The Future of Payment


And every Friday we’d go out for drinks. And every goddamn Friday this would happen. The bill would come, and they would go, ah shit, sorry Tod, do you mind covering this week I forgot my wallet. And I have no memory. I’m not even certain what city I’m in right now.

Okay, I’m really bad at memory. And so I go yeah, yeah no problem. Of course they’d done this week after week. The next week comes, the exact thing happens. Bill comes, oh Tod, do you mind paying, over and over again for a year. This is how bad I am at payment to online casino review site.

And just last year I emailed the other Todd, Todd Cusolle, to ask him like okay level with me here. How much money did we actually end up getting off of poor Tod Maffin, and this was his email. So we don’t speak anymore, and.

But you know it all used to be simple, and this is one of the interesting things that I find about payment and commerce, and I work in the retail space, I run a digital marketing agency, we work with lots of retail customers, so we work with your customers. We help a lot of shopping centers, we help a lot of retail organizations, we’ve worked with Mountain Equipment Co-op, and so on. And so our view of payment and commerce comes from the view that your customers are seeing, and that’s why, as I hope in the sort of the comments that I’ve got, we talk a bit about that most important part here, which is gonna be solving. The other two will fall out of it. And your role as the ability to be the trusted advisor through this crazy digital world, is going to be so important. Because technology will change everything.

Technology will change and continues to change the very nature of payment. This was the very first credit card in fact, at the consumer level anyway. There were some oil and gas things, and it wasn’t a card at all, it was a coin. And they would literally take the coin and they would rub it on the sales slip, and this had problems. Notably, there’s no name on it. And it wasn’t cheap to produce.

So technology adapted. And it ended up being, this is the original charge card was literally a metal card, they called it the Charga-Plate. And it was a little bit better, you know because it had a name on it and so on. But it was not cheap to produce, and so the consumer demand that that changed as well, and it did. And it changed mostly because of this guy, Frank McNamara, he was out for dinner and he’d forgotten his wallet in New York City.

And like Matt and Todd, although he actually did forget his wallet. And he was very embarrassed, he was humiliated, in fact, and he was saying to the guy look I’ll wash your dishes, I’m so sorry. And his wife eventually paid and bailed him out. But he came back a month later to that restaurant with two things, with a business plan and a partner. And the idea was Diner’s Club.

And that was the invention of the Diner’s Club. But it was initially meant just for restaurants, it was literally a club for diners. And it ballooned so incredibly quickly. And of course it’s typewritten, wouldn’t it be awesome if this were the way it was still today. Can I just say something, I hope this isn’t offensive, ’cause I’m in from Vancouver right, so we all have weed, right. I mean like, let’s just.

(audience laughing) Dudes, I’m a little high right, no, no, I’m not. I am, but on Sudafed, not on anything bad. And I have to tell you like I went to the weed store, I have no interest in weed. I’ve smoked weed twice in my life, both were negative experiences. One I don’t really remember, the second I happened to been in Toronto and I spent three hours walking up and down Young Street looking for bananas.

Still don’t know why. Don’t even know if I found them. So in Vancouver now it’s kind of legal basically, there are more weed stores in Vancouver than there are Starbucks. That is actually factually true. There are more weed stores in Vancouver than there are Starbucks in Vancouver. And so I went and I got their card, which is kind of like this.

It looks like something you’d make at science fair, you know in grade A, it’s the craziest little thing. And you put it through this cheap little Staples laminating card. There ya go. Like, that’s it? Anyway, we’re off topic already, we’re gonna be here forever. So after they started that 42,000 people in the first year, 42,000 people had signed up for it.

Which, back then of course in the 30s, was pretty amazing. And yet, technology still needed to change. And of course we’ve come a long way since then.

We’ve got cards, we’ve got augmented reality, we have social payment, we have e-transfer, we’re gonna walk through a lot of those things that your customers are seeing today. Of course, as you know, Africa’s been one of the huge leaders in there. This platform here M-Pesa, is responsible for a third of Kenya’s overall GDP alone.

Just this one platform, a third. So very close to Vancouver as weed revenues, in terms of the GDP. Mobile payment transactions in China hit 2.35 trillion dollars, trillion dollars in 2015. That’s, by the way, that’s 10 times more than the US.

So we’re kind of behind the ways, in some ways we’re still catching up. And I have to say that not everyone believes that it’s still gonna get there. About 15 years ago I gave a speech to a federal agency on the future of mobile commerce. And I put this slide up and people laughed. They thought I was kidding.

Only it’s not funny, ’cause it’s here, right? It looks a little bit differently, it looks like this now. But it’s here. And it will affect every aspect of how you do business.

Your job in the next decade is gonna be to master that first one, to solve the problems, be the trusted provided for everything, because technology is changing everything. MasterCard says half of all digital orders are done on smart phones. Now we’re talking things like the former website orders and so on.

Even those website orders, half of them are being done on a smart phone. I don’t know if you’ve ever tried to order anything on a smart form from a website, it’s horrible for the most part, but it’s getting better. It’s getting better really quickly.

This is payment’s moment. I truly believe this. I don’t have any money, but if I were to invest in money, you bet I’ll be investing in two areas. One is payment, and the other is batteries.

Batteries and power bars. Trust me, when you see all these thing. Like I have the Alexa at home, which I’m sure some of you have seen, we’ll talk about it in a moment as well.

Of course the Alexa is connected to the door unlocker, which is connected to the camera in our house, which is connected to every light bulb has a wifi chip in it and everything. We run like so many power bars to get all these thing working, I think BC Hydro must check on us every week, like you sure there’s not a grow op in there? Is that the third weed reference? Am I just reinforcing all the Vancouver stereotypes, what’s happening here? So what I want to do is I want to bring you up to speed on the changes that are happening in the stores of your customers. Not just the Canadian Tires of the world, but also the small businesses.

You know, as you heard Rob said earlier, it’s gonna be those small and medium sized businesses where the change is really gonna happen in the next little while. So I want to bring you up to speed on what those changes are, because then you will be better positioned to meet those payment demands, but you’ll also, as a sales person, be better positioned to just be able to explain it. So we will be tackling this together in eight ways, and here they are.

Financial abstraction, biometrics and big data, hacker culture, social buying, conversational commerce, sometimes called chat bots, hyperlocal marketing, that’s the beacons of the world, augmented reality in stores, and this crazy internet of things. So let us begin with the first, which is financial abstraction. Is anyone here a big video game player? Okay, Xbox.

Put your hands up if you’re an Xbox player. Yeah, really. Okay, so this is my gamer tag, add me. I have no friends.

For a while I was playing this game called Plants Versus Zombies: Garden Warfare, which is just multiplayer shooter, and you’re basically a plant or a zombie and you’re shooting. And the idea behind the game is that you’re in this room with like 24, this like area, with like 24 other people, and they’re really, really, really good. And you’re supposed to have this chat system where you can hear other words. For the first couple of months EA, the developer of that chat system was broken, and so I just thought these guys are good man. And I would get my little cactus out and I’d go (imitating gun fire) I’d try to snipe, pea shooter would hit me right in the head.

I was getting pissed off. Like I rage quit sometimes. And then all of a sudden one day they turned the chat on, they’re all eight years old. (audience laughing) They’re all eight, and they’re like ha ha ha ha, I got the pea shooter. I’m like are you kidding me? So I switched to more grown up games.

One of my favorite is this game called Watch Dogs. And Watch Dogs is a great game, hacker game. This is the first version of Watch Dogs, which I like better than the first one. One of the modes in Watch Dogs is this area where you go into free roam, and you basically just do whatever the hell you want with no consequence. You can throw bombs on things, and you know you get cars in the game, but basically you’re a hacker, so you just unlock them with your smartphone and you just steal the car.

And so you get in this lobby with a bunch of people, kids mostly. And you run up and you stand on top of their car, and you get your little bazooka out, eh, I’m gonna shoot your car, and they go go for it, (booming) (laughing) and it’s fun. I’m 46 years old. But there’s no consequence right, there’s no real consequence to this because it’s not real money. And if your car gets blown up you just go steal another car, or you buy another car with the in game money, or something like that. And this is one example of the financial abstraction that young people today are living with.

Right, they have become disconnected from real money and the role of real money. And as a moment we’ll see how that affects payment, which it does in some pretty drastic ways. This financial abstraction in video game carries through for most video games, but not all. And the one exception is GTA V. I keep looking for my video game friend now for validation. GTA V, which you will notice looks a lot like watch Dogs, but has a slight difference.

So this is playing a game and I’m just doing my regular mayhem, again in a group of a whole bunch of people, and I start throwing bombs, throwing these bombs on cars. And this little kid runs up to me, in his character. ‘Cause you can hear them all. And says please don’t blow up my car.

Well not only did I blow it up, I also, it was such an explosion that the fire department apparently showed up. So I blew up his car, and the kid burst into tears. (audience laughing) And then his mom came on the headset. I recorded that.

I’m now going to play you, no I didn’t record it, I’m just kidding. (laughing) Boy everyone’s on the edge of their seats there though, aren’t they? They’re like can’t wait to hear this shit. (laughing) You’re all sick people. But he was absolutely distraught, because unlike Watch Dogs, and unlike a lot of other video games, in fact most video games, there is a real cost to this. It’s not that you necessarily have to play with real money, but when you see a car in GTA V you can just go steal one, or you can buy yourself a nicer one.

Now there’s two way to earn money in this financially abstract world, the first is to play it in game. Right, you’re always just sort of playing the game you’re doing missions, you get a mission, you kill some people, it’s worth 80 bucks, or something like that. But it takes a lot, it takes a lot to get there. The other way, of course, as I’m sure we all know, is paying with real money. And so you go to EA, and you buy a card, a card with 1.2 million in game dollars costs 25 bucks in real money.

I added up how much money I spent on Plants Versus Zombies, after I paid for the game, it was 212 dollars. I am not proud of that. So this kid either, poor kid whose car I blew up, and there’s no undo, there’s no like restore save, his car was gone. So he either paid with his actual allowance.

Shut up, I didn’t know okay. Look, I came from Watch Dogs what do you want from me? There’s no user manual. Or, the alternative is, he did it in game, which is great.

Right? I calculated how many hours it would have taken him to have earned that car in game and it was 82 hours. Um, but it was his fault really. Because he had failed to buy insurance for his car, which is something you should do in case dicks like me show up in your game. This is actually true.

One of things that you can do. ‘Cause he started to cry and he’s like I didn’t have insurance for it. I’m like what are you talking about.

In the game you can buy insurance, in case dicks like me show up. Or you wreck you car. Right? So there’s a little less abstraction here, but for the most part the young people today are playing without, and not just playing, but also using devices without a clear sense of the direct connection to money. That impacts payment and commerce in amazing ways. We see this every week in the news, don’t we?

You know, kids are buying in game currency without understanding that it’s real money that they’re dealing with. Those lines are more than blurred now, they’re practically invisible. And some brands are exploiting this. Disney invested a billion dollars in what they called the Magical Wristband. It’s your hotel key, it’s your park pass, but most importantly, it’s your wallet.

Because it’s connected directly to your credit card. And I should tell you, this kind of experimentation with payment is not just a flight of fancy, it is built into the ethos of Disney, of that corporation. When you look at what Walt Disney was trying to do when he initially announced EPCOT Center, it was to be the world of the future. The whole positioning around it was come in and see the future. And in many ways you’ll probably recognize this model from the cruise ships, right?

This is the exact same thing. Your card is your ID to get back on the boat, it’s your wallet, ’cause it’s connected to your credit card, it’s your room key, and so forth. But again, these trends are all beginning to come into place now.

Where the act of transferring money, even an NFC tap to actual cash, even those things are becoming even more blurred and even more invisible. The sense of financial abstraction is going to change dramatically the way people buy. And how is it going to change it? They’re going to buy more.

Dun & Bradstreet already says that 12 to 18% spend more money when they use cards than when they use cash, which makes sense. If you think about you, right, I mean it’s like it’s different with a card. You’re sort of tapping it. Shop at the drugmart you got to pay with cash, you’re like really? Three dollars for egg nog, where have I been? You know on a card you just don’t think about it that way.

And so as this abstraction gets even more and more blurred this is good news I suppose for payment processors. Good news for retailers, bad news for people with student loans, and so on, consumer debt. But interestingly though I think is this lack of connection between the money, the payment, and the results actually is bringing some really interesting new models to town. This is a great little app that will connect to your main bank account. And everyday it trickles a little bit of money into your savings account, without you knowing about it.

So everyday it takes 45 cents, buck 20, wouldn’t that be great? Like I don’t know how you save right now, but ours is like every month it takes every, at the end of every month it takes a chunk out, and boy we feel that chunk, don’t we? But this, it just trickles it out.

And how does it know the amount of trickling? It spends the first four weeks monitoring your spending habits. And it understands how do I get these people on the line between just the right amount of savings and not being able to survive.

And it let’s you adjust it accordingly. And because of financial abstraction, people don’t even realize it’s happening. The app communicates with the user through another trend we’ll cover in just a moment, conversational commerce. In this case, Facebook Messenger, the bot can do all sorts of things. It can report things to you. It’s even smart enough to say random things.

If you say awesome, it’ll reply with a gif that says you’re awesome. And these bots are beginning to personalize the relationship in a very human way, ironically. When was the last time your bank said you’re awesome to you. Like I don’t know about your bank, but this is how my bank communicates with me. (audience laughing) I would rather have you’re awesome, frankly.

This is part of the reason that some financial players are now playing into the spaces. Well this is Chime, it’s essentially a bank. You get regular savings account, but what’s neat about their credit card here is that every single purchase it makes, it rounds up to the nearest dollar, takes that money and dumps it in your savings account. And then at the end of every week it adds up all of those round ups that you’ve done, the total of those and gives you 10% of it in cash, well not in cash but in money in your account.

It’s genius, it’s genius. This is the direction the banks will be going because they have to, because they’re gonna get their butt eaten alive by these little players like this. They’re gonna steal these ideas, you watch.

A year from now, all the major banks will have something like this. This is some video from just a couple of weeks ago, at CES, the big nerd conference down in the US. One of the most, no, no I wear nerd like the badge of honor it is. (audience laughing) I’m an alpha geek. This is one of the most talked about spaces, one of the most talked about products in your space. Does anyone recognize it?

Tappy. Tappy is, brace yourselves, a payment enabled wedding band. Insert joke here. Of course it’s not just a wedding band, right. It’s any kind of band.

It’s ceramic, so it doesn’t interfere with wifi. But my point is that these devices are being put everywhere. The ability to pay is being put everywhere. This is a massive opportunity for you.

Maybe not for your spouse, God help us all, in the case of Tappy. But one thing is clear, that the more devices we have that enable payment the less connect our relationship to payment has. Which is part of the reason the big companies have been investing in biometrics.

And we are beginning to see the trickle down of big data, which had been sort of initially just sort of used for the large players. Being used for the smaller ones as well. And I have to say, big data is a complicated thing. And business has never been good at explaining complicate procedures. – Here at Rockwell Automation’s World Headquarters, research has been proceeding to develop a line of automation products that establishes new standards for quality, technological leadership, and operating excellence. The original machine had a base plate of prefabulated amulitem surmounted by immalleable logarithmic casing.

In such a way that two sperving bearings ran a direct line with a panametric fam. The line up consisted simply of six hydrocoptic marzel vanes. So fitted to the ambifacient lunar wane shaft, that side fumbling was effectively prevented. The main winding was of the normal lotus-o-delta type placed in panendermic semi-boloid slots of the stator. Every seventh conductor being connected by a nonreversible tremie pipe to the differential girdlespring on the up end of the grammeters. – I love the little thumbs up he does too at the end.

Like I know he’s saying the up end, but it doesn’t it look like the actor is like fucking nailed that line, yeah, nailed it. (laughing) This is page one of the 2,000 pages or manual for the turboencabulator. Which I am happy to report to you is not a real thing, but in fact just a bit of a running joke between engineers. If you go on the, I just about said on the YouTube.

(laughing) If you go on the tweeters, if you go on YouTube every major industry, GE, Honeywell, and so on, have got their own version of that. And part of what makes it funny is that it’s true, right. I mean you have probably gotten into this discussion with your customers about tokenization. I have tried to learn about tokenization. I am an idiot.

Right, and so that ability to, again, solve that problem, the problem isn’t the technology that they’re having, the problem is they want to get their money faster. The problem is they want returns to go smoother, they want fraud detection to be easier. Right. It’s that ability. That part of where that is going to come in, at least from their end, and you’ll have a role to play in here.

Because think about all the data points that you as payment processors have on their customers. Perhaps more than they do, to be perfectly honest. And your ability to use that big data as it relates to biometrics, is gonna be one of the major, major assets that you will have, that no other organization will have.

Big data of course is not as complicated as it sounds. I would like to explain it by showing this horribly embarrassing photo of me. (audience laughing) When I was 10 years old, I was kind of a bouncy kid, I don’t know if you can tell. I was kind of a bouncy kid, bounced around a lot, and I got diagnosed with what was then called hyperactivity. Today it’s ADD or ADHD or something, and I’d be on meds.

But my mom decided that she would go to the internet of the day, which I understand were called libraries, to research, like maybe this is a food allergy, maybe Tod’s just bouncing off the walls because of a food allergy. And she came across this diet called the Feingold Diet, written by a Doctor Feingold. Now this diet has since been completely debunked, it’s kind of the antivax of the nutrition movement. But this diet had one very important part, and it would eliminate from your diet all additives, all preservatives, it’s all the bad things you think. But it would also eliminate all sugar from your diet.

And the idea was if your kid goes without sugar, they will calm down. I have to say it worked actually. I kind of became a different kid. Problem is my mom decided to implement the Feingold Diet on October 31st.

(audience gasping and laughing) Halloween. So I would go and collect, the way it would work was I’d still go out and trick or treat, I’d still collect all the candy, but I’m kind of a data nerd, I always was, so I would exchange it for the stuff I could eat. So all the sugared stuff I exchanged it for sugar free. All the chocolate I exchanged for carob. Has anyone here had carob? Has anyone tried carob?

Yeah, carob is a well protected industry secret. Carob is actually manufactured from sawdust and wood stain. That’s not true, please don’t sue me. Sure in the heck taste like it though. And so I would try to group all of these things into different piles.

That’s how I had my entertainment for Halloween sadly, was I would try and group it. I’d put all the ingredients stuffed together in buckets and then I’d dump them all out and I’d arrange it by color, and I’d dump them all out, I had a lot of time on my hands, I’m an only child, what can I tell you. And really when you think about big data, that’s basically all big data is. It’s taking all these different buckets and dumping them out, and mixing them up, and seeing what different patterns you can come up with. Here’s the great news about you in the next decade, you control a whole lot of buckets. You already have the buckets that most of your customers are going to need.

You might have, as I mentioned, more than they do. So let’s talk about some easy buckets to acquire in the case of a furniture store or a clothing store, right. This is stuff that they’ve already got at the customer level.

They’ve got the account status, you know payment, they know what past purchases they’ve bought, they know your home postal code, and so on. And then there’s this sort of second group which is also structured data, but it’s a little tougher to get, because it might be in different places, right. It may not be in the store itself. I’m thinking about things like visits to the website, they’re running Googly Analytics, it’s still in a database somewhere, all that data, but it’s offsite, it’s down in the US.

Or responses to the satisfaction survey, might be in Polldaddy, or something like that. Or engagement level with emails, right. GetResponse, or MailChimp, or your own internal email processor. It’s all still structured data, you can still export it as a CSV or an Excel spreadsheet if you want. And then there’s also these sort of random completely unstructured events, right. Random ideas.

On the phone, the customers service rep is on the phone with one of their customers, and their customer says you should do such and such. Well where does that idea go? Most cases it just gets written on a Post-it note and then forgot about. Or other little things like that. Like the metatagging that’s existing. Take a photograph of let’s say a community event, let’s say lululemon decides to go to a community event, right?

Photos of those check-ins all contain metadata. If there’s text attached to it we can understand the sentiment attached to it. That’s what my company MineFly helped develop, was that sentiment analysis. All big data is really is you take these three categories of buckets, the stuff that’s on site that’s already structured, the stuff that’s off site that’s already structured, and the stuff that’s not structured and is kind of random.

But will you take all of that stuff and we put it in one big bucket. And then we begin to ask the bucket some questions. Like for instance, how many customers who attend our community events are unhappy?

We got the attendance event from check-ins, we got the happiness level from the sentiment analysis on emails for instance. Or what outdoor wear SKUs are happiest, high net-worth customers are already likely to be interested? Remember you, as mineras already control some of the data.

You’ve already got a sense of some of this net worth, you’ve already got a sense of spending patterns. That data is going to be so critically important and luckily for you you’re already positioned there. All that stuff comes from various sites. Big data is also helping a whole range of other organizations.

UPS for instance, here’s something fun to do. Follow a UPS truck for like an hour, or five. Just go, like don’t leave right now, don’t do it right now. But just spend an afternoon. Just find a UPS truck and follow it.

Now they’ll call the police, so don’t tell ’em that this idea came from me, ’cause it’ll creep them out, but one thing you will notice about UPS trucks, is that they never make left turns. UPS trucks do not make left turns. And the reason for that is that they discovered that if they take all of that big data, right they’ve took all of those different buckets, they took traffic conditions, weather patterns, accident reports, fleet management, fuel consumption, satisfaction level of the drivers, all of these buckets they put them together and they realized, you know what guys, if you actually make three rights it’s better than making one left. What happens on the left? Well you’re sitting in that lane for about an hour and a half right, until you go left. There’s a much stronger increased chance of people running and accidents, it’s safer, they burn less gas, and so on.

So big data is coming up with some really amazing things. But it’s not just going to be that, it’s going to be some of the technology that we’re starting to see our customers use on the retail side, and that is biometrics. Police departments have used biometrics, and terrorist hunting organizations for ages now. We know for instance, that if we’re able to identify someone’s face, and for instance, the heat mapping on their face, we’ll be able to tell what kind of emotion that they’re experiencing. This is just beginning to trickle down on to the marketing side of this, right.

So how does this play out, let’s say for a resort? Say a resort on Costa Rica, right. And maybe the Costa Rica Resort has got a timeshare booth, ’cause they all do don’t they? You know when you can’t get to the elevator, can I help you find anything? We’re not interested. I was giving a speech last month in the Dominican Republic.

I think 30 people called to offer my wife and I the welcome package. Have you picked up your welcome kit yet? I don’t want the welcome kit. And so how does this play out right now? Well they just bug you.

But imagine a world where they’re using biometrics to identify people likely to buy. They have cameras, and this by the way is already in use. In some markets, Dallas and Denver, the two primary markets where this has been the end of last year where they started to experiment with this, right. So they put the heat registry cameras, infrared cameras and so on looking through the lobby looking to identify facial heat and pattern recognition which we’ll talk about in a moment, to identify people that fit into one of four criteria, relaxed, curious, happy, or bored. Because if you are either relax, curious, happy, or bored, you are much more likely to buy a timeshare than I am.

Because when you call me for my welcome kit I am none of these emotions. Incredibly powerful, incredibly powerful. And as I mentioned it’s not just biometrics in terms of facial, it’s the way that people move through a store is being analyzed now. You think about casinos, right? We have all been to a casino. You know that they’ve got those little cameras, those little circular cameras.

And I think people believe that in the casino, like if you watch too much Ocean’s 11 or something that there’s massive room with a hundred people all staring at these cameras. That’s not what these security rooms look like. Oh, the cameras are being watched, but they’re being watched by software.

And they’re being watched for specific patterns. They have hundreds of walking patterns built into the software itself. And just to break it down to an incredibly simplistic level there are two patterns when someone walks into a casino, someone who’s just there to play a game and someone who’s there to do harm.

Now within those two categories there are hundreds of thousands of combinations, but here’s what it looks like for someone who is just normal like me right. You walk into a casino normal speed, you sit down at the first, roulette’s my advice, I don’t know about anyone else. Sit down at the first roulette table, roulette I like ’cause it’s the simplest game.

You can literally just take your chips and throw them on the board and that’s a bet. That means something. People next to you go oh he’s split the five and nine, very clever. And I’m like. (audience laughing) Yes, I split the five and nine.

The chip in your drink mean anything? Sorry about that. So I play a few rounds you know, and I get up, and I get the free drink from the free drink girl and I go away and I play and I lose all my money, and I go to the snack bar and I drown my sorrows in chow mein. That’s my pattern, that might be registered positive pattern 134. Now this is what a negative pattern looks like to the casinos. First of all it happens right as soon as someone comes in.

Because people who intend to do harm to a casino, to a retail store, someone with nefarious things on their mind, it has been shown that those people walk on average 25% faster than people who do not. So right away the fact that you’re moving quicker puts you on alert. Now it hasn’t escalated it up to a human being yet, but now the cameras are really watching, now that software’s watching. And do you sit down at the first roulette table? You do not. ‘Cause you’re looking for a mark.

So you kind of look around, no these people aren’t drunk enough. You stand over here. Now the cameras are really watching, right? Maybe at this point it’s noticed that you walked in fast, it went to three or four tables, waited three or four seconds of each, maybe at this point the software has escalated it to one of these humans you’re used to seeing, right? And so then I sit down. And I say to the person next to me, do you mind if I tap your chip for good luck, I’m having kind of a bad day on the other table.

And they’re like yeah no problem. And you take your glass and you tap their chip for good luck, and you’re like thanks buddy, and you maybe sit there for a little bit and then you leave. And what the person doesn’t realize is that you’ve just stolen $100 from them. Because on the bottom of your glass was double sided duct tape.

And so when you tap their chips, you sucked up one of the chips. So this kind of technology, right using big data, using some of the buckets that you already have at mineras, which will become so incredibly valuable for your customers and of course for you, combining with biometrics the way people walk, pattern recognition, all of this is radically going to change. And your ability to communicate this to your customers is going to help right?

It’s not solving equation. They’re going to be hearing about it, they’re going to retail conferences. I’m at those retail conferences, I’m telling them all this stuff too.

So they’re already getting a sense of that, they already does really want to be out there using it. So let’s talk a bit about something no one wants to talk about at these events, and that is the role of hackers. But I don’t want to talk about the security side of things, excuse me, because I actually think hackers are good for you. And to be fair, what we’re really talking about here is not hacker culture, as much as maker culture. People who want to extend the things that they love. Maybe they love your brand, maybe they love your payment app, they will build upon it.

And when you send lawyers after them, it just goes to hell. Take this example, this a guy, Jose Alvares, he’s a student in Tempe, Arizona. And like most students, he was completely broke. So, what did he do?

As you can see, when out to the dumpster and got FedEx boxes, and made furniture out of them. And built all sorts of furniture. Now, before we talk about how FedEx responded, what does this say about FedEx’s products? Yeah, right. Doesn’t it, that’s what it says to me.

Sturdy as hell. FedEx didn’t this so, and they sent him a cease and desist. Here is the important thing, when people love what you do, the apps you create, the service you provide, they’re going to want to build on it, and you should embrace this when it happens, it’s going to happen to you.

In fact, it may have already happened. Municipalities are quite far ahead of this. This is the city of Vancouver’s list of accessible databases, where it’s. It’s not real time, some are CSV or Excel spreadsheets, but you can download any of these lists and use them any way you want.

It’s open data. There are some downright depressing list, like this list of dead animals, updated hourly, it’s horrible. Some are useful, this is every called to Vancouver’s 311. How would someone in an app use this, I don’t know. I don’t know. But you should encourage this.

Not only because they might be good at finding security flaws for you, but they might be building new ideas. That’s why the big players like IBM security are publishing actual step-by-step tutorials on YouTube showing people how to hack Mobile payment apps. This is a YouTube video that is on the website, it’s on the YouTube channel of IBM security. Look at this, clutch mobile banking. There it is, it’s correct.

Sorry to all the security folks in the room. Hackers, makers, whatever you want to call them, are being taught, this is part of the culture today, right? Decrypting this technology, getting in there see how it works see what doesn’t work, it’s going to happen to you no matter what. And in fact one of the more popular gatherings these days are these things called hackathons, people gather for 24 hours powered by pizza and energy drinks, and companies turn their source code of apps and websites over to these people, who are not really hackers, I mean they have hacking skills but they’re not really bad hackers. To see what they can make from them.

The one in Vancouver, look at these big-name sponsors. Microsoft was a sponsor of a hackathon. Most notably, excuse me, two law firms are sponsors of an event dedicated to people hacking, and Telus’ software, they went after Telus’ software, with Telus permission and money.

Hiking incredibly strong. Out of hackathons how come products like GroupMe, which was so successful that Skype bought it a year later. Stock image company Shutterstock found it so helpful it’s now an annual event and a lot of what gets created at these hackathons turns into real products. When the hackers come for you my friends you should embrace them. You should be having your own hackathons. All the brands you see here and hundreds more have hackathons.

The Amazon Go store, right the one worth all NFC, the one you just walk out, I’m sure you’ve heard about this, came out of a hackathon idea. You are going to be hacked, hopefully in the best way possible, and you should embrace these. Because some of these things might come up with some great things. I mean through a maker’s eye, and with the open APIs as you provide we might see a whole new different type of payment process where customers can choose from any number of combination of wallets. You’ve got some room left on your Visa, throw it in there. Oh you got some Facebook credits kicking around, done.

I’ve got a bit of cash on my PayPal account, and I think AMEX owes me some loyalty points. All that to build, I mean it’s kind of the way it’s sort of happening right now. Like I fly WestJet, you can pay with cash or you can pay with the WestJet dollars, it there just sort of bumping up.

All of these things will be coming out, probably hackers first, if you’re not there first. And either way embrace them. So let’s move out of the foundational type of stuff on to some of the social buying. You’ll see a lot in social buying, of course in conversational commerce, ecommerce has been around since I guess really 91.

91 is when the internet opened up sort of to commercial activity. And so people have been buying things online forever. This is the T-shirt I bought for my wife in the middle, I really did buy her. To the huge players like Amazon, and of course we know everything from there. Parallel to the ecommerce world. As the ecommerce world has been sort of growing, the social world, as you know, has been going phenomenally strong.

Facebook is up to 1.8 billion monthly active users, 1.8 billion, it’s amazing. Social buying is simply the intersection of those two. So let’s talk a little bit about that.

Some of this stuff you probably already know, some of it’s really quite interesting. Pinterest is actually one of the big leaders here. Pinterest got this new buyable pins button where it connects directly to and through other shops, right it connects through a lot of the BigCommerce, and the engines like that, Shopify, and so on. Interestingly enough by the way, Pinterest doesn’t take a cut.

It’s an interesting model, that surprised me. So they’re just erupting that traditional purchase path, right, because it used to be where these pins would bounce over to the retailer’s website and you’d buy it on the retailer’s website, well now that buyer’s functionality is happening right inside the app itself some are doing this really well, some are not. Twitter had this and two days ago Twitter announced they were killing it.

They’re not going to do the buyable tweets anymore, they’re just pulling out of it for some reason. So it’s changing all the time. So here’s a real-world case study, this is a company called shophearts. Very clothing boutiques old kind of chic dresses and so on, certainly already popular category on Pinterest. And they already had a pretty popular presents, 4700 pins. But over the holidays they enabled payment on those pins, meaning people could buy right from within Pinterest itself and not have to go to a store, not have to go to the website.

Those buyable pins drove 15% of sales, the actual pin button themselves, and perhaps even more important for this company, 90% of those customers were new. So trust me when I say that your customers, especially the retailers, are taking this very seriously. They are getting hit from all corners, from the Pinterests, the Facebook’s of the world, and so on.

Inside Pinterest customers even better were spending 30% more than people in store or on the website. And this trend toward deep learning in big data is built right into this itself. What backs this?

You have probably heard a lot about the buyable pins in the past, but you probably haven’t heard about all the rich algorithms behind here. Based on data that you already have, crazy world, this is the power of that social graph that is so incredibly important. The power of recommendation.

And this is where Facebook became so successful. I speak to a lot of realtors, I sometimes show them the slide, which is the average monthly number of searches for the phrase real estate Toronto, in Google, this is in Google. And they are surprised by this ’cause they always think God I thought it would be more. Didn’t that number look low to you? Like I hope he’s not going to say that’s a big number ’cause that kind of looks low to me. For the last 10 years the number of searches for the phrase real estate Toronto has steadily declined year over year over year.

Here’s a different chart. Guess what chart this is a search term for? Realtor reviews. So the difference here is really clear. It used to be you just go online and find anything that looked good and buy.

And increasingly this recommendation engine Yelp, and so on, Google reviews, and Facebook now has reviews, all of that stuff is really really important. The granddaddy of course is Facebook. Little surprised they’re getting into it as well, people are even starting to call it F-commerce instead of ecommerce, because of the influence that it will wield. And here’s a part of the reason why Facebook will be a pretty major player in this space. Their user interface, especially on mobile, is outstanding. It’s fluid, it’s frictionless, and if you think people will be hesitant to use this technology, to give Facebook their credit card, think about Apple.

One of the most genius things that Apple did was to convince people to give up their credit card number. Even for a free app. It’s like while we’re not going to charge your card, but just give us your credit card number. So now Apple has billions of credit card numbers there.

Which makes getting apps as easy as buying that blue Get button. No matter what you’re buying. I’m not here to judge.

Another thing that your customers are increasingly experimenting with, to some level of success, and others not, is conversational customer, this is sometimes known as chat bots in the industry. The first chat bot was invented by this guy, who has a bot called Eliza, back in the 60s. It was like a computer science experiment. Eliza was painfully stupid.

This is Joseph Weizenbaum. Here’s a conversation I had with Eliza. My slides aren’t very pretty. Your slides aren’t very pretty? No, they aren’t. Are you just saying no to be negative?

This is kind of like conversation with my wife actually, now that I think about it. No, they really truly suck. Why, no? So you see what happens here, all it’s doing is looking for one or two key words and spitting it back. And we’re a little bit better than this today in terms of conversational commerce, but not much.

We’re a little bit better but not much. Bots didn’t really come into the world consciousness until this happened. – Open the pod bay doors, HAL. – [HAL] I’m sorry Dave, I’m afraid I can’t do that. – And now, I present to you the stupidest slide I have ever made in my 20 year career of keynoting. (laughing) We are somewhere in between these two.

The people who sell bots will tell you that we are at the HAL level, and we are not. But we’re close, we’re close. Bots are already taking reservations at restaurants. They’re selling everything from clothing to take out food, the space is moving incredibly fast.

And February of this year, I guess of last year now, there were no bolts on Facebook Messenger, 5 months later there were 18,000. And just by comparison it took Apple about eight months to get to 18,000 apps on their store. So soon you will not be hearing there is an app for that, we will soon be hearing there is a bot for that. Driven by enormous growth in chat apps. In fact, this might surprise you. More people use messaging apps today than Social Network apps.

I’m going to say that again, ’cause it’s so incredibly important to where the future of commerce is going. More people use the messaging apps, we’re talking Facebook Messenger, WeChat, Kik, Telegram, Snapchat even, although that’s more of a publishing platforms, but more people are using those messaging apps than are using the Facebook app, the Twitter app, and so on. In the first 3 weeks of KLM’s boarding pass bot being live they delivered 50,000 boarding passes that way. We’ve built some of these for some of our clients by the way. Anyone hear from Winnipeg?

Anyone, anyone? One guy? (audience laughing) In the discount seats too, why do you accept this? So you know Kildonan Place? Kildonan Place is one of our clients. And so they have their whole thing is Shop Happy.

And so all of their messaging is sort of around happy things and so forth. So we manage all their social media for them, we manage all their digital marketing. And I don’t know if you’ve seen this, but actually in the mall they have a bot.

But it’s a real bot, and his name is Happy Bot. (whirring) – Huh, what? Where am I?

Hi there, nice to see ya. (whirring) Special coupon for a special customers. (dinging) Almost ready just need one more second. (dinging) See ya later, alligator. Well, my job’s done here.

– He just basically gives you a choice of one of two coupons. He’s not that bright. But there’s a line up to use him. It’s really amazing.

Isn’t the voice great? The voice is just like from one of their ad agencies, it’s like one of their guys there. So we built a messenger bot that reflects that, right. We built this for them that has, you’ll notice, the same kind of language. Anyway, how can I help you? And so these bots are fairly active, you can choose from one of these things.

It’ll understand words, so you don’t have to select with buttons, it’ll understand specific things you can type in. For instance food court, and it’ll understand those sorts of things. At the back end of this you may have noticed that Happy Bot spent a little bit of time typing, that was fake.

Because these engines now will simulate human behavior. To the point that it will even put a fake I’m typing message, the little three dots that you see when someone’s typing, it’ll fake that. We have actually noticed that people are willing to engage more with it when they see that.

Paradoxically when they’re told to wait a little bit because they know it’s a bot right, right away he says it’s a bot, but for some reason instead of it just blasting stuff out. And so we program into it any number of potential replies. These are the real world bot responses for Kildonan Place.

You know. Returns, refunds, you’ll notice that these are kind of stupid right, they’re not that bright. And this is sort of the level that we’re at with conversational commerce.

Is it kind of, like tell me a joke for instance. So it knows some things, you know. It knows to randomize. So if you say any of these things, like hi, hello, how are you, or so on, it has one of four options. It’s gonna spit out one of those things for you. If you ask it for a joke, and how do we find the robot jokes?

We literally Googled bad robot jokes, and punched them in. But sometimes emergencies right, so it’ll understand these phrases, please, fire, stabbing. It’ll understand different types of emergencies.

But it’s imperfect. Because it might understand puke, sorry for that analogy. But it won’t necessarily understand I just puked. I’m gonna have to pick a different example, I think next time.

But these sorts of things are incredibly powerful, they are becoming more and more, and these will develop even more so, especially especially, now that more people are using these messenger apps. On my own website I published a whole bunch of the most common chat bot responses that we’ve programmed into Happy Bot. It’s had 10,000 downloads, it has been up for three weeks.

The demand is there. But the real marketing power for your customers is not necessarily gonna be in the responses, it’s in the ability to reach out to people afterwards. As Rob was talking about, retargeting. These bots will have retargeting built in as well. And you could have it under certain conditions.

If they’ve chatted through Facebook, Facebook already knows everything about them. It knows their gender, it knows their age, it knows what time zone they’re in. And so one day after, if you chatted about sweaters and you’re a woman and you’re in your 20s, it can automatically push something back out into messaging for you. Like he was saying.

That warming up of the channels that’s gonna be so incredibly powerful. Another app that’s sort of more in the saving space. Right, understanding language. So it’s an expense report essentially.

Automatically sort of calculates stuff, incredibly strong. I put beacons in here because certainly it’s gonna be pretty enormously popular. I’m sure a lot of you are already in that space and know quite a bit about beacons. But I do want to talk about the outlier that’s here, that no one seems to talk about.

And that is the iPhone headphone jack. The whole Apple, if you ask Apple why they removed the headphone jack, do you know the word that they use for it? Courage. (audience laughing) Swear to god, that’s what they say. Why did we remove it, because courage.

Like are you running for president too, like? No, the real reason that they did this was to force the adoption of beacon technology. Until now it’s been hard to get beacons out in the real world. Beacons of course are these little devices that sort of hang on walls, and it’s very tight geolocational space. And marketers are using, retailers are using in store, to identify where people are in a store, give them opportunities and offers based on that.

But it’s been reliant on the technology of Bluetooth. And most people have their Bluetooth turned off on their phone. You probably have it turned off on your phone too ’cause you’ve read one of those 40 million web articles that says is your iPhone draining power all the time, turn off Bluetooth, right?

Haven’t we all done this? So we’re like hell yeah I want six more minutes out of my iPhone, I’ll turn off Bluetooth. So really what this is about is less about audio and more about driving the technology of beacons.

Because you bet Apple is in this space. Apple and Google competing very heavily for it. So they’re forcing people to leave Bluetooth on, which of course has great opportunities for the beacons of the world. Soon as they come into a store, the retailers are gonna be able to target them with all sorts of messaging, opportunities, and so on.

Another space that I think you’re gonna wanna watch is augmented reality. Augmented reality has actually been around since the 60s. It really only became popular, God help us, when Pokemon Go came on the scene. Did anyone here play Pokemon Go? Come on. Yeah, for like an hour, right?

Yeah, exactly. Pokemon Go was enormously, and this guy can’t even catch a goddamn Zubat. Like honestly, those are the easiest things to catch in the world. Look at this idiot. Oh it stopped, I could have watched forever.

Zubats, come on buddy. These things were incredibly popular. Pokemon Go apps, it was actually. Now we’re gonna find out who the real nerds in the audience are.

Did anyone actually play Ingress? Oh, two people. Yay, my people are here. (audience laughing) Ingress was the app that Pokemon Go was based on. It was a much better app. And they’ve just recently reskinned it and made Pokemon Go.

But this had enormous impact for those of you who remember, during the 12 minutes that Pokemon Go was popular, enormously popular. So much so that I had to put out an emergency email to all of our shopping center clients with the headline, Holy Christ, What The Hell Is Going On. Because all of a sudden they were getting swarmed with people playing Pokemon Go. And about two weeks after I sent this out, the whole thing died. But the interest in augmented reality has stuck around.

And what Pokemon Go did was introduce people to using augmented reality through their phones, and is training a new shopping experience. That spike there that you see, the red line is the previous interest in augmented reality, this is a search for the phrase on the Google. The spike is obviously Pokemon Go, but you can see what happened right.

Increased interest because of Pokemon Go. And so for your customers, in the retail sector especially, there is an enormous amount of interest around that, and spending. This is what some marketers think it’ll look like. Either through your phone or glasses, it’ll light up products that your Facebook friends have recommended. So if they’ve liked a particular product, it’ll light that up for you.

It’s got a shopping list. It’ll ask you if it’s connected to the payment system, right, whether you want to use the points in your wallet, or so on. These are actually some real world hybrids that are connecting social to retail. This is one of a handful of gadgets, where if you go and you like the brand’s page on Facebook, it has a direct connection to this actual physical box that will change the number to 8673.

And not just for store wide, but this level of influence is being built through to the product level. These hangers have Facebook like counts for the individual products. If someone goes on the Facebook page and click I like this jacket, the hanger will note popularity. So you don’t even need to rely on your friends now. What would be a better experience than rely on the advice of strangers?

Well apparently it can happen now. Some of these attempts will be misguided. This is Lowe’s attempt at it. And this isn’t even augmented reality, this is virtual reality, right. So they’ve decided to put these Holorooms in two of their Toronto stores last year. They’re putting them in 19 of the stores down in the US this year.

But the problem with this is it’s a lot of floor space, it’s expensive technology, it requires a Lowe’s representative to be there with someone, and the graphics are not very good either. I mean, Pokemon Go has better graphics. So what you’ll begin to see, and probably have already began to see, is this shift away from these big sort of instillations that are more for PR than anything, and more into the buyer’s own tablets, the buyer’s own phones. In the future your customers, your customers that is, the retailers at least, will be focusing less on bringing people in to their stores and more on bringing the store to their customers.

This is a great example of a product called Wayfair. Uses augmented reality, right. The difference between augmented and virtual is virtual designs everything for you, augmented is it shows you something inside your world. So it uses the camera, and it does this so you can walk around and see it. My favorite example is the sofa, which they’re gonna do in just a moment. They basically point it at the floor where they want the sofa to be.

They drag it out onto the floor. And it opens like a shipping box would. And then you spin it around. And of course one tap, and you’ve bought it. Once someone finds something they like, they’re going to want to find an easy way to pay for it.

The Gap has been experimenting with this as well. Right, in this case you have to tell it your body size. And then you basically, it’s like a catalog, it’s just like any other catalog in sort of the real world. You go in, you pick what you want it to be, and then you can walk around.

This is done on stage. So you’re able to kind of see a bit of the guy that’s doing it. But he can get right down and turn around, and look at the back and look at the front. And get right up and see the weave pattern if he wants to.

And this is not just augmented reality, it’s happening already. Some of you may know the Sephora app, which I tried last week. Much to the confusion of our renovators, like why is Tod truing on virtual lipstick? So it’s augmented reality again. And in fact this is a kind of brilliant application for it, it’s really the same technology that Snapchat uses for its stickers. I like that one a lot.

Come on, it was pretty. Made me look like a pretty girl. And some marketers are using AR as an ad delivery vehicle. Not all with great results. Here it’s just like hold up the dollar bill in front of you. So good brand presence, good awareness I suppose, you know not a lot of conversion going on there.

And finally we should talk about the internet of things. Which is the biggest buzz word we’ve had since ecommerce, right. And that’s my wallpaper for Watch Dogs, ’cause I pressed the wrong button. To be fair what we’re really talking about is two devices, at least today. We’re talking about Amazon Echo and Google Home. There are other devices, Microsoft will have an entry, there are other ones out there on the marketplace, but these are the two vying for it, they are not available in Canada yet.

Although I got an Amazon Alexa, I got the Dot, through eBay. The Dot is usually, like in the US it sells for 39 bucks. They’re inexpensive. And it’s not, as I said, available in Canada. So on eBay it’s about 12,000 dollars Canadian, but it still works. You can see that IHS and the Gardner Group believe this market will be enormous.

We’re just at the very end of that scale there. In terms of economic impact, second only to the mobile internet and the automation of knowledge work. This is gonna be absolutely enormous. And we could see the power of how easy it was in the purchase phase. Right, on the payment side. We can see how easy it was because of this girl.

Have you heard of this story? This is Megan, she lives in Texas. And she learned that if she says Alexa order me a dollhouse, that it will ship a dollhouse to her.

And in fact, she also had the wherewithal to say and four pounds of cookies, swear to god. And the next day Amazon heard it, and the next day it arrived. And so it showed up on a local newscast, it was like a cute little story, right. They sort of ended up talking about the Amazon Alexa, and the Dots and so on.

And they went to this kids house, you know, and all that stuff. They talked to the mom and it was a great story. And then at the end of this newscast, which was remember a newscast about accidentally saying words into Alexa, at the end of the newscast the anchor said this. – I love the little girl’s take on it, Alexa ordered me a dollhouse. – And hundreds of people’s Alexas all heard it, and I swear, I couldn’t make this stuff up if I tried, and started ordering it.

So we have a long way to go. Little devices, you will see things like this from a purchasing point of view, look at how easy this is. This is from, again a massive leader in this space right, Amazon. These are literally little buttons you push.

You can buy these for 5.99, and then you get a 4.99 credit for your extra order, it pays for itself. And how do these work? Really, really easily. It’s one button for one product. They’re wifi enabled to the internet of things. When you run out of coffee, you push the coffee button.

When you run out of Tide, you push the Tide button. And it’ll alert you on your phone, so you don’t have to run in that problem little girl had. All of this, crazy world. And by the way they’ve got these things now as web buttons. They’ve just announced this, this morning.

When I booted up my computer this morning they had just announced this. These are the same buttons now, they’re on the website essentially. And so when you think about how quick this is.

You could be using just Amazon systems. You could be on the toilet, using Dash to order new toilet paper, Alexa to confirm it’s on its way, and Prime Now will deliver you the toilet paper while you’re sitting on the seat. That’s progress ladies and gentlemen. So let me wrap up.

We’ve talked about a lot of different things that are certainly coming down this space. In terms of how it’s gonna be impacting commerce, how it’s gonna be impacting your business, this is the only bot that I want personality, has not be invented. But one thing is really clear, and that is that the way people are buying is changing. And so the way you sell has to change as well.

It’s not going to be good enough anymore to just sell a terminal. It’s not. You know, you’ve got to be in that. Your retailers do not want to be in this space either, to be perfectly honest, they are just as terrified, when they see those little buttons and so on. Your ability to communicate to solve those problems is what’s gonna be paramount here.