs of each domestic payment acceptance infrastructure.
Desjardins says that, as a result, implementation costs for new payment solutions have been reduced by as much as 20% and that it can now deploy enhancements to its payments applications six to eight weeks faster than previous deployment timeframes.
Monetico
Desjardins’ acquiring arm Monetico has registered its payment solutions brand in over 60 countries.
“Monetico’s goal is to become a world-class leader in payments by creating a range of solutions geared to local entrepreneurs and large-scale, international businesses.” Patrice Dagenais, Desjardins’ Vice president, Payment and Business Partnership, says. “Monetico’s strategy is to provide easier access to global payment solutions to stimulate innovation, facilitating global partnerships and enabling cross-border growth.”
As Monetico has deployed nexo standards, Monetico-powered merchants can establish operations in new territories, uninhibited by payment acceptance complexity, says Dagenais. Other benefits of nexo include delivering a consistent user experience at the point of sale across multiple payment types, and reducing payments vendor costs by tapping into a potentially global base of vendors and suppliers.
Dagenais says Monetico can be parameterized for each individual country, enabling merchants to deliver a consistent, familiar user experience for cardholders, regardless of location. “A Monetico terminal will speak to the cardholder in their native language, regardless of the language used in the country where the terminal operates,” he says.
“We want to commercialise the technology we developed for Monetico, although we don’t see that as our main objective,” says Provost. ‘We’re open to discussions with other banks and will work with international partners. But we’re not quite ready to licence the Monetico technology to other players yet.”
nexo protocols
nexo FAST describes a financial application on a POS terminal, based on EMV chip-and-PIN technology. It provides specifications for a terminal transaction flow for the terminal-to-card interface, the terminal-to-cardholder interface, and exception-handling.
The nexo acquirer protocol allows the use of real-time or batch submissions and supports direct connections from merchants to acquirers or via a payment service provider intermediary.
The nexo retailer protocol defines a set of interfaces between a card payment application and a retail POS system. It offers features such as a clear separation between sale and payment, the provision of a complete series of payment and loyalty services, and a common approach for all types of architectures and environments.
The nexo TMS protocol provides an interface between a terminal management system (TMS) and a payment system. It supports functions for configuring, managing and maintaining the application’s parameters, as well as the software and the security keys of a payment system.
Contactless-only card reader
Monetico has developed a nexo-based contactless-only card reader, which can be used in unattended applications such as transit or parking, says Provost. “We’ve also developed chip-and-PIN MPoS card readers based on nexo,” he says.
In April 2017, Desjardins launched Canada’s first pilot of contactless Visa and Mastercard credit card payments on public transit buses. The pilot, due to last at least six months and operated in conjunction with Société de Transport de Laval involved deploying Monetico contactless card readers on STL buses in the Quebec city of Laval.
Partnerships
In October 2017, Desjardins became a founding member of Montreal-based Institute for Data Valorization (IVADO), a group of industry professionals and academic developing data science expertise. Desjardins said that it will pool its expertise with IVADO to promote financial products and services innovation.
“For Desjardins, IVADO membership is part of a process of prioritising the challenges of digital technology, which began with the creation of Desjardins’ innovation laboratory in December 2015,” it said. “Cybersecurity, big data processing, performance optimization and the design of analysis algorithms are all examples of possible that ultimately support access to digital banking services meeting the needs of today’s and tomorrow’s users.”
Separately, Desjardins and pension fund La Caisse de dépôt et placement du Québec (Quebec Deposit and Investment Fund) have created an investment fund of up to C$75 million. The two founders say the independent venture fund will support the growth of Fintech and AI applied to finance in Quebec and Canada.
Caisse and Desjardins will invest equal amounts for a joint total of C$50m and other investors can participate in the fund, they say.
