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Open Payments Systems for Merchants: Don't Close Down Your Options

Open Payments Systems for Merchants: Don't Close Down Your Options

Remember “Open Systems”?

It was a big industry nom du jour in the 80s and 90s.  Every IT system had to be open and therefore flexible and future-proof.  Nobody can argue with the logic behind this; making systems easy to integrate with other systems, ensuring vendors could cooperate with one another; creating agility to improve time to market and drive down costs.

From a payments perspective, this meant that during the 90s, payments systems started to use more modern technologies that were better able to accommodate this philosophy. The use of Unix and Windows platforms for processing payments gained popularity and the payment standard of ISO 8583 became ubiquitous. Every part of the payment chain (POS systems, terminals, acquirers, card schemes, issuer bank hosts), in theory, could support ISO 8583 and that ensured that all systems could talk to each other in a common language. Only it didn’t work out like that.

ISO 8583 became a House of Babel. No two vendors or institutions adopted it in quite the same way. The framework helped to ease integration, but it did not provide for true interoperability.  And, in fact, many important parts of the payments chain did not adopt its use at all, including the UK acquirer banks and many terminals.

We now have a payments landscape made up of many different payment protocols and a complete lack of standardization. But along came nexo as a potential solution to the problem.

nexo is a standards group promoting the use of modern, freely available non-proprietary ISO 20022 specifications for interfacing between players in the payments chain. The goal is for standardization to create fast, interoperable and borderless payments acceptance.

Will it succeed?

It’s already gained some traction and many of the key players in the payments world are signed up to it.  Some large acquirers and merchants are already using it successfully.  But one wonders if all vendors will truly embrace it and allow it to flourish. For many, nexo levels the playing field. Interoperability can mean replaceability and fierce competition, which may not be good for the incumbent vendor.

Irrespective of the noble cause being pursued by those behind nexo and its success or otherwise, merchants can still maintain elements of the flexibility offered by open systems.  Merchants are best served by PSPs that are able to support nexo and can also allow merchants flexibility and choice over the acquirers and the payment terminals that they use (even if they are not nexo-compliant) so that the merchant is not tied into a one-size-fits-all straight jacket for payment processing.  Merchants need the flexibility to be able to choose from the a la carte menu of payment options in order to maximize customer conversion and frictionless payment acceptance.

So open systems in its truest sense is still a work in progress, but with the right choices over their suppliers, merchants have the opportunity to keep their options open.


ACI’s UP Merchant Payments solution offers merchants a secure omni-channel payments platform with the flexibility to support in-store, online and mobile needs – and the scalability to power sales today and in the future.