Financial Inclusion

What Do The God Particle, Yodeling and Knights Have To Do With The Future Of Payments?

“Vague but exciting.”

These three words could be used to describe just about any early-stage idea when it’s first presented. I’ll bet every investor or strategic partner has had the same reaction to many of the ideas they’ve been pitched over the years to reinvent payments and commerce. And, I’ll also bet that most of them are probably pretty happy that they found most of those ideas just vague enough to keep their checkbooks tightly closed. Much of the time “vague” is code for no real there, there.

But I’ll bet you’d also never guess what massively game-changing innovation, when first revealed, was also described using those exact three words.

The World Wide Web.

Talk about an understatement.

Sir Tim Berners Lee wrote a paper in 1989 (long before he was a Sir) while working at CERN (Europe’s nuclear research organization and birthplace of the discovery of Higgs Boson also known as the God Particle) in Switzerland (where they do a lot of yodeling) about a system he’d created that would link information using hyperlinks. It’s reported that his boss at the time wrote “vague, but exciting” at the top of that paper. (So now you have solved the God Particle, Yodeling and Knight riddle…)

We all now know just how exciting his idea was, as vague as many may have considered it at first. The first web page that was hosted by Berners-Lee 24 years ago this month gave birth to an innovation that has revolutionized the way information is accessed and shared with anyone, anywhere in the world.


It would be a few more years after that first web page was launched until the Internet browser would make access to such pages easy and efficient. In 1995, five years after that first page had its web debut, Pew reported that only 14 percent of adults living in the U.S. used the Internet and fewer than 1 percent worldwide did. Today, in 2014, according to the site that tracks internet usage in real time, roughly 50 percent of people worldwide use the Internet and 87 percent of those in the US now do, as well.

Those of us living in developed economies take this all for granted since it’s been a part of our lives for a quarter century now. But the availability of and access to information and other resources via the World Wide Web has democratized the delivery of financial services to those living in developing economies, improved the economic conditions of those economies and given the emerging middle class there global access to goods and services.

But that’s not why Berners-Lee’s “vague but exciting” innovation is one of the most significant technological achievements of our time.

What Berners-Lee gave the world when he invented the World Wide Web was a foundation that innovators, with vision and ambition and imagination, could use to create the ecosystems that would reinvent and transform and innovate and disrupt just about every single industry there is - and create entirely new ones.

For instance . . .

With browsers and efficient access to the Internet came the need for an efficient way to discover information. Search and the ecosystems that made it possible to easily find information online was given life by two (now pretty rich and famous) Ph.D students Sergey Brin and Larry Page, literally, in a garage in 1998. Sure, they didn’t invent the first search engine, but they did invent, by far, the most successful one.

In 1994, another guy in a garage in Bellevue, Washington, had an idea that consumers should be able to buy products online. His plan for a “web commerce” business called “Cadabra” included selling a few things for which he felt that there could be a massive and standardized consumer demand – books. One year later, in 1995, Jeff Bezos’ Cadabra became Amazon and the multi-trillion dollar eCommerce ecosystem was born.

Online Advertising
At about that same time, brands wanted a way to efficiently reach a whole new community of people – or more appropriately, their eyeballs. Promoting their products and services to those eyeballs was an opportunity that they wanted to seize. The “banner ad” that gave birth to the ecosystem now called online advertising was born at the HQ of a webzine startup called Hotwired in 1994, interestingly, as a way to fund their publishing operation.

Using the Internet to send money and payments to sellers was the puzzle that two innovators by the names of Max Levchin and Peter Thiel thought worth pursuing a few years later. They, along with several others, founded Confinity in 1998 to do just that. Confinity would be acquired a year later by an Internet banking business,, started by a guy by the name of Elon Musk. Three years later, would become PayPal. Their original idea of sending money to people over the Internet would become the foundation of the internet-enabled payments ecosystem that makes it possible for people to send money and pay merchants and other businesses online.

Using the internet to keep friends better connected was an idea conceived three years later in a dorm room at Harvard University. Mark Zuckerberg’s “theFacebook” started off as a way for people on college campuses to get to know each other more efficiently. (Ok, to really check out the hot babes, but let’s not let details get in the way here.) Later, it became a tool for connecting friends, families, and old classmates and even finding new ones. Zuckerberg’s theFacebook became the foundation of the ecosystem we now call social networks not long after it was born in 2004. (Ok, Zuck wasn’t the first either at this either, but he quickly toppled then king MySpace which had devolved to become known as a “vortex of perversion”.)

The Cloud
At about the same time came the realization that access to the growing volume of data and information made possible via the World Wide Web no longer had to be done by big and expensive servers sitting inside of individual enterprises. Rather, remote, networked computers connected to each other via the Internet could make access to that information not only efficient but inexpensive, and opening up a massive new type of business that could “rent” access to software and other services. The cloud computing and the software platforms ecosystem that made it possible for innovation to be done less expensively and faster since technology could be purchased like any other utility and was brought to life in the late 1990s.

All of these things also inspired a series of innovators who saw an opportunity to mash-up the features of a telephone, computing power and the computer’s visual display to create portable devices that used their own operating systems to power a variety of consumer functions like web browsing, email and navigation and of course, telephony. The mobile ecosystem was transformed when the first smartphone was introduced in 1995 by BellSouth, further refined by NTT DoCoMo in 1999 in Japan and RIM in 2002 and completely transformed, as we all know by Apple and its app store in 2007.

Search. Online Advertising. Social. The Cloud. Mobile. Payments. Retail.

Seven massively powerful individual ecosystems that are driving (or being driven by) innovation from within those powerful ecosystems.

But, perhaps more relevant for all of us living in the payments and commerce ecosystems, is how these seven massive ecosystems are unleashing powerful innovation – and disruption - where they now intersect.

Access to the World Wide Web makes these singularly powerful ecosystems, incredibly dynamic; capable of creating entirely new businesses where they overlap and leaving behind the remnants of those incapable of keeping up.

And, payments and commerce is at the heart of this massive transformation.

Here’s seven reasons why.

Once upon a time, people used to search for businesses in giant print tomes called the Yellow Pages which first came onto the scene in the late 1880s. Anyone under the age of 35 probably has probably never ever seen one and has no idea what I’m talking about. But don’t worry, there’s no need to study up. This once massive business that used to deliver a book to every single person with a landline telephone (now you see part of the problem) is today on life support as a print business and trying desperately to stay relevant online. That’s pretty tough since they’re trying to stay relevant in an age where search is dominated by search giant Google, relevant in an where powerful vertical search providers like Yelp and OpenTable and and Thumbtack are growing in importance and relevant in an age where any business can not only be found online but once found, can actually conduct commerce online, too.

Believe it or not, people also used to also read newspapers and magazines. And print ads were a big deal - Mad Men-type operations aren’t just a made for TV artifact. Ad shops on the infamous Madison

Avenue cranked out print ads designed to captivate a rather captive audience of readers. Those ads fetched high prices, too, since in the age of print media, there wasn’t a lot of competition for those eyeballs. Not anymore. Print publications are a dying breed replaced by a near endless supply of digital media that caters to just about every interest group in the world. Access is easy and mostly free. And, online advertising makes it possible for brands to target and reach relevant eyeballs just about anywhere there is a page on the web. But more important is the ability of online advertising to turn the once static print ad into an offer or a coupon or a deal - a way to reach a consumer the instant they are looking for something – and drive traffic to the advertisers’ web site seconds later. Once there, they have the opportunity to convert them into a customer while they remain in the “buying moment.”

Social networks are as old as the human race. But Facebook made staying in touch a whole lot easier than picking up the telephone every time a person wanted to share new scoop about what they were up to with their networks. Not surprisingly, brands jumped on the social network bandwagon too and used Facebook to “friend” and stay in touch with the (now) 1.23 billion people who visit it each month. And, while most every single effort to bring commerce into Facebook has failed, few would argue its success as an online advertising platform for those brands. Analysts report that Facebook will drive $5 billion of sales to web sites this year, and by 2017 will be responsible for influencing 5 percent of all retail transactions. Like all predictions, they’re just guesses, but these numbers suggest the very real power that lives at the intersection of social and retail and online advertising. That intersection of social and retail and payment has also given birth to shopping networks that are also highly social. Wanelo, Lyst, and The Hunt are but three examples of networks that make it possible for shopping and social to coexist peacefully online and drive commerce to the brands that participate.

Speaking of retail, 95 percent of it is still done in a physical store. Many types of products will never go online – like gasoline and restaurants – even if the way consumers pay for those things is done with a mobile device. But access to the World Wide Web is changing the way people shop and buy in a material way. Foot traffic is down in physical stores as consumers use mobile devices increasingly to shop online. And, when consumers visit stores, they shop differently. They’ve done their research beforehand and buy what they researched – and often only that – on sale. Anything else they happen to see, well, they can use their mobile devices to check prices in real time. All of that delivers a mixed blessing for retailers who are, today, one thousand percent focused on delivering an “omnichannel” experience for those consumers, hoping to keep them loyal and hoping to preserve their margins in the process. Macy’s CEO Terry Lundgren summed up the innovation and disruption that is playing out in retail this past weekend. More than 15k people showed up at Macy’s New York store on Thanksgiving Day – more they say than they’ve ever seen. More people also showed up online. Lundgren, who runs a franchise that is the 8th most trafficked business on the internet (right behind Netflix he says) mused that those online shoppers bought at Macys and for that he was thankful. But they - and he – worried that they would miss the impulse purchases that would have happened in the store and that also drives their margins.

Margins have never gotten in the way of perhaps the most disruptive force in retail yet – Amazon. Amazon isn’t just about selling goods online, it’s now where most people start their shopping journey. Amazon Web Services also makes it possible for small sellers to market their inventory to the 220+ million people with registered Amazon payment accounts and whose shopping and payment experience is but one-click away. Its vast data treasure trove serves up personal recommendations based on past behavior in order to drive those important impulse purchases. But Amazon’s disruption isn’t just that it’s the world’s biggest marketplace. The mobile device, Amazon’s brand proposition of having the lowest prices on products and its one click payment method made it possible for a concept like showrooming to become a new retail vocabulary word and for Amazon to literally take sales from retailers inside their physical storefronts. Jeff Bezos and company didn’t just innovate retail by letting people buy online, he and they created a whole new commerce concept at the intersection of retail, search, payment and the cloud. And that innovation – or disruption – depending upon where you sit - has caused every retailer to think more carefully about how they can use those same assets to also innovate at that same intersection.

The cloud
is an important subtext of everything that I’ve talked about so far. But it’s most visible impact on payments and commerce is its ability to enable payments as a service that lives in the cloud. That, in turn, gives innovators an unprecedented opportunity to embed payment into apps that blur the lines between the on and off line worlds. Uber is, of course, the poster child for the innovation that lives at that intersection of the cloud and payments and mobile. And the disruption it has delivered to the taxi industry is material – it is reported that the cost of New York City taxi medallions is in decline. The ability to have a payment-enabled Uber is a critical part of its success for both drivers and passengers as we saw in New York when (for a short time) it had to decouple payment from the app (people stopped using it). But Uber isn’t the only business to have been born at this powerful intersection. Airbnb, TaskRabbit, and Thumbtack – are but a tiny handful of businesses that would have never existed but for the innovation made possible when mobile, payments, and the cloud all meet. Existing businesses are finding new possibilities at this intersection, too. OpenTable now enables payment via its restaurant discovery and reservations app. Nordstrom allows its online consumers to pay online and pickup in store. Starbucks is experimenting with the same concept and PayPal is enabling its users to order ahead at a variety of QSRs.

Payments is perhaps the one ecosystem that’s central to the reinvention and disruption and innovation of just about every each and every ecosystem I’ve described so far. The ability to pay for things online is driving - and disrupting – retail. The ability to embed payments in apps is creating exciting new businesses, destroying old ones and changing many more. The ability to use the internet and apps to send money to any person anywhere in the world is transforming economies. The ability to link offers and other rewards to payments methods creates new opportunities for card brands and merchants to establish loyalty programs that they hope create loyal customers.

But it’s what’s happening at the intersection of the cloud and mobile and payments and retail that today has everyone sitting at rapt attention.

PayPal was perhaps the first to see the vast opportunity at the intersection of the internet and payments and retail. It created a secure digital account that removed the friction from shopping online – first at eBay, but later online at any retail site, provided it accepted it of course. In 2004, Alipay did the same thing for Chinese consumers interested in shopping on Alibaba’s marketplaces, paying bills and engaging in a variety of financial activities. Today, mobile as an access device only amplifies that opportunity for PayPal, Alipay and others who now have a much larger pool of people who are able to access the web and the retail and commerce experiences that await them.

More recently, Apple Pay has shown everyone the power and potential of the mobile device as a way to pay for things in physical stores. And since that’s where 90 percent of retail transactions happen today, that’s where everyone with a stake, an interest or an ambition in any of the ecosystems that I’ve talked about so far is directing at least a part of their innovation initiatives. The ability to innovate at the intersection of mobile and the cloud and retail and payments will transform how retailers and their customers interact.

And just where that will take the business of payments and commerce will be fascinating to watch. How each of the ecosystems evaluate the opportunities and challenges that await them at those intersections will be the subject of many an article (certainly a few more from me!) and no doubt, even a few books. For sure, it will be how we kick off The Innovation Project 2015. And, we’ll do it with the man whose “vague but exciting” innovation has laid the foundation for the innovations that define the worlds of payments and commerce as we know it.

Sir Tim Berners-Lee will open our program by speaking with the CEOs whose ecosystems have been shaped, disrupted and innovated by the World Wide Web that he created 25 years ago and the wave of innovation that was unleashed that only he could imagine.

I know I can’t wait to hear how he thinks we’ve done with the tool that he gave us and at what intersections he sees the next great innovations for payments and commerce.

I hope you'll join me.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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