First mover: LAVEGO AG now using nexo protocol

LAVEGO AG was recently acquired by Unzer. The highly innovative company is a girocard network operator that developed its own platform, which it calls PaySphere. For over 25 years, LAVEGO AG has been enabling retailers and SMEs to accept card-based payments and benefit from a range of other value-added services. LAVEGO recently started using specifications and protocols developed by nexo standards as a way of realising new efficiency gains both at home and internationally. But who or what are nexo standards? What benefits are associated with standardising interfaces? What innovations result from this? What does this mean for integration of national schemes? In the following, we provide answers to the most important questions.

Q&A on nexo standards

Who or what are 'nexo standards'?

nexo standards is an association that is responsible for managing a body of standards promoted by the EU Commission in parallel to SEPA that can significantly simplify cross-border payment processing. Established in 2014 as a non-profit initiative, the open, global association aims to remove existing obstacles in the heavily fragmented global ecosystem for the acceptance of payments. The organisation has its HQ in Brussels and its members come from the entire payment sector, including acquirers, network operators, payment service providers and vendors.

What are the precursors to the defined nexo standards?

The nexo standards were defined in 2014, when three initiatives of payment standards and payment specifications were combined: EPASOrg, the OSCar consortium and the CIR SEPA-Fast technical working group. nexo standards was the first organisation to design and develop payment acceptance messages on the basis of ISO 20022. Providing universal standard and protocol messages guarantees the international interoperability of various terminals and payment systems.

What is the objective of nexo standards?

nexo aims to harmonise the various, typically proprietary interfaces used for card payment transactions. These include the host or acquirer interface, the cash till interface (nexo Retail) and the interface for terminal management (nexo TMS).

What does the ISO 20022 guideline cover?

What is ISO 20022? ISO 20022 is also classed as the UNIFI message standard (UNIversal Financial Industry message standard). This standard aims to secure worldwide convergence of both existing and new messaging standards from various areas of finance. ISO 20022 offers a platform for developing new messages that specifies a uniform message development and modelling process. This means that messages are developed by standardisation bodies such as SWIFT (Society for Worldwide Interbank Financial Telecommunication) and then approved as globally applied standards under ISO 20022.¹ SEPA payment transactions and nexo are both based on ISO 20022 messages. These are in XML format, which makes them easily readable for both humans and machines.

What is nexoFAST?

nexoFAST describes the entire behaviour of a POS terminal. This not only explicitly involves sending messages in the nexo Acquirer format, but rather all relevant topics in and around a POS terminal.

What does nexo TMS mean?

The nexo TMS protocol describes a uniform interface for management of POS terminals. All nexoFAST-certified terminals can be managed using this protocol. So what is the main benefit? The ability to use one TMS for all manufacturers, meaning that a dedicated TMS is no longer required for each manufacturer.

What is the nexo Retailer protocol?

The two most popular POS interfaces in Germany are ZVT and OPI. However, both of these remain largely unknown outside of Germany – and the same applies to the POS interfaces used in other countries. nexo Retailer offers a uniform interface for all POS systems for sending information to the POS terminal and the host.

Who is LAVEGO?

LAVEGO AG is a technical network operator and payment institution that is based in Munich and was recently acquired by Unzer. Alongside its standard business, the company also processes transactions from technically challenging niche markets, such as petrol stations and unmanned ATM terminals. Subject to the necessary approval from the authorities, the acquisition by Unzer is likely to be completed in the first half of 2021.

What are the main benefits associated with using nexo standard protocols for Unzer and LAVEGO?

LAVEGO is one of the first providers to use the nexo protocol in parallel with the older and more established protocols on its PaySphere platform, which was developed in-house specifically for this purpose. The entire range of protocols is implemented here – with nexoFAST used for the terminals, nexo Acquirer on the PaySphere platform and nexo TMS for managing the devices.

Benefit 1

Independence from terminal manufacturers and their software development.

Benefit 2

Independence when selecting a terminal manufacturer. LAVEGO offers Sunmi and Castlestech.

Benefit 3

nexo is recognised almost everywhere in Europe and massively simplifies integration of further, national payment schemes such as Cartes Bancaires in France or Bancontact in Belgium.

Benefit 4

The process for downloading cryptographic keys that is integrated into nexo TMS facilitates use of "zero-touch start-up" terminals, which do not need to be manually configured.

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¹ Source: Association of German Banks (BdB e.V.): https://bankenverband.de/media/files/ISO-20022_im-ueberblick.pdf, downloaded on March 26, 2021.