To See Future Of Mobile Commerce, Look To 1950s Summer School 2013 is in the books, and with three days of interactive live cases, insightful modules and once-in-a-lifetime interactions, the event did Harvard's distinguished lecture halls justice.

This was due in no small part to the faculty that included newly appointed Merchant Customer Exchange (MCX) CEO Dekkers Davidson, Senior Walmart Vice President Daniel Eckert, Cisco Retail Director Jon Stine and many more.

But, there was one exec who had the tall task of igniting three days of discussions on topics as diverse as the future of mobile wallets, the opportunities presented by omnichannel commerce and the coming transformation of retail with a single speech: Market Platform Dynamics CEO Karen Webster.

Webster took the podium at 9 a.m. on August 12, and delivered an expansive message in front of a lecture hall crowded with top payments talent. Above all, she highlighted the factors that influence today's shopping and reinforced how they will continue to shape commerce in the future.

"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.

Webster's message was clear: in the face of the tremendous opportunity presented by mobile technology, payments industry players will find success by remembering the elements that have shaped the shopping experience merchants and consumers know and love.

But, this was far from the only takeaway attendees received. For more of Webster's remarks, read the full transcript of her speech below. And to see the presentation that accompanied Webster’s keynote, view the slideshow here.


Summer School 2013 Opening Keynote

By Karen Webster, CEO, Market Platform Dynamics (@karenmpd)

Good afternoon and welcome to PYMNTS Summer School, Class of 2013. My job is to provide just the right context for these next two days, and since it is summer, I thought I would start us off on the right footing, by talking about the great American pastime: shopping.

Yes, I know ... you were all ready for me to say baseball, especially since the [Red] Sox are in first place. But, I am happy to say that it’s shopping. As it should be.

There are only 30 Major League Baseball stadiums in the U.S., and only about 160 or so times between April and early October that a person who even likes baseball enough to go to a game can actually go to a game. Shopping, on the other hand, is the universal sport.

Everyone can do it, and it’s something that can be done in a whole lot more than 30 locations. And thank goodness much more frequently than half the year.

In fact, in the U.S., you can do it at one of more than 13 million physical merchant locations. Those retail locations collectively drive about 95 percent of total retail spend - some $4 trillion dollars in 2012 - and occupy more than 14.5 billion square feet of physical space.

To put that in perspective, Occupy Retail, those 14.5 billion square feet is how much you’d need if you wanted to line up all 7 billion people in the world shoulder to shoulder. So, see, we are already adding tons of value.

In less than two minutes into your Summer School experience, you now know three things:

  1. That shopping is, in fact, the great American pastime - it simply has to be to support all of that physical real estate - and spending.
  2. Why there’s such an obsession with introducing mobile devices into the physical shopping environment - since it is where the vast majority of spending still happens in the U.S.
  3. Why it is incredibly challenging to introduce a new way to transact - there are simply millions  and millions of retail storefronts and hundreds of millions of people who all interact using payment methods and devices that have been in place for decades and that everyone is familiar with and comfortable using.

Therein lies the biggest opportunity and obstacle for everyone in this room: using mobile not just to change the way we pay but to add value to how we buy.

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. I’d go so far as to say that being so focused on using phones instead of cards to make a payment at the physical point of sale is why mobile payments have been such a slog.

Payment comes at the end of the buying experience, and using a card at that point in the buying process works just fine, not to mention is a habit that has been formed over the last 40 or so years.

So, 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: using technology and mobile devices to make the buying experience much richer for consumers and merchants, and giving consumers a reason to want to break their old payments habits because it becomes part of a much more valuable buying experience.

And, that’s Mobile Commerce.

Over the next two days, we're going to share what we think is the essential fact base about the payments, mobile and commerce ecosystems. So that you understand how they work, who’s using them and where the points of friction and opportunity are.

But to start, I want to focus your thinking on something that I think is also fundamental to this discussion - and that is how we buy today. And to do that, I’d like to go back to the 1950s - the  decade when the shopping experience as we know it today developed, in fact, really ignited, and our shopping habits were formed.

For many of you sitting in this room, the 1950s is ancient history. Amazingly, it’s only about six decades ago. Yes, there were actually cars then!

But, it produced a bunch of payments and shopping innovation that’s pretty important to examine if your goal is to add value to  - or even change - the shopping habits that were formed some 60-plus years ago.

The 1950s was called the age of consumerism, and boy, oh boy were Americans ready to buy.

The average adult in the 1950s probably didn’t grow up with a lot of stuff. They were born in the 1930s when the economy was in shambles, unemployment was sky high and most people couldn’t afford much beyond the basics - unless their parents hadn’t been wiped out in the 1929 crash.

They came of age during WWII - in the 1940s - when consumer goods were rationed - everything from sugar to gasoline to tires to nylon stockings was in short supply. At the same time, much of the nation's productive capacity shifted to things related to the war and not to the things that the average consumer wanted to buy.

So, when the war ended and the soldiers came home and went to work producing the goods that people could buy and people had money to spend, spend they did.

The [gross national product] GNP during the decade of the 1950s doubled and the economy boomed.

This pent up demand and new post-war prosperity lead to a shopping innovation that is now very familiar to us and even has an online analogue - the shopping mall. Even though the first shopping mall opened in Kansas City, Missouri, in 1922, the Country Club Plaza, it wasn't until the 1950s that malls began to emerge in abundance in the suburbs where populations were then shifting.

Before then, shopping was done at local merchants.

Most of those stores had more or less the same layout, one central aisle, with shelves and drawers going to the ceiling along the walls. There weren't shopping carts to push around. A clerk always took your requests and brought you what you wanted.

If you were a regular customer, the store clerk probably even knew you by name, and maybe even what you wanted, and had it waiting for you on your usual shopping day. Many of them had a charge account for you that you paid in full, without interest, according to a schedule that you and that merchant agreed was fair.

But, to do all of your shopping, you had to go to multiple stores across town, and it was time consuming, especially when you didn’t have a car, which most people didn’t, and so it was considered a real chore.

The shopping mall changed all of that, as did the department stores that anchored those shopping establishments.

One of the real innovations was something that we take for granted today - the ability for shoppers to actually pick up and touch merchandise before making a purchase.

All of a sudden, the buying experience went from being a chore to being fun, an experience and an adventure with many of the stores that anyone wanted or needed under one climate-controlled roof.

It also became social.

Women went to the mall with their children or their friends. What made shopping even more efficient was having a number of ways to pay for the things that consumers wanted to buy.

As you all know well, the introduction of the charge card in the 1950s, and the credit card that followed over the next two decades, allowed people to use a single card to buy things at a variety of merchants and even to finance those purchases using those cards.

The innovation that we know called the charge and credit cards were important innovations for three very important reasons:

  1. Merchants no longer had to take the risk for repayment.
  2. Merchants could outsource credit operations to others who could do it more efficiently and cheaper.
  3. Consumers weren’t restricted to buying things using only the money they had in their pockets at the time.

Even though people continued to use "store accounts" to pay for their purchases in the 1950s, the shopping mall fueled their appetite for shopping and spending exploded.

By the end of the 1950s, Americans made up 6 percent of the world's population, but consumed one-third of all the world's goods and services.

And just who made those purchases? Women.

It is estimated that 80 to 90 percent of the shopping and spending was done by women in the 1950s. And women not only bought things, but even influenced big-ticket purchases such as cars, TVs and appliances. And ties - no wonder men looked so good in the 1950s!

That’s why Don Draper and the advertising Mad Men of the '50s and '60s directed their craft to women.

One-hundred percent of the shopping was done in a physical store, influenced by ads targeted to women, and enabled by sales clerks whose job was to provide enough information - and personal service - to close the sale.

Now, let's fast forward 60 years, a few million more people and merchants later.

Some things haven’t changed much.

The majority of spend still happens in a physical store. Like 95 percent of it. And in spite of the massive number of smart mobile devices and tablets, people still seem to like it that way.

Two different studies of shoppers actually concluded that even though today’s consumers take their mobile devices everywhere, and even use them to shop online, they still like going to a physical store to buy.

That’s not to say that mobile doesn’t play a role in the 2013 shopping experience. It does, but it hasn’t cannibalized bricks and mortar in any material way just yet.

But, what it has done is make the in-store buying process more efficient.

A recent Accenture study reported that 88 percent of consumers who bought in stores actually looked up products first online, then went to the store to make the purchase.

Even teens, 95 percent of whom have mobile phones, still prefer to shop in physical stores.

As for showrooming, which as we all know is the dark side of how consumers use their devices to shop, sure it happens, and in some categories, like electronics, more than others.

But, according to a recent PwC study only 2 percent of all shoppers actually showroom. That is, actually walk into a physical store to buy an item only to buy the same merchandise from a competing online retailer via their mobile device while in the store.

Turns out that most consumers are using their mobile devices in-store to look at product reviews and recommendations before buying in that store.


Well, surprise, surprise, the shopping innovations introduced some 60 years ago still motivate the buying process for people today - the ability to actually touch and feel what they are buying before they buy it, and the chance to have personal service delivered by knowledgeable sales people during the buying experience.

And, just like the 1950s, women still dominate the spending and influence purchasing.

In 2012, women accounted for 85 percent of all consumer purchases including everything from autos to health care. They made more than 50 percent of all new car purchases and influenced 80 percent of all automobile purchases.

They make more trips to the grocery, drug, department and discount stores, and spend more there than their male counterparts, about $4.00 more each trip on average.

And, the older the woman, the more spending they control.

Women ages 50 and older are the healthiest, wealthiest and most active generation of women in history. They have a net worth of $19 trillion and own more than three-fourths of the nation’s financial wealth.

Since they’ll likely outlive their partners, they stand to benefit from the largest transfer of wealth in our history and will continue to drive spending well into their senior years.

Consumers also like the personal attention and experience that comes with buying in stores.

It’s why loyalty and membership programs are so popular - it’s how consumers are "recognized" as being special and how they get special benefits for being loyal.

Consumers want merchants to know what they like and when what they like is going to be on sale. And, they willingly give up information in order to benefit from that experience.

Shopping is still social but with a high-tech flair.

Online social networks influence preference and purchase. Facebook makes it easy to query friends on the must-have back-to-school items, or what to get grandma for her 75th birthday. And Pinterest pins increasingly drive people to stores in search of the stuff that their friends and the people they follow have said they liked.

Sadly, though for mobile payments pioneers, using a card to pay at the physical checkout, also still rules. Only 5 percent of all smartphone users have said that they have ever used their phones to pay for something at a physical merchant - and, I will bet that most of those transactions happened at Starbucks.

What they do use is a card, and they like it that way.

Everyone knows what to do with a card at checkout, merchants and consumers both. Pull out card, swipe, sign or put in PIN - and away they go.

Swapping out a phone for a card just for the sake of paying creates more friction than value.

Now, here’s one place where things may be a little different than the 1950s payment method use at checkout.

People clearly use cash and check less often, but seem to have put the brakes on using credit.

The financial crisis has put a crimp on the ability for many people to access and even want to use credit. Debit rules - people now prefer spending what they have in their pockets - unlike the consumers in the 1950s.

And, the notion of credit with a merchant - which today we call store cards, that isn’t what it was either. Only a small percent of all retail spending goes on store cards.

So, just to put a bow on this 1950 to 2013 shopping history lesson, people still like to shop in stores. They like being able to see and feel and touch things before they buy them. They still value personal service and being recognized as a loyal and valued customer. They like the benefits of status - of being a "regular" which often includes getting access to special offers and special services that not only reward them for being loyal, but save them time and money.

Oh, and of course, they like - no, they expect - being able to use their payment method of choice at checkout at the merchants they buy from.

But, the great opportunity is to use mobile devices, to take what consumers and merchants both value most about the shopping experience to an entirely new level.

So, what if mobile devices could become a personal shopping assistant and aggregate "favorites" into a shopping list that makes it easy to be reminded when it’s time to buy more or when things that are on wish lists are in stock or on sale; or let consumers know before they walk into the store whether the item they see in a store window is in stock in their size; or recommend products that go with things that they already purchased; or help them avoid standing in lines in the stores by paying online first and picking up in store later; or help salespeople recognize high-value shoppers when they walk into their store so that their preferences can be flagged and experience more tailored to both their preferences and the merchandise in the store; or aggregate loyalty and membership information so that consumers don’t have to be the ones to remember it all in order to get their discounts; or curate and serve relevant offers based on where consumers happen to be and what they like to do and buy so that when they're in a new place, they can actually discover new places and new opportunities, based on their own buying patterns and preferences?

Oh, and did I mention about being able to use the method of payment they want to use in a simple and frictionless way?

The subtle but important insight here is that the power and potential of mobile commerce isn’t about changing the way people pay, but how they buy, how they interact with merchants, so that mobile can elevate the relationship and the interaction in new and meaningful ways.

In closing, there are two things that history can tell us about the mobile commerce future that lies before us.

    1. Consumer expectations of the shopping experience have changed very little over the last 60 years.


  • Habits, particularly payments habits, take a long time to change.



It took more than 30 years for debit to reach 50 percent of spend in the U.S, 14 for eCommerce to capture 5 percent of spend and 11 years for prepaid to barely even register as a payment method. Sixty years and nearly several hundred million smart mobile handsets later, we’re all still so used to seeing and touching the things we want to buy before we buy them.

Not everything we buy, but the vast majority of things that we spend the vast majority of our money on. A lot of the things I mentioned earlier are starting to happen in small ways due to some of the innovators in this space and in this room.

Mobile is making it possible for every physical interaction to have an online component, blurring the boundaries between on and offline transacting, and creating opportunities for everyone in this room.

Over the next two days, you’ll hear from the best and brightest in mobile commerce - those whose are on the forefront of making this on and offline convergence a reality for merchants and consumers. What you’ll then be left to decide is how to leverage your assets in order to change the way people buy, not simply how they pay.

That’s still going to be pretty hard, but as one of the greatest innovators of all-time, Thomas Edison, said, "Opportunity not only looks like work, it is work."

Speaking of work, lets get down to it now!

Follow Karen on Twitter @karenmpd



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

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