Nexo standards and importance of ISO20022

Jan Bilek

Payments legacy – ISO8583, APACS, SPDH

Differing standards across European countries have made it difficult and costly for retailers to adopt a centralised approach to credit and debit card payments, mainly when operating internationally. These domestic standards worked well when electronic payments first started back in the 1980s, as they were primarily used by retailers, banks and suppliers who largely served single markets. With the introduction of the Euro currency and the increasingly globalized nature of trade and travel, these differences and duplication are no longer acceptable.

Each major European countries developed their own card payment standard, which they define, maintain and with which they ensure compliance. Many of these are derivatives of the ISO 8583 norm, which has been widely used by banks and retailers for card transactions for almost 30 years. Mainly the ISO28583 it a bitmap format, its age and the fact that discretionary data fields have been constantly contaminated to support new card payments functionality, interoperability does not exist between countries, systems and suppliers. Also, many of these implementations are proprietary and not interoperable.

AS2805 BP-Sim

To further complicate matters, some are based on the 1987 version of the ISO8583 standard with others on the 1993 version (the 2003 version being rarely implemented), while this also counts in some even more adventurous standards like APACS (UK) & SPDH. It is for these reasons we no longer believe these legacy standards is appropriate for the next generation of card payments.

Next generation payment systems – ISO20022

ISO 20022 is a common methodology used within the financial industry to create consistent messages across different subdomains of the industry. It is based on a concept of separate layers with the business and the logical messages making up two different layers. The third layer, the syntax, is the physical representation of the logical message.

ISO 20022 makes a clear distinction between the way of representing the elements of information (the standards itself) and the actual representation of this information in a format or a language (the syntax or coding) that the machine can interpret. Typical representation would be EFTlab’s Financial message in JSON.

EFM EFTlab's Financial Message BP-Node

Each message is built along: a set of syntax and message design rules; message components; coding elements associated to the message components.
ISO 20022 provides a common platform for the development of messages using: a model methodology (based on UML); a central dictionary of business items (ISO 20022 Repository); a set of design rules to convert the messages described into a specific coding syntax, such as XML.

ISO20022 is considered as ISO’s universal financial standard, defined as “a new way to develop message standards within the financial industry” – a standard to develop standards and while in a short you can say that it is another way to can all other standards, it seems to be the most sophisticated way to go forward.


ISO20022 standards are being widely used within the financial services community for many purposes, including for corporate payments, foreign exchange, securities and trade services. These are the ideal building blocks towards a Payments hub.

Time has come for NEXO standard

Problems of legacy payment formats and over-complexity of ISO20022 are being lately addressed by the Nexo standard. Nexo is an international non-profit, membership based association that is headquartered in Brussels. It was established in October 2014 to develop, promote and maintain open and universal next generation card payment standards and specifications.

Common standards are seen as a major step forward in achieving a unified market for payments that will bring benefits to all payments industry stakeholders and, in particular, to multinational retail merchants. The Nexo standard has developed a series of standards that have been endorsed by ISO20022. Many of these are of direct relevance to retailers, including the EPAS Acquirer and Terminal Management System (TMS) standards.


The Nexo standard currently supports:

  • Contact/Contactless EMV (and non-EMV) chip card
  • Magnetic stripe cards
  • Manual transaction key entry
  • Attended and unattended acceptance environments
  • Multiple forms of customer verification methods (CVM)- online PIN, offline PIN, signature and no CVM
  • Single or dual message capture modes
  • Online capture/batch capture by message or file
  • Tokenisation
  • Instant payments

The Nexo standards series of protocols belongs to the category of application protocols that govern the interaction and exchange of data between software applications where the exchange of data is performed between two different pieces of equipment:

  • The payment terminal (or a payment server) located usually at the merchant’s location
  • A server under the supervision of a bank, payment service provider, or entity acting on their behalf.

They also rely on the use of lower level data transport protocols to ensure that the exchange of information is carried out in a smooth, secure way. In the domain of card payments, a protocol enables, among other things, the exchange of information to:

  • Authorize a card payment transaction
  • Cancel a card payment transaction
  • Allow a retailer to be credited for the payment transaction
  • Initiate the debiting of the customer (cardholder) account by the bank.

It’s no easy task to bring together the ecosystem’s players and define a set of truly interoperable, universal standards but thankfully, a lot of the hard work has already been done by industry association, Nexo standards. Utilizing the efficiency and interoperability potential of ISO 20022, it has defined a comprehensive portfolio of implementation specifications and messaging protocols that standardize the exchange of payment acceptance data.

That’s why we believe that Nexo standards are natural choice for next generation card payment processing systems.