PYMNTS Summer School Recap: Day One
By Ben Carsley, Managing Editor (@BC_PYMNTS)
Welcome to the inaugural edition of our PYMNTS Summer School 2013 Recaps - a series designed to bring our readers everything they need to know from the faculty, fellows and forward-thinking innovators we've assembled at PYMNTS Summer School. Each day, a different PYMNTS.com editor will give you a rundown of the best quotes and most interesting ideas from mobile payments ecosystem experts, as well as reaction from attendees and more.
PYMNTS Summer School officially began yesterday, Monday, August 12, on Harvard University's campus in Cambridge, MA.
After an opening lunch for faculty and fellows, Market Platform Dynamics CEO Karen Webster kicked off the Sumer School festivities with opening remarks that reinforced one central idea: mobile shouldn’t just change the way we pay, but should add value to the way we buy as well.
“Sure, payments is incredibly important: after all, it is how merchants get paid for their services. But it can’t and shouldn’t drive the entire discussion about mobile payments, much less a mobile payments strategy,” Webster said.
The big takeaway from Webster’s talk? U.S. consumer habits were largely formed in the 1950s, when post-war prosperity, plus inventions like the credit card and the emergence of the shopping mall, led to the advent of “the age of consumerism.”
The habits that consumers formed them – buying in-store, speaking to sales people and physically seeing and/or touching items before purchase – remain largely intact today, as 95 percent of U.S. purchases still take place in a store.
“That’s why we’ve focused Summer School not on mobile payments, but on something much broader and much more strategic and much more disruptive and much harder… but ultimately much more valuable and profitable.”
This more valuable focus, Webster explained, involves using mobile devices to make the buying experience richer for consumers and merchants alike, and gives consumers an impetus for breaking their old payments habits.
According to Webster, PYMNTS Summer School isn’t about mobile payments so much as it’s about mobile commerce.
MCX CEO On How Merchants View Mobile
Following Webster’s opening speech, The Summer School Keynote address came courtesy of Dekkers Davidson, the newly named CEO of Merchant Customer Exchange (MCX). In one of his earliest public appearances as MCX’ new leader, Davidson took a look back at some of his most influential mobile and payments experiences, fielded questions about MCX’ business model and strategy and gave his take on how merchants view mobile commerce today.
In terms of details about the MCX platform, Davidson remained fairly mum, but he did break down several of MCX’ goals over the next few years. Davidson also gave “three key reasons” why MCX exists: to deliver a better shopping experience for consumers, to safeguard merchant interests and data and to “bring balance to the payments ecosystem,” as he termed it.
“We strive to be the leader in the mobile commerce ecosystem, and to drive the transformation of the payments experience. We want to bring integration to the search, shop, buy and post-purchase experiences,” he said.
Asked about the challenges he faces as the leader of a coalition of payments players, Davidson acknowledged that the collaboration can be difficult but maintained that the time and resources MCX retailers are willing to put into the platform will ultimately lead to its success.
“If you want to go fast, go alone,” Davidson said. “If you want to go far, go together.”
The Omnichannel Opportunity
Webster transitioned from a retail coalition to a single merchant by next holding a “Fireside Chat” with Faisal Masud: formerly of eBay, Amazon and Groupon, and, as of this past May, Executive Vice President, Global eCommerce at Staples.
Masud fielded questions from both Webster and the audience about Staples’ online success (it’s the second-largest eCommerce player behind Amazon), the challenges retailers face when coordinating supply chains and distribution and more. Yet the core of Masud’s discussion was about omnichannel retail – a popular buzzword in the industry today and something Staples is looking to take advantage of through the opening of new stores.
“It’s a new format of store that’s much smaller … but much more optimized to a connected commerce experience,” Masud said.
To illustrate his point, Masud described a process whereby a consumer could walk into a Staples omnichannel shop and order an item that was physically unavailable there for next-day delivery. Masud said that the goal is to create a “seamless experience” for the consumer, and to be “agnostic as to where the consumer purchases.”
Masud also argued that mobile commerce doesn’t represent “the downfall” of traditional brick-and-mortar stores, as many suggest, but rather quite the opposite. Instead of viewing mobile as a challenge to physical stores, Masud cited it as “another channel customers expect and want to take advantage of.”
”It’s a massive opportunity more than a conflict for a retailer,” he said.
We’ll have more on Webster and Masud’s Fireside Chat in the days to come, so stay tuned.
Module 1: The Mobile Commerce Ecosystem
Summer School’s first module took place after Webster’s chat with Masud, and focused on many of the nitty-gritty technical aspects that influence mobile commerce. Moderated by MPD Founder and Economist David Evans, the module comprised a diverse group of presenters in Sarab Sokhey, CEO, SinghTel Inc., Chris Gardner, co-founder, Paydiant and Johan Envall, manager of strategic partnerships, Seamless Payments AB.
Sokhey’s presentation focused on his experience with NFC, and how the TEE (trusted execution environment) may come to replace the SE (secure element) with which most NFC payments operate today.
He noted the complex layer of standards that go “into every step” of developing an NFC-enabled mobile phone designed to conduct payments, and cited such standards as coming with “inefficiencies, cost, burdens and finger-pointing” attached.
Speaking on a broader level, Sokhey then echoed a sentiment that proved to be one of the most common across Summer School Day One: with mobile payments, a consumer's end-to-end needs must be satisfied.
“It’s about shopping, it starts with discovery and should go all the way to delivery at home,” Sokhey said. “It’s not about payments.”
Gardner presented next and gave a unique breakdown of various players in the mobile wallet space, separating said players into “meta-wallet, branded wallet and bank/FI wallet” categories.
He went on to emphasize that the wallet is “not really a payments platform” but “a marketing platform," and that payments make up just one aspect of what a mobile wallet should deliver.
Gardner also got some of the biggest laughs of the day, likening MCX to a unicorn when asked if he believed the retail coalition would succeed.
Finally, Envall held the floor and gave his perspective on the differences between the mobile payments ecosystems in and out of the U.S. Envall compared the U.S. market to many others, but focused on Sweden, where Seamless is based and where Envall said he “never uses cash” in what is the world’s most card-friendly country.
Envall also spent time contrasting the U.S. ecosystem to the one seen in many developing countries, noting the real power that mobile has in many such locations.
"Mobile telephony skipped fixed technology in developing countries,” one of Envall’s presentation slides noted. “Will mobile payments do the same to card payments?”
Live Case Study: Google Wallet
Finally, day one of Summer School wrapped up with the first of three live cases: an in-depth look at the “why” behind Google Wallet’s failure to ignite. Led by Harvard Business School Senior Lecturer and Partner at Flybridge Capital, Jeff Bussgang, the 90-minute session put those in the audience in the role of Google CEO Larry Page, and asked a tough question: if you were running Google, would you walk away from payments entirely or would you shift strategy and try again?
We can’t reveal too much about what was said behind close doors, but the diversity of opinion and crowd-sourced approach to problem-solving led to some interesting observations about Google Wallet’s past, present and future.
Top Three Tweets
Mention @PYMNTS or use the hashtag #IPSS2013 to interact with the PYMNTS team and other Summer School guests!
Feedback From Fellows
“Some of the stuff that is interesting is how the rest of the world does transactions. The United States is very unique compared to the rest of the world when it comes to how we do business, how we do transactions, how our marketing happens …
When it comes down to stuff I’ve learned here, it’s good to hear that it’s not transactions, it’s about the user experience. It’s about bringing it together: what is the benefit for the user, what is the benefit for the merchant? That’s really the crux of what we’re doing here. “ – Bret Caruso, C-SAM
“I think that the open forum with Jeff [Bussgang] was excellent. The panelists were very good, but I thought the strategy or the structure of how Jeff facilitated the group to read a case study and be able to have the audience participation with so many different disciplines in the room, of experiences, was really valuable …
What I’m learning is that I can see where people have made mistakes, what people are thinking, but more so how I can use that to further our business moving forward, because everything is merging towards a payment experience.” – Greg Dimitri, CLK CLK
Check back tomorrow and Thursday for days two and three!