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Embracing the
Self-Service
Economy
DANIEL CASTRO | ROBERT ATKINSON | STEPHEN EZELL
APRIL 2010
The Information Technology
& Innovation Foundation
ITIF
April 2010
Embracing the Self-Service Economy
Daniel Castro
Robert Atkinson
Stephen Ezell
T H E I NF OR MA T IO N T E C H NO LO GY & I NN OV AT I ON F OU NDAT IO N
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T H E I NF OR MA T IO N T E C H NO LO GY & I NN OV AT I ON F OU NDAT IO N
Table of Contents
I. Executive Summary ........................................................................................... 1
II. Introduction ......................................................................................................... 3
A. What is self service? ................................................................................ 4
III. Benets of self service ...................................................................................... 4
A. Benets for consumers ...........................................................................4
B. Benets for businesses ............................................................................ 5
C. Benets for the economy ....................................................................... 6
IV. Types of self-service technology ......................................................................7
A. Electronic kiosks ..................................................................................... 7
1. Banking ..............................................................................................7
2. Self-service gasoline stations ..........................................................8
3. Self-pay parking, tolls, and transit ................................................. 9
4. Food-ordering kiosks ...................................................................... 9
5. Airport and travel kiosks .............................................................. 10
6. Vending machines and “reverse” vending machines ................ 11
7. Self checkout ..................................................................................12
8. Retail kiosks .................................................................................... 13
9. Human resources kiosks ............................................................... 15
10. Digital photograph printing .......................................................15
11. Postal kiosks .................................................................................16
12. Electronic voting..........................................................................16
13. Health care kiosks ........................................................................ 17
14. Information kiosks ...................................................................... 17
B. Internet Applications ............................................................................ 18
PA GE I
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T H E I NF OR MA T IO N T E C H NO LO GY & I NN OV AT I ON F OU NDAT IO N
1. Online health ................................................................................. 18
2. Online banking .............................................................................. 18
3. E-learning....................................................................................... 18
4. Professional services ....................................................................19
5. Retail e-commerce ........................................................................ 20
6. Customer service ..........................................................................21
7. Online customization ................................................................... 22
8. Access to government services................................................... 23
9. Ticketing and reservations ...........................................................23
C. Mobile devices, including smart phones and smart cards ............... 24
1. Smart phones .................................................................................24
2. Mobile payments ........................................................................... 25
3. Smart cards .................................................................................... 27
4. Mobile self-service in the developing world ............................. 28
D. Phone Applications ............................................................................... 29
V. Impact of labor cost on self-service technology adoption .......................... 30
VI. Responding to concerns over self-service ....................................................31
A. Concern: Self-service simply shifts work to the consumer.............31
B. Concern: Self service eliminates consumer choice and robs
individuals of human contact ......................................................31
C. Concern: Self service destroys jobs .................................................... 32
D. Concern: Even if self-service boosts productivity, workers will not
benet ...............................................................................................34
VII. Policy Recommendations ................................................................................34
A. Resist and overturn policies that restrict business use of self-service
technologies ..................................................................................... 34
B. Support “prosumer” technologies like broadband, electronic IDs
and mobile payment systems ........................................................36
C. Encourage greater government use of self-service technology ..... 37
PA GE II
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D. Support creation of a Center of Excellence for Accessible Design
in IT-enabled Self Service ............................................................37
E. Increase the minimum wage in order to boost self-service
technology adoption ...................................................................... 37
F. Provide stronger safety nets for workers adversely affected by
technological change ......................................................................38
VIII. Conclusion ....................................................................................................... 38
PA GE III
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Figure 1: Estimated average bank transaction costs, by technology ..................... 6
Figure 2: ATM Deployment in the United States, 1994-2008 ............................... 8
Figure 3: Self-boarding gate at the Paris-Charles de Gaulle Airport ................... 10
Figure 4: eCycling Station from ecoATM ...............................................................11
Figure 5: Self-checkout terminals deployed by region, 2008. ............................... 13
Figure 6: Cost of HR application, self-service vs. manual ...................................16
Figure 7: E-commerce retail sales as a percent of total sales, 2000-2009 .......... 20
Figure 8: Anna, the IKEA online assistant .............................................................21
Figure 9: Implementation of e-ticketing for air travel worldwide, 2006-2009 .. 24
Figure 10: Electronic boarding pass on an iPhone. ............................................... 25
Figure 11: Mobile NFC Payment at a Japan Railway Station ............................... 26
Table 1: Deployment of Contactless Fare Payment in U.S. Mass Transit. ......... 27
PA GE IV
List of Figures and Tables
T H E I NF OR MA T IO N T E C H NO LO GY & I NN OV AT I ON F OU NDAT IO N
T
he past decade has witnessed a rapid growth in self service
that allows consumers to take on the traditional role of a
service worker in the provision of a service. Self service has
long existed—think of placing a call by dialing a telephone instead of
using a telephone operator or pressing a button in an elevator instead
of using an elevator operator—but its importance has grown as ad-
vances in information technology (IT) have created many opportu-
nities to leverage self-service technology for large gains in efciency
and convenience. Using computer kiosks, airline travelers check in to
their ights; on the Internet, consumers purchase products without
ever speaking to a sales agent; and, using a mobile phone, customers
check their bank balances and transfer funds. Self-service technology
continues to become more efcient and more convenient, and, as a re-
sult, increasingly organizations, including businesses, non-prots and
governments, are using self-service technology to operate more pro-
ductively and to better serve their customers.
Self-service technology has already
transformed entire industries, from
ATMs in banking to e-commerce in the
travel industry, resulting in signicant
savings for businesses which are passed
on to consumers in the form of lower
prices and better service. However,
even though self-service technology has
generated a wide range of benets and
savings for consumers, businesses, and
government, it is only the beginning.
Over at least the next decade, self-ser-
vice technology has the potential to be
We estimate that if
self-service technology
were more widely
deployed, the U.S.
economy would be
approximately $130
billion larger annually,
the equivalent of an
additional $1,100 in
annual income for every
household.
Executive Summary
a major force for growth in productivity
and improvements in quality of life. We
estimate that if self-service technology
were more widely deployed, the U.S.
economy would be approximately $130
billion larger annually, the equivalent of
an additional $1,100 in annual income
for every household.
These savings could not be coming at a
more crucial time. Most national econo-
mies will need the power of self-service
technologies if they are to avoid serious
TH E IN FO RM ATIO N TE CH NO LO GY & I NN OV ATI ON FO UNDAT IO N
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economic problems stemming from signicant growth
in the number of retirees, a situation that will be par-
ticularly acute in Europe, Japan, and the United States.
In the United States, for example, the number of retir-
ees for every 1,000 working age adults is projected to
grow from 213 today to 346 by 2030. For Social Secu-
rity recipients in 2030 to not see a decline in their in-
ation-adjusted payments without workers seeing a de-
cline in their after-tax incomes, economic productivity
will have to increase by 62 percent. Unfortunately, the
Social Security Administration estimates productivity
will grow just 40 percent. As a result, in 2030, either
worker incomes after Social Security taxes are deducted
will be signicantly lower, or Social Security benets
will be lower, or both. Self-service technologies prom-
ise to be a major source of needed productivity growth,
enabling the United States, Japan, Europe, and other
nations facing demographic challenges to realize such
growth without reductions in wages or benets.
But these benets will not automatically occur unless
the right policies are in place and the wrong ones are
avoided. First, governments should avoid putting in
place restrictions on self-service business models and
processes. This means that policymakers must resist
the efforts of special interest groups that press for re-
strictions in technology to protect their economic or
social interests at the expense of the average citizen.
Second, where appropriate, governments should proac-
tively promote self-service delivery of government ser-
vices. For example, governments should pass along to
citizens the savings from using lower-cost self-service
options. Governments should also help create a climate
conducive to expansion of self-service technologies.
This means that government should support the de-
velopment and deployment of technologies that enable
self-service, like broadband, electronic IDs, and mobile
payment systems. In the United States in particular,
Congress should increase the minimum wage thereby
providing rms with more incentive to invest in self-
service technology, while at the same time helping to
boost the incomes of low income Americans. In ad-
dition, Congress should establish an academic Center
of Excellence to develop best practices for accessible
design for self-service technology. Finally, we recom-
mend that policymakers establish stronger safety nets
for workers adversely affected by technological change
so that the workforce can more easily adapt to a rapidly
changing economy.
Self-service technology offers a broad set of benets
to consumers and businesses and has the potential to
contribute even more to our national prosperity and
quality of life. While self-service technology is wide-
spread, it is still relatively new and will only continue
to improve in quality over time. However, policymak-
ers must avoid enacting policies to restrict self-service
while at the same time putting in place appropriate
policies to stimulate the self-service economy to realize
these benets.
T H E I NF OR MA T IO N T E C H NO LO GY & I NN OV AT I ON F OU NDAT IO N
Over at least the next
decade, self-service
technology has the
potential to be a major
force for growth in
productivity and
improvements in quality
of life. However, policy-
makers must avoid
enacting policies to
restrict self-service while
at the same time putting
in place appropriate
policies to stimulate the
self-service economy to
realize these benets.
Embracing the Self-Service Economy
Over the past decade a conuence of factors—including
technological advances and the emergence of new busi-
ness models—have contributed to a rapid growth in in-
formation technology (IT)-enabled self service that allows consumers
to take on new roles in the provision of services. Using computer
kiosks, airline travelers check in to their ights; on the Internet, con-
sumers purchase products without ever speaking to a sales agent;
and, using a mobile phone, customers check their bank balances and
transfer funds. Self-service technology continues to become more ef-
cient and more convenient, and, as a result, increasingly organiza-
tions, including businesses, non-prots and governments, are using
self-service technology to operate more productively and to better
serve their customers. Today, self-service technology has become a
xture in most Americans’ lives to the point that the technology is
often taken for granted.
However, even though self-service
technology has generated a wide range
of benets and savings for consumers,
businesses, and government, it is only
the beginning. Over at least the next
decade, self-service technology has the
potential to be a major force for growth
in productivity and improvements in
quality of life. Most national economies
will need the power of self-service tech-
nologies if they are to avoid serious eco-
nomic problems stemming from signif-
icant growth in the number of retirees,
a situation that will be particularly acute
in Europe, Japan, and the United States.
In the United States, for example, the
number of retirees for every 1,000 work-
ing age adults is projected to grow from
213 today to 346 by 2030. For Social Se-
curity recipients in 2030 to not see a de-
cline in their ination-adjusted payments
without workers seeing a decline in their
after-tax incomes, economic productivity
will have to increase by 62 percent. Un-
fortunately, the Social Security Adminis-
tration estimates productivity will grow
just 40 percent. As a result, in 2030, ei-
ther worker incomes after Social Security
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taxes are deducted will be signicantly lower, or Social
Security benets will be lower, or both.1 Self-service
technologies promise to be a major source of needed
productivity growth, enabling the United States, Japan,
Europe, and other nations facing demographic chal-
lenges to realize such growth without reductions in
wages or benets.
Unfortunately policymakers and government leaders
do not always recognize the value of the self-service
economy nor appreciate its importance to increasing
standards of living. If self-service technology were
more widely deployed, the U.S. economy would be ap-
proximately $130 billion larger annually, the equiva-
lent of an additional $1,100 in annual income for every
household.
But these benets will not automatically occur unless
the right policies are in place and the wrong ones are
avoided. This report provides an overview of the ben-
ets of self-service technology and the current trends
in the eld. It also discusses the policy implications of
the self-service economy and recommends, for policy-
makers and government leaders, the following:
Resist and overturn policies that restrict busi-
ness use of self-service technologies
Support “prosumer” technologies like broad-
band, electronic IDs, and mobile payment
systems
Encourage greater government use of self-ser-
vice technology
Support creation of a “Center of Excellence for
Accessible Design in IT-enabled Self Service”
Increase the minimum wage in order to boost
self-service technology adoption
Provide stronger safety nets for workers ad-
versely affected by technological change
The self-service economy is a vital component of the
IT revolution—the principal driver of the economy—
and success with self-service technology is critical to
creating a more intelligent and connected world.
What is self service?
Self service is the process by which consumers en-
gage in all or a portion of the provision of a service or
product. Self service has long existed—think of do-it-
yourself homeowners doing the work of professional
contractors, or self-help books substituting for thera-
pists—but its importance has grown as IT has created
many opportunities to leverage technology for large
gains in efciency and convenience. Many of these
changes have become ingrained into Americans’ way
of life. Telephone operators have been replaced by au-
tomatic telephone switching that lets individual dial a
phone number directly. Elevator operators have been
replaced by electronic control systems that let people
operate elevators directly. At bowling alleys, players
can simply push a button to activate automatic pin-
setters and reset the bowling pins, rather than using
pinboys for this function. At grocery stores, shoppers
pick out their own items rather than taking a list to a
central counter and having a clerk get their goods for
them.
With self service, the consumer lls a specic ser-
vice role, such as bagging her own groceries, which a
service employee would otherwise have to complete.
Self service is different from automation, although
there are similarities in that they both involve making
a service more efcient. Automation is used to limit
the tasks a service employee must complete, such as
a retailer having a cashier use a bar code scanner to
automatically identify and price an item rather than
having to enter the price manually. Gas stations pro-
vide a good example of the distinction between self
service and automation: self service allows a consumer
pump to her own gas in lieu of an attendant, whereas
automation allows an automatic car wash to replace a
crew that washes cars by hand.
BENEFITS OF SELF SERVICE
The self-service economy has grown because self ser-
vice provides benets to consumers, organizations,
and the economy as a whole.
Benefits for consumers
Consumers often have the option of choosing to use
self-service technology: at a bank, a customer may
choose between using a teller and using an automated
teller machine (ATM); at a hotel, a traveler may choose
between using a vending machine and using room
service; and, at a gas station, a customer can choose
between pumping her own gas and having an atten-
dant do it. Consumers continue to choose self-service
technology for a variety of reasons including faster
service, more convenience, and ease of use. Price can
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also be a factor when there are monetary savings asso-
ciated with using the self-service option. For example,
in most states, a driver pays a premium at a gas sta-
tion for an attendant to provide the service, which is
another way of saying that a driver receives a discount
for pumping her own gas. In other cases, such as with
banks, there is typically no extra fee associated with us-
ing the human teller versus using the ATM (although
some banks have experimented with teller fees).2
Self-service technology can provide consumers greater
convenience, accessibility, and ease of use. Convenience
is a big factor: self-service technologies often make a
business available 24 hours a day, seven days a week,
rather than being limited to traditional working hours.
Consumers often nd self-service technology empow-
ering; using the technology, the customer can control
the service encounter and not feel rushed or pressured.
While some businesses may think their customers pre-
fer face-to-face encounters, this is not always true.3
In a 2009 consumer survey, 44 percent of respondents
indicated that they would prefer to use a hotel kiosk
so that they would have no interaction with the clerk.4
And often, when there are long lines at check in, even
more guests prefer kiosk check-in. Some consumers
also prefer to use self-service technology to protect
their privacy. For example, patients at a hospital may
prefer the anonymity of registering with a kiosk rather
than a receptionist. Similarly, consumers may prefer
to buy certain personal goods online rather than in-
person at a retail store.
Self-service technology can also make service encoun-
ters more accessible for individuals with disabilities.
For example, individuals with mobility disabilities may
nd online shopping more accessible than shopping in
brick-and-mortar stores. Individuals can take advan-
tage of accessibility options in Web browsers to access
online applications and services. Kiosks can also offer
features to make them accessible to individuals with
disabilities, such as ATMs that have a headphone jack
so that users can opt to use an audio interface to com-
plete a banking transaction. Kiosks and Internet-based
applications can also offer features such as multilingual
interfaces to make services more user-friendly. For ex-
ample, a car rental company may use a multilingual
kiosk at an international airport to serve its foreign
customers, thereby offering service in more languages
than any single employee could possibly provide.
Benefits for businesses
Businesses must utilize IT to be competitive in
the service economy. The IT revolution has led
to a signicant growth in productivity, and the
rms with the highest level of IT investments show
the highest levels of productivity per worker.5
While most industries have successfully used IT to
increase productivity of their back ofce workers and
frontline service employees, there remains signicant
opportunity to have customers use technology to make
the delivery of a good or service more efcient. By de-
ploying self-service technology, companies can further
apply the productivity benets of IT to their business.
In banks, the average cost for an online transaction is only
$0.20, a fraction of $4.25, the average cost of a transaction at a
branch location.
For many types of services, the customer has always
been a part of the production and delivery process.6
For example, tax accountants have always relied on
their customers to provide them with the information
they need to complete the tax forms. From a business
point of view, these customers are “partial employees”
or “co-producers” because they make up an integral
part of the service delivery process.7 Self-service tech-
nology is one way for companies to manage these cus-
tomers to help facilitate the service delivery.
Businesses invest in self-service technology because
it reduces their costs and helps them provide a bet-
ter quality product or service. Using self-service tech-
nology frees up workers that can either be reassigned
to more protable jobs or eliminated to reduce pay-
roll costs. For example, a retailer that introduces self-
checkout can reassign cashiers to sales or customer ser-
vice jobs to increase sales and customer satisfaction or
cut these jobs to save on overhead. Many organizations
use self-service technology to free up workers from
routine transactions so that they can focus on higher
value work. For example, in hospitals, medical staff
that previously focused on clerical work can instead fo-
cus on the health care needs of their patients. In banks,
ATMs now handle most routine banking transactions
thereby allowing tellers to focus on providing addi-
tional nancial services and customer support. The
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end result for the consumer is more efciency, more
convenience and better service. Self-service technol-
ogy can also standardize the customer experience and
allow companies to better target customers for up-sell-
ing. For example, a check-in kiosk at an airport can be
programmed to try to sell travelers upgrades to their
ights.
Using self-service technology can also help a company
increase operational efciency. For example, e-com-
merce can cut costs dramatically for a business and it
can also cut inventory by 20 to 25 percent because it
allows rms to respond more rapidly to orders. In ad-
dition, e-commerce can reduce incorrect orders and
other inaccuracies and save companies billions. The
savings from self-service technology can be seen at
banks. As shown in Figure 1, the average estimated
cost for an online transaction is only $0.20, a fraction
of $4.25, the estimated cost of a transaction at a branch
location.8
Benefits for the economy
The economy also benets from self-service technolo-
gy. Per-capita income growth is the single most impor-
tant indicator of a nation’s economic well being. And
the growth in per-capita income is largely a function of
the growth of productivity (the amount of output per
hour of work). Higher productivity growth goes a long
way in solving pressing societal problems, including
Social Security shortfalls, lagging income growth, the
national debt, and the ability of society to spend in key
areas (e.g., transportation, environmental protection,
and health coverage). In addition, if advanced nations
sustain or even increase their productivity growth,
within a decade workers could have not only higher
incomes, but also reduced overall work time and an
overall increase in the time they can spend with their
families and on leisure. The importance of embracing
self service technology applies to not only the United
States but also Europe, Japan, and other nations fac-
ing economic challenges from aging populations. Self-
service technology is a labor-saving device and these
savings translate into more efcient output. Embrac-
ing productivity-enhancing self-service technologies is
necessary to maintain the current standard of living for
their workers and retirees in these countries.
In most advanced economies, the most substantial
gains in per-capita income and productivity growth
until around the 1970s came from improving produc-
tivity in goods production (e.g., farming, mining, man-
ufacturing, etc.). Companies used technology to auto-
mate processes and because these sectors were such
a major part of economies, improvements in produc-
tivity had large effects on overall per-capita income.
As efciency gains were achieved in the goods sector,
however, if economies wanted to grow, they had to
nd ways to boost efciencies in the service sector. For
the last 40 or so years companies have used technology
to streamline many service processes, particularly what
are called “back-ofce” processes, such as accounting,
logistics and ordering, information processing and oth-
ers. As a result, many of the opportunities for produc-
tivity gains have already been achieved there. The next
big frontier for productivity is on what is called the
“front ofce”, aspects of business and government that
deal with the customer in functions that largely entail
an exchange of information (e.g., a ticket, for example,
is simply a form of information, letting someone board
a bus or enter a theatre). Self-service technology is crit-
ical because it enables improvement in the efciency
of a large array of processes in the economy, which in
turn enables lower prices and higher wages.
The potential economic benets of more use of self-
service technology are substantial. We estimate that if
self-service technology was more widely deployed, it
would contribute an additional $130 billion to the U.S.
economy annually. Put differently, this means that the
self-service economy would create $1,100 in additional
income per U.S. household.10
Figure 1: Estimated average bank transaction costs, by
technology9
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
Online
Banking
Interactive
Voice
Response
ATM Cash
Withdrawal
or Imaged
Deposit
ATM
Envelope
Deposit
Call
Center
Branch
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TYPES OF SELF-SERVICE TECHNOLOGY
Self-service technology allows a consumer to take on
a role in the delivery of a service or product. In some
instances, self-service technology is not necessary for
self service. For example, both a hotel guest and a maid
could clean a room—the decision as to whether the
customer or the business provides the service is more
a question of luxury than of capability. But self service
is on the rise today because of the advances enabled
by the IT revolution such as the Internet and mobile
phones. In addition, self service is the natural outcome
of technology that has reached maturity. When tech-
nology was new, it was often difcult to use and it re-
quired workers with specialized skills for operation.
However, over time, self-service technologies have be-
come more user-friendly to the point that the average
person no longer requires a specialist to operate the
technology.
Currently, most self-service technology uses one of
four channels: electronic kiosks, the Internet, mobile
devices, and the telephone. Some, but not all, of the ap-
plications delivered over these channels exclusively use
self service. However, some services offer both pure
self-service options as well as hybrid solutions that
combine self-service technology with personal service.
For example, at the airport travelers may use a kiosk to
check in, but interaction with airline staff is necessary
at the baggage drop. Similarly, a taxpayer using an on-
line tax preparation service like Intuit’s TurboTax may
still talk by phone to one of its tax professionals for
personal tax advice.
Electronic kiosks
Kiosks provide stand-alone solutions to provide users
access to information or a service, such as checking an
account balance at an ATM or checking in for a ight
at an airport kiosk. Many of these kiosks replace small
booths or workstations that previously required an at-
tendant to complete a routine task. Today’s technology
makes kiosks more affordable and convenient. Ad-
vances in technology like touch screen displays, card
readers, scanners, thermal printing, Power over Ether-
net (PoE+), wireless networks, and the availability of
broadband Internet access have made deploying con-
sumer-friendly computer kiosks a cost-effective option
for many services. As a result kiosk implementations
have ourished: in 2008, self-service kiosk transac-
tions in North America totaled $607 billion and will
likely reach $1.7 trillion by 2012.11 Today, approximate-
ly 47 percent of kiosks solutions are being deployed
in the retail sector, 41 percent in the hospitality and
commercial services sector, and the remainder divided
between health care, government, and other sectors.12
Advances in technolog y like touch screen displays, card readers,
scanners, thermal printing, Power over Ethernet (PoE+),
wireless networks, and the availability of broadband Internet
access have made deploying consumer-friendly computer kiosks a
cost-effective option for many services.
BANKING
Many banks and nancial services providers offer self-
service options. Automated teller machines (ATMs) are
one of the earliest examples of self-service technology.
First introduced in the 1970s, the technology has our-
ished. Today over 1.8 million ATMs are in operation in
virtually every country, and globally consumers con-
duct over 44 billion transactions annually on ATMs.13
With one ATM for every 284 households, the United
States accounts for 14 billion ATM transactions an-
nually, and over 90 percent of consumers use ATMs.14
As shown in Figure 2, the number of ATMs deployed
in the United States increased sharply after 1996 when
Visa and MasterCard began allowing surcharges on
ATM transactions. Unlike other transactional fees,
which are divided between the bank, the network
operator and the ATM owner, ATM operators could
collect the new surcharge fees. As a result, the busi-
ness case for deploying ATMs became more appeal-
ing for both nancial institutions and others. In recent
years the number of transactions at ATMs has slowed
or declined, in part due to the growth in point-of-sale
(POS) cash-back options at retailers.15
The rst ATMs were located at bank branches, but
banks (and their customers) quickly saw the value of
providing additional machines in convenient locations
like shopping malls, grocery stores, and airports. The
technology replaced the bank’s need for tellers and also
offered convenience to banking customers previously
restricted to limited banking hours by giving them 24-
hour access to their bank accounts seven days a week.
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As technology has changed, ATMs have evolved to
handle increasingly more complicated transactions
and to provide customers greater convenience. Today’s
ATMs not only allow a bank’s customers to make with-
drawals, deposits, check balances, and make transfers,
but ATMs may offer additional services, such as sell-
ing postage or concert tickets. Most ATMs also offer
accessibility features such as voice prompts to aid vi-
sually impaired customers and multilingual options to
better serve their customers.
With today’s digital image processing technology,
ATMs can also process deposits more efciently
through an ATM. Previously to make a deposit, a cus-
tomer would have to place the cash or checks to be
deposited in an envelope, place this envelope inside the
ATM, and then a bank employee would have to come
to the ATM daily to collect the deposits, open the
envelopes, and process the transactions. Because the
bank often could not verify the contents of the deposit,
banks often imposed restrictions on the availability of
funds deposited by ATMs. Consumer condence with
ATM deposits also suffered because without a detailed
receipt, consumers had little evidence to back up their
claims in the event of a dispute.
Today’s ATMs are more advanced and can better han-
dle check and cash deposits. Newer ATMs can auto-
matically scan checks, use optical character recogni-
tion (OCR) technology to process the deposits in real
time, and allow customers to instantly receive credit
for the deposit. Consumers can also receive a receipt
with a printed image of their check deposit, which pro-
vides them evidence of their deposit in the event of a
dispute. In addition, by eliminating the envelope for
deposits, banks can eliminate up to 75 percent of the
transaction cost. In the United States, this change was
enabled by the Check Clearing for the 21st Century
(the Check 21 Act) that gave digital images of checks
the same legal status as the original paper check.17
This legislation went into effect on October 28, 2004.
Newer ATMs can also implement cash recycling and
allow cash that is deposited into the ATM to be auto-
matically processed so that the same cash can also be
used for withdrawals. Cash recycling can thus reduce
the cost of operating ATMs.
The low cost of self-service technology is also making
it possible to extend nancial services to the more than
10 million Americans who are “unbanked.” Financial
institutions can offer self-service options at kiosks like
check cashing and bill pay, even to individuals who are
not formally customers of the institution. For exam-
ple, 7-Eleven has installed over two thousand kiosks
in its stores that allow customers to cash checks, sell
money orders, transfer money abroad, and pay bills.18
In addition, consumers can use self-service kiosks to
buy prepaid debit cards and reload value.
SELF-SERVICE GASOLINE STATIONS
Self-service gasoline stations are one of the most
prevalent self-service technologies. Instead of having
an attendant pump gas, self-service gas stations allow
customers to pump their own gas, and in most cases,
use a self-pay option to pay for the gas at the pump.
Although full-service gas stations provide additional
services—the attendant wipes windshields, checks tire
pressure, and checks the oil level—they have largely
been replaced by more cost-effective self-service sta-
tions. Where full-service stations do operate, they usu-
ally charge a premium for this service.
However, in the United States, two states—New Jer-
sey and Oregon—have resisted self-service gas sta-
tions. Originally, the New Jersey Legislature created
the ban in 1949 because of safety concerns that have
become obsolete with today’s equipment. Today these
states continue to resist repealing these bans because
of the impact it would have on jobs. In New Jersey,
for example, gas stations employ 36,000 individuals.19
These bans, however, translate into higher prices for
consumers. The Federal Trade Commission notes that
consumers pay between 2 and 5 cents more per gallon in
states with a ban on self service than in those without it.20
This means that the average Oregon or New Jersey driver
Figure 2: ATM Deployment in the United States
1994-200816
1994 1996 1998 2000 2002 2004 2006 2008
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
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pays almost $30 more per year just so several thousand
people can be employed pumping gas. Additionally, gas
station attendants may face health risks from prolonged
exposure to the chemical compounds in gasoline.21
The latest effort to lift the ban in New Jersey recently
failed, as the state gas station trade association mobi-
lized opposition.22
SELF-PAY PARKING, TOLLS, AND TRANSIT
Parking lots, garages, toll bridges, and toll roads used
to require attendants to collect payments. Today, au-
tomated payment systems allow motorists to pay for
parking without the use of an attendant. For example,
a driver may use a payment kiosk to pay the park-
ing fee using a credit card, debit card, smart card, or
cash. Other systems automatically identify drivers that
swipe their credit card or smart card upon entering and
exiting the car park, eliminating the need for a paper
ticket. Cities like Philadelphia are deploying hundreds
of self-service parking kiosks that replace traditional
coin-operated parking meters. Using these parking ki-
osks, drivers pay for a xed amount of time and then
place their receipt, which shows an expiration time, on
their dashboard. These systems eliminate the expen-
sive process of needing meter coin collectors to regu-
larly visit each parking meter to collect coins, as well as
the process of then sorting and depositing the coins.
Similarly, drivers on toll roads increasingly use auto-
mated lanes that allow drivers to pay a toll without
stopping at a toll booth station. Toll roads using the
E-ZPass systems, for example, use wireless transpon-
ders in vehicles that automatically debit the customer’s
account. Transit systems, such as the Metro system in
Washington, D.C., have also upgraded their payment
systems to make it more efcient. Bus riders can simply
pass a contactless smart card over a reader to pay their
fare and board the bus, reducing the need for drivers
to collect fares. These automated systems are also used
by riders to enter the subway platform. This not only
saves transit districts money, it reduces the amount of
time it takes to board or enter. In some nations, rather
than using a smartcard, travelers can user their cell
phones as the payment device by simply waving their
cell phone over the reader.
FOOD-ORDERING KIOSKS
Self-service in the food industry is not new; coin op-
erated cafeterias like the Automat rst opened in the
United States in 1902.23 Today, quick serve restaurants,
including major fast food chains and convenience
stores such as Sheetz and Wawa, have begun imple-
menting self-service kiosks to improve business and
provide better service to their customers. For example,
Subway is piloting 70 self-service kiosks in its sandwich
shops for customers to place their order and pay for
their meal. The kiosks can be installed at the restaurant
or in a satellite location so that customers can place an
order for pickup or delivery.
Eliminating language barriers is important to getting a
customer’s order correct, which boosts customer satisfaction and
leads to less waste.
Using kiosks to take orders means fewer employees
need to work at the counter and more employees can
work on food preparation. Restaurants that implement
self-service kiosks can see a 10 to 20 percent increase in
throughput (the rate at which customers are served).24
In addition, kiosk sales generally are higher, as kiosks
are able to up-sell more effectively than a typical em-
ployee. Kiosks also can offer multilingual service. This
not only allows the customers to choose the language
they want to use to place an order, it also allows the
employees to choose the language in which they want
to receive the order. This feature is especially useful
when the primary language of the customer is not the
same as that of the employee receiving the order. Elim-
inating language barriers is important to getting a cus-
tomer’s order correct, which boosts customer satisfac-
tion and leads to less waste. Finally, self-service food-
ordering kiosks can also be used to satisfy regulations
enacted in various jurisdictions that require restaurants
to make available nutritional information about their
products easily available to their customers.
Similar electronic ordering systems have been deployed
at the delis of grocery stores. For example, the Stop &
Shop grocery chain in the northeastern United States
offers a touch screen kiosks where customers can place
their deli orders. At the kiosk, customers can swipe
their grocery store loyalty card so that they can see
their previous orders or enter a new one. After placing
his order, the customer receives an order number and
can wait for their order, or enter a cell phone number
and receive a text message when the order is ready.25
Electronic order systems are also being deployed at
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drive-through restaurants to make placing orders
faster and more accurate. Drivers can now more easily
place orders from their car with recent improvements
in touch-screen technology, such as touch screens that
respond to both gloved and bare ngers, and graphic
interfaces that automatically adjust to the height of the
driver’s car.26
The cost of checking in a passenger with an airline agent is
approximately $3 versus only $0.14 with a kiosk.27
AIRPORT AND TRAVEL KIOSKS
Airlines have invested heavily in airport kiosks to al-
low customers to manage their reservations. Airport
kiosks with touch screen displays, magnetic stripe card
readers, and bar code scanners are now common in
airports around the world. Using these kiosks, custom-
ers have the opportunity to check in for their ight,
change or upgrade their seats, modify their reserva-
tion, and even purchase a ticket. Travelers without
baggage can check in and then proceed directly to the
gate; travelers with baggage can check in and then take
their luggage to the baggage drop.
Check-in kiosks, combined with online check in, have
enabled airlines to generate substantial gains in pro-
ductivity as processing a passenger with a kiosk is more
efcient than processing a passenger using only air-
line agents. The cost of checking in a passenger with
an airline agent is approximately $3 versus only $0.14
with a kiosk.27 Alaska Airlines, for example, has found
that with 84 percent of customers using self-service
check in, they have boosted the number of passen-
gers processed per agent from 21 to 55 per hour.28
Some airports, such as Newark Liberty International
Airport, have invested in common-use check-in kiosks
that serve all of the airlines in a particular terminal
rather than dedicated kiosks for each airline, allowing
each kiosk to serve more customers, with less idle time.
The International Air Transport Association (IATA)
has launched a “Fast Travel” initiative designed to
bring more self-service options to air travelers. In part
this is to address customer demand—according to a
2009 survey, over half of all passengers worldwide want
more self-service options, in large part to have more
control and reduce length of time waiting in lines.30
By providing more self-service options, airlines will
give passengers more control over the departure and
arrival process, reduce passenger wait time in lines,
and save the airlines money. For example, airlines have
introduced kiosks that allow passengers to tag their
checked baggage themselves rather than requiring an
agent to handle this transaction. Airlines are also up-
grading their kiosks to scan and forward documents
to government ofcials, so that travelers can submit
their travel documents from a kiosk, rather than going
to a check-in counter to show their identication. On
some airlines, passengers that miss a ight or encoun-
ter a cancelled ight can use kiosks to rebook a ight,
rather than having to wait to speak to an agent. Simi-
larly, if passengers are missing luggage, they can use a
kiosk to report the issue rather than having to locate
an agent. Finally, some airlines, such as Air France, are
introducing self boarding, an automated boarding gate
that allows passengers to board through an automated
turnstile. IATA estimates that once fully implemented
all of these initiatives will save $1.6 billion annually
across the entire industry.31
Governments are also using self-service technology,
combined with biometric-enhanced passports, to im-
prove the accuracy and speed with which travelers can
pass through customs and immigration. For example,
the Australian government has established SmartGate
kiosks at its international airports to allow travelers
with Australian or New Zealand e-passport holders
to self-process through the passport control area.3 2
The SmartGate system uses data in the e-passport and
Figure 3: Self-boarding gate at the Paris-Charles de Gaulle
Airport29
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facial recognition technology to perform the customs
and immigration checks that are usually conducted
by a customs ofcer. SmartGate will be gradually
opened to other nationalities that have Internation-
al Civil Aviation Organisation (ICAO)-compliant
e-passports. In the United States, the Customs and
Border Protection (CBP) operates various “trusted
traveler” programs that allow low-risk, pre-approved
individuals to use kiosks for expedited border cross-
ing. For example, international travelers can enroll in
the Global Entry program after paying a fee, passing a
background check, submitting biometric information
including a ngerprint and photograph, and partici-
pating in an in-person interview with a CBP ofcer.
Once enrolled, travelers can use an automated kiosk
and express lane to go through passport control more
quickly.33
Others in the travel industry are using kiosks as well.
Some hotels are beginning to allow guests to avoid
lines and check in at kiosks that can look-up a reserva-
tion, allocate a room, and dispense a room key. Hotels
also offer automated check out, for example, through
a dedicated electronic kiosk in the hotel lobby (where
guests can print a receipt) or through an application
accessible through the in-room TV, so that travelers
can more easily complete their stay. Car rental compa-
nies have deployed electronic kiosks in airports that
allow customers to easily complete their car reserva-
tion. Using a kiosk, customers can quickly enter their
personal information, scan their driver’s license, and
then purchase any upgrades, insurance, and add-ons
like navigation systems or child seats. The technology
frees employees from mundane tasks like data entry
and allows them to focus on providing a best cus-
tomer experience. And asking the customer to use the
technology does not seem to slow down the service
encounter; Hertz, which has deployed check-in kiosks
at airports around the world, found that the average
time for check in was only about ve minutes.34
VENDING MACHINES AND “REVERSE” VENDING MACHINES
Vending machines are one of the most basic self-
service technologies that replace vendors selling in-
dividual items. Vending machines today sell every-
thing from beverages to food to retail products. The
electronics retailer Best Buy has introduced Best Buy
Express, self-service kiosks in airports that allow
travelers to buy small electronics like chargers, music
players, digital cameras, and headphones. Kiosks are
also used to sell tickets, for example movie tickets at
theaters and rail tickets for subway and train systems.
Even traditional vending machines are being upgrad-
ed to advanced interactive touch screen displays. For
example, at the 2008 Beijing Olympics, Coca-Cola in-
troduced the Video Vendor, a vending machine with
a 46-inch touch screen display showing video, sound,
and graphics. Not only can vendors use this to cre-
ate a more interesting encounter for their customers,
customers can use the Video Vendor to nd out more
product information, such as the nutritional value of
a snack. Coca-Cola has also developed Freestyle, a
robotics-enabled kiosk that lets customers create their
own unique beverage to suit their preferences. Free-
style uses 30 different avor cartridges from which
customers can mix and match to produce more than
100 different drinks.35
DVD rental kiosks have also becomes popular in re-
cent years with self-services rentals from Redbox and
Blockbuster. Redbox, launched in 2002, now offers
$1 per night DVD rentals at over 19,000 kiosk loca-
tions in the United States, including at grocery stores,
pharmacies, and fast food restaurants. Each kiosk can
hold approximately 630 DVDs and offers around 200
Figure 4: eCycling Station from ecoATM39
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different movies. Customers use a touch screen display
to select an available movie and then swipe their cred-
it card to rent a DVD. Customers are then charged a
xed rate per night until they return the DVD at any
Redbox kiosk. Using the Redbox Web site, customers
can also choose a movie online and then use the com-
pany’s real-time inventory tracking system to reserve
a DVD to pick up at the location of their choice.36
Because of the convenience and pricing model, Red-
box has quickly obtained a 19 percent market share in
the rental market.37
Smarte Carte, Inc. operates a variety of self-service de-
vices familiar to most travelers in the United States.
The company created the self-serve baggage cart in
the 1970s and since then has upgraded the devices as
technology improves to make change, accept credit
cards, and be remotely managed electronically. Today
self-serve vending machines at the airport provide ac-
cess to luggage carts, storage lockers, charging stations,
and Internet access, providing automated solutions to
services that in the past would have require an atten-
dant. For example, the “Charge Carte” has standard
power cables for cell phones, MP3 players, and other
portable electronic devices, allowing customers to rap-
idly charge their device. Airports even offer self-serve
massage chairs, which replace the 15-minute shoulder
massages offered by airport masseuses.
Similar self-service technologies have also been de-
ployed at airports, train stations, hotels, and entertain-
ment venues. For example, amusement parks and water
parks around the country provide their customers with
wristbands embedded with radio-frequency identica-
tion (RFID) tags that give them access to a variety of
services. For example, at Hyland Hills Water World in
Colorado guests can use digital kiosks to load funds
onto their RFID wristbands and then use the wrist-
bands to purchase food or rent a storage locker, elimi-
nating the need to carry keys or cash. The wristbands
can also be used to automatically identify guests (for
example, to locate a lost child), run loyalty or season
pass programs, and provide keyless access to the guests’
rooms at resorts.38
In addition to traditional vending machines where con-
sumers put in money and in return get a product, vari-
ous “reverse vending machines” allow consumers to
deposit some type of goods and receive a payment in
return. Perhaps the best known of these is the Coin-
Star “Coins to Cash” machines, self-service kiosks
that consumers can use to automatically count their
spare change, and receive a gift card or voucher for the
cash value. Found in high-trafc locations like grocery
stores and banks, these machines not only get more
coinage back into the economy, thereby reducing the
need of governments to produce coins—an expensive
process—they also reduce costs for banks by reducing
the need to handle coins.
Another innovative “reverse vending machine” is the
ecoATM kiosk which is billed as an automated recy-
cling station for mobile phones and other consumer
electronics like MP3 players, GPS systems, and laptop
computers. The kiosks can identify the consumer elec-
tronic device, complete a visual inspection, and calcu-
late a secondary-market value. For consumers, the pro-
cess is effortless—they insert their recyclable electron-
ic product, receive a quote, and, if they accept, their
device is binned and they can receive gift card or make
a charitable donation for the value of their device.4 0
In 2008 more than $192 billion in retail sales were purchased
using self checkout, representing almost 5 percent of total retail
sales.44
SELF CHECKOUT
Self checkout is one of the most widespread applications
of self-service technology. Using self-checkout systems
retailers can allow their customers to scan, bag, and
pay for their own items, rather than having to employ a
worker to complete the same task. Given that there are
over 60 billion transactions a year in retail stores alone,
68 percent of which are in grocery, gas, and conve-
nience stores, the potential savings are signicant as a
large number of these transactions could easily be done
with self-service applications.41 Already self checkout
is widely deployed in retail locations such as grocery
stores, hardware stores, and warehouse clubs. As of the
end of 2008, there were over 90,000 self-checkout sys-
tems deployed globally, and this number is expected to
quadruple by 2014.42 An online survey found that 68
percent of U.S. adults who use the Internet have used
self checkout at a retail store and 21 percent have used
an in-store kiosk.43 Most of these self-checkout systems
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are in North America, where in 2008 more than $192
billion in retail sales were purchased using self check-
out, representing almost 5 percent of total retail sales.44
Self checkout benets both consumers and businesses.
For example, it can reduce the amount of time custom-
ers spend waiting in line, one of the biggest complaints
of customers. NCR, a leading provider of self-check-
out devices, estimates that the technology can reduce
the average queue time for a customer by 40 percent.
Typically only one attendant is needed to manage four
or six self-checkout stations. Self-checkout can also
lead to lower costs for consumers if stores reduce their
labor costs, or a higher quality consumer experience
if workers are redeployed to other tasks. One U.S.
grocery store chain found that after implementing
self-checkout, 10 percent of their sales were from self-
checkout and they were able to redirect 7 percent of
their front-end labor to other store operations.46 The
average use is much higher: data from self-checkout
installations at major grocery stores has found that 15
to 40 percent of the daily transaction volume and 12 to
30 percent of the daily sales volume of these stores are
now being handled by self-checkout machines.47 The
UK-based retailer Tesco has also invested heavily in
self-checkout technology for its retail stores, going so
far as completely replacing cashiers with self checkout
at its Tesco Express stores (the store is still supervised
by at least one worker). Stores also benet from self
checkout because it has the potential to reduce store
theft. Employee theft is substantial: in 2008, retailers
lost approximately $15.9 billion to employee theft.48
Not only has self checkout not lead to more customer
theft (partially because of countermeasures such as in-
store security cameras and weight scales), it can also
reduce employee theft because fewer employees will be
handling cash transactions.
Home Depot has been one of the leaders in using self-
checkout technology. After piloting the technology in
2002, it quickly deployed the technology to almost 800
stores within a year. Today, Home Depot has imple-
mented self-checkout systems at all of its retail stores
in the United States, and they are used for at least 35
percent of all transactions.49 In Home Depot stores,
four self-checkout stations are used to replace three
traditional checkout lanes. Since one cashier stays to
help customers with self-checkout, this eliminates the
need for two cashiers. In Home Depot’s case they re-
deployed their workers to add around 40 hours per
week per store to the sales oor. As the former CEO
Robert Nardelli describes, “Using technology as an
enabler to eliminate tasks, we’ve been taking those
task hours and reallocating our labor hours to the sell-
ing oor in our stores.”50
Retailers are not the only users of self-checkout tech-
nology. Libraries have also introduced self-checkout
for library books, thus freeing librarians from the mo-
notonous task of scanning and stamping books. In-
stead, library patrons can use self-checkout kiosks to
scan their library card and books, and then receive a
receipt when a book is ready. Some libraries also allow
their patrons to pay library nes and fees at kiosks.
In addition, libraries may offer online self-service op-
tions, such as reserving library materials or applying
for a borrower’s card.
RETAIL KIOSKS
In addition to self checkout, many retailers have de-
ployed kiosks in their stores to provide their customers
better access to products and services. For example,
retailers may use kiosks to bring online resources into
the store. BMW deployed over 550 kiosks at its deal-
ers so that customers could access the wide range of
multimedia content available on their Web site, such
as the BMW lm series.53 Retailers may also use ki-
osks to allow customers to obtain loyalty cards or buy
gift cards. An example of this is Cabela’s, a large retail
chain for outdoor products, which introduced kiosks
in their stores. Not only do the kiosks provide access
to the store’s popular Web site so that customers can
purchase goods not available in the store, in addition,
Figure 5: Self-checkout terminals deployed by region,
200845
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Asia-PacificWestern EuropeNorth America
74,000
15,000
3,000
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customers can use the kiosks to look up product infor-
mation, check product availability, register for promo-
tions, and join the store’s loyalty program. Kiosks are
also used to provide a self-service option for the most
common customer service requests, such as purchas-
ing gift cards, obtaining store loyalty cards, creating
or checking gift registries, or even applying for a job.
Stores can also use kiosks to provide an innovative ser-
vice unique to their industry. Virgin Megastores USA,
for example, used kiosks to improve the listening sta-
tions they provide for their customers. In the past, cus-
tomers were either limited to a small selection of CDs
preselected by the staff to which they could listen, or
they had to nd a representative to unwrap their CD
and then manually play the music. In 2005, Virgin re-
placed these listening stations with kiosks that could
access an online database of 200,000 CDs containing
2.5 million tracks. To use these kiosks, customers only
have to scan the barcode of the CD they are consid-
BOX 1: THE FIRST SELF-SERVICE GROCERY STORES
Even before self checkout came along, grocery stores have long been among the leaders in implementing self
service. In the early part of the 20th century, most grocery stores were run entirely by clerks: customers would
give their order to a clerk and the clerk would get the items from a shelf. Clearly this process was incredibly inef-
cient. In 1916, Clarence Saunders opened a grocery store with a revolutionary set of ideas: eliminate all of the
unnecessary clerks, give customers a shopping basket and allow customers to get items from the shelves them-
selves. His store, Piggly Wiggly, was a success (in part because of its competitive pricing enabled by self service),
and his franchise and his business model quickly spread across the nation. Today virtually every grocery store in
the United States follows this model.51
Saunders was a big proponent of self-service and his innovations did not stop with Piggly Wiggly. In 1937 he
opened a new automated store in Memphis, Tennessee called “Keedoozle” (for “Key Does All”). Customers
would enter the store, receive a mechanical “key” (an aluminum device with a roll of paper tape) and take the key
to different display cases containing the groceries. To make a purchase, the shopper puts the key in a slot and then
presses a button, which records the purchase on the paper tape by punching holes in the tape. Once the customer
was done shopping, she could take the key to a cashier. The cashier would use the key to automatically calculate
the total bill and then activate a chute system to automatically dispense the groceries. The customer could then go
to a nearby lounge and wait for the order to be bagged and delivered. Saunders claimed that the store was much
more efcient than a traditional grocery store—requiring about half the workers of a comparable store—and
eliminated shoplifting. The store passed these savings on to customers in the form of prices lower than competi-
tors by 10 percent. Unfortunately, Keedoozle was ahead of its time and eventually closed, as the technology was
only able to handle products in cans and cartons and the mechanical system was prone to failure.52
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ering purchasing and then they can listen to a 30- to
60-second sample of each track.
Retail locations for telecommunication providers, for
example a mobile phone company, also can use kiosks
to allow customers to pay their bills. In the United
States this type of service is particularly important for
the more than 20 percent of individuals without access
to the Internet or the 16 percent of households that do
not use a bank.55 For example, Verizon Wireless uses
bill payment kiosks in its retail stores so that its store
staff can focus on sales and customer service, rather
than processing bill payments.
As technology advances, some retailers are taking
advantage of fast network connections to implement
two-way video solutions that let a customer use an in-
store kiosk to communicate with a virtual staff mem-
ber. By using virtual staff, companies can make more
efcient use of their customer service agents and pro-
vide better service to their customers.
HUMAN RESOURCES KIOSKS
Some businesses use kiosks to provide their employees
electronic access to human resources (HR) informa-
tion and services. In particular, this is useful for busi-
nesses where all workers do not have ready access to a
computer at work, such as a factory or retail store, or
may not have access to a computer at home. HR kiosks
provide employees access to information such as past
pay statements, benets, and training opportunities, as
well as let employees administer their retirement ac-
counts, enroll in benets, and request leave. Employees
can use kiosks for day-to-day activity such as recording
their time sheets or completing online training. Com-
panies also use kiosks to process job applications from
potential candidates. HR self service, whether deliv-
ered via a kiosk or online, can yield signicant cost
savings to a company. As shown in Figure 6, the aver-
age cost of many HR processes is signicantly lower
when completed with a self-service application rather
than when completed manually. For example, the total
cost of labor (for employees, managers, and HR staff )
of enrolling a worker in company benets costs on av-
erage around $30 if completed manually but drops to
about $5 using self-service technologies.56
DIGITAL PHOTOGRAPH PRINTING
Digital photograph printing constitutes a signicant
share of the kiosks implemented worldwide.58 By using
more efcient equipment, the average cost of printing
a photo at a kiosk is approximately $0.29 compared
with $1.00 on a home printer.59 Available at pharma-
cies, supermarkets, and convenience stores, these ki-
osks allow customers to make high-quality prints from
digital images within seconds. The Kodak Picture
BOX 2: MULTI-USER, MULTI-TOUCH SURFACE COMPUTING
Advances in technology lead to innovations in self-service technology and one important technology that
has recently emerged is Microsoft Surface. Microsoft Surface is a large, table-like computing device with
a horizontal display that people can interact with using touch and gestures. It incorporates several inno-
vations including multi-user interaction (the ability to have multiple users interact with it at once), multi-
touch input (the ability to accept input from multiple contact points, rather than a single contact point
like typical touch-screens), and object recognition (the ability to recognize a physical object placed on the
surface of the device).
Microsoft Surface has been used in various self-service applications from restaurants to retail store to
showrooms. For example, AT&T installed Microsoft Surface at some of its retail stores. Customers can
use the device to learn more about different cell phone models. When a phone is placed on the display,
the device automatically recognizes the phone and shows customers information about the model. In Las
Vegas guests at the lounge of the Rio Hotel can use the device to order their drinks from the table, play
games, watch videos on YouTube, and even irt with people at different tables. And in Seattle, guests at
Hotel 1000 can use a Microsoft Surface installation as a virtual concierge to learn about nearby points-of-
interest and get directions, to learn more about the hotel’s services, and to view their photos and videos.54
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Kiosk, for example, allows consumers to make prints
from a digital camera, camera phone, or digital media
(e.g., a USB drive or memory card). Using the kiosks,
consumers can also edit their photographs, includ-
ing standard features such as removing red eye, en-
larging, cropping, and adjusting the brightness, color
and contrast. Special effects can also be added to the
photo, such as adding text or converting a photograph
to black and white or sepia tones. In addition to stan-
dard prints, many of the kiosks can produce additional
products including calendars, greeting cards, posters,
and a movie DVD of the images. As of early 2009,
Kodak has installed over 100,000 photo kiosks world-
wide.60
POSTAL KIOSKS
The U.S. Postal Service (USPS) created the automat-
ed postal center (APC) to provide a self-service op-
tion for customers. The APC is a self-service kiosk at
which customers can complete 85 percent of the retail
transactions available at a full-service counter, includ-
ing buying stamps and mailing letters and packages.
Using the APC, a customer can weigh and ship pack-
ages up to 70 pounds, perform zip code lookups, and
purchase shipping options such as delivery conrma-
tion, signature conrmation, or insurance. Most APCs
are located in the lobby of a post ofce, and many of-
ces provide 24/7 access to the machine. As of 2008,
USPS had deployed APCs at almost 2,500 locations;
however, this represents only a fraction of the 27,000
post ofces operated by USPS employees.61 Retailers,
businesses, and organizations can also deploy postal
kiosks to provide this service on-site.
USPS also offers various other self-service options di-
rectly to its customers including traditional vending
machines to buy stamps, telephone and mail order-
ing of stamps, and an online store to buy stamps and
other postal merchandise. USPS also created “Click-
N-Ship,” an online service that allows customers to
use their computer to print postage labels and schedule
packages to be shipped.
ELECTRONIC VOTING
Electronic voting is an example of how technology can
make self-service accessible to more individuals. While
most voting is already “self service” (since it is sup-
posed to be the voter, not an assistant, who casts a bal-
lot), not all individuals are able to vote independently
on traditional voting technologies like paper ballots,
punch cards, and lever machines.62 Electronic voting
has the potential to revolutionize the voting process
for blind, disabled, or illiterate voters. With other tech-
nology, many of these voters could vote only with the
assistance of poll workers, which compromised both
the condentiality and the integrity of their ballots.
Electronic voting machines can make voting simpler
or add new features, such as a photo of a candidate
for illiterate voters. Audio-based electronic voting ma-
chines also can enable blind and illiterate voters to vote
privately and independently. At Auburn University, re-
searchers have developed Prime III, a secure, multi-
modal electronic voting system that allows all users to
vote on the same machine. As the research team de-
scribes the voting system, “If you can’t see, hear, read
or if you have a physical disability, you can still vote on
Prime III.”
In addition, electronic voting can improve voting ac-
curacy thus providing voters with a better experience.
In the 2000 U.S. presidential election, for example,
some punch-card voting machines created ballots with
half-punched ballots. When election ofcials could
not determine voter intent, they had to discard these
ballots. Electronic voting machines eliminate this
problem, because in the binary world of computers,
“dimpled chads” do not exist. With paper ballots, vot-
ers can also easily overvote or undervote, mistakenly
rendering their ballot invalid. Electronic voting ma-
chines help eliminate these problems by preventing
voters from casting invalid ballots, thereby ensuring
that more ballots count.
Finally, electronic voting systems can also be used to
increase voter convenience. For example, electronic
Figure 6: Cost of HR application, self-service vs. manual57
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Self-Service
Manual
Change of addressEnroll in trainingEnroll in benefits
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voting machines can show voters a summary of their
ballot, allowing them easily to verify that they have
not made an error. In addition, many electronic vot-
ing machines enable multilingual and non-English
speaking voters to vote using their preferred language.
Electronic voting also makes it easier to implement
early voting. Early voting helps make voting more ac-
cessible to people who might otherwise be unable to
vote on the day of the election. Early voting with pa-
per ballots is impractical and expensive because cus-
tom ballots must be made available for each precinct.
For example, in Riverside County, California, election
ofcials switched to electronic voting machines after
they discovered that they wasted over half a million
dollars in unused paper ballots in one election because
of low voter turnout.63 Electronic voting machines can
host ballots for every precinct, so election ofcials can
more easily provide early voting.
As of 2008, USPS had deployed APCs at almost 2,500
locations; however, this represents only a fraction of the 27,000
post ofces operated by USPS employees.61
HEALTH CARE KIOSKS
Self-serve computer kiosks can be used by hospitals
to automate a number of patient interactions. They
can be used to facilitate patient management activities
such as patient admission, discharge, and transfer. Ki-
osks can also be used to process copayments, receive
patient consent forms, request prescription rells,
collect demographic data, perform clinical prescreen-
ing, verify insurance eligibility, and perform satisfac-
tion surveys. Another common application of kiosks
in hospitals is for way-nding (i.e., providing patients
with directions to their appointments). Finally, kiosks
can offer all of these services in multiple languages.
Kiosks benet hospitals by freeing nurses and hospi-
tal staff from routine activities and allowing them to
work more efciently. Patients benet from kiosks by
experiencing shorter waiting times, more convenience,
and more privacy.64 Currently, only a small percentage
of U.S. hospitals have such kiosks. A 2008 survey of
hospitals found no more than 5 percent of hospitals
had adopted kiosks for most patient management ac-
tivities. The same survey found that 13 percent of hos-
pitals had a patient kiosk for way-nding.65
Health kiosks are also found outside of hospitals and
medical ofces to provide health care directly to the
consumer. For example, in the United States, kiosks that
monitor blood pressure have become commonplace in
many pharmacies. As the technology has advanced, re-
tailers are now deploying more advanced health care
kiosks to help treat and screen patients for common
conditions. For example, the grocery chain Kroger has
launched a pilot in Kentucky to install health kiosks
at its stores that allow customers to learn their weight,
body mass index, body composition, blood pressure,
heart rate, and blood oxygen levels. Shoppers could
record these measurements in an online database and
track their health over time.66
Another innovative application is EyeSite, an interac-
tive kiosk developed by SoloHealth, which provides
consumers a self-service option for assessing their vi-
sion and learning about eye health conditions. Using
an interactive video interface, the kiosk can help the
customer assess his distance and near vision and un-
derstand if his prescription has changed. After com-
pleting the exam, patients can use the kiosk to nd a
nearby eye care provider to follow-up with a compre-
hensive exam if needed. This also means that patients
who simply want to buy new prescription glasses can
use the kiosk to see if their vision has changed, and if
not, avoid an unnecessary trip to the eye doctor.
Similar applications may be possible in the future in-
cluding hearing tests, bone density measurements or
screening for obesity, hypertension, stress, and depres-
sion. Some solutions may even eliminate the need for
a doctor’s visit. For example, the technology exists
today to perform an automated refraction (sight test)
and determine the prescription for corrective lenses.
Such services if implemented in low-cost kiosks will
likely face opposition from some ophthalmologists or
optometrists who traditionally perform eye exams.
INFORMATION KIOSKS
Many interactive electronic kiosks are the digital ver-
sion of the information kiosks of the past that were
staffed by attendants. Airports, convention centers,
and shopping centers all can use information kiosks to
provide public access to online resources. For example,
an electronic kiosk in an airport may provide access
to ight information, a map of the concourse, and a
directory of nearby businesses such as car rental com-
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panies and hotels. At a hotel or convention center, a ki-
osk might provide guests access to online information
such as local weather, nearby restaurants, and maps and
directions. Tourist information centers can use kiosks
to provide tourists with detailed information about
local attractions, upcoming events, and suggested
itineraries.
Internet applications
At its core, the Internet is a self-service technology
allowing individuals to access information, run ap-
plications, and create content. Fast broadband Inter-
net access and high rates of computer ownership have
made it possible for consumers to access a wide array
of information that was previously either unavailable to
them or required them to contact a service provider to
look up the information for them. Internet access has
also enabled consumers to engage in a whole host of
self-service retail transactions.
Indeed, various Internet applications have equipped
consumers to take on new roles and responsibilities
that previously required assistance from individuals
employed in the service sector, including professionals
from virtually every eld from banking to education
to retail. Many types of professions, including real es-
tate agents, travel agents and stock brokers, have had to
adapt to a new economy where they no longer have ex-
clusive access to information. Finally, consumers have
become active participants online, using the Internet
to customize products from computers to cars.
ONLINE HEALTH
In health care, IT empowers patients by giving them
access to the latest medical research, their own health
records, and information on the quality of care they
receive. Online applications such as Microsoft Health-
Vault have emerged to allow individuals to track and
analyze their personal health information. Patients
can use consumer-friendly Web sites like Revolution
Health and WebMD to access up-to-date medical in-
formation on health conditions and treatments. With
online access to their personal health records and new
Web-based tools, individuals can manage their health
information online as easily as they manage their -
nances. Currently, for example, online applications al-
low patients to track health markers such as their blood
pressure, cholesterol, and body mass index to see how
these indicators change over time and how they com-
pare to healthy patients of the same age and sex. Pa-
tients can combine these online tools with medical
home monitoring devices to track and compare their
health between ofce visits. As a result, patients are
less dependent on health care workers for medical so-
lutions and can take a more active role in their own
care.
ONLINE BANKING
Much like ATMs, online banking has replaced the
need for tellers for most nancial transactions at a
bank. Banks increasingly offer online applications that
meet the day-to-day banking needs of most custom-
ers, such as opening an account, checking account bal-
ances, and transferring funds. Most banks have also
introduced online bill pay systems that allow their
customers to send both paper and electronic checks
to businesses and individuals. Self-service technology
has become so mature that some banks, such as ING
Direct, HSBC Direct, and E*Trade Bank, operate with
only an online presence. These banks often use self-
service technology even for complex transactions. For
example, ING Direct offers electronic closings for
mortgage renancing that let customers submit forms
online, eliminating the need for more time-consum-
ing meeting with bank representatives. Currently 63
percent of all Internet users in the United States bank
online.67
E-LEARNING
Online learning replaces traditional face-to-face teach-
ing with online courses and educational activities.
Fisher-Price, for example, makes online games for ba-
bies and toddlers, including games that help toddlers
learn letters, numbers, names of animals, sounds of
musical instruments, and other things.68 Games for
children designed to double as learning tools have also
proliferated. Discover Babylon, for example, is a game
that involves exploring the history of Mesopotamia to
complete a series of challenges.69 Another game, Im-
mune Attack, is designed to engage students by having
them battle virtual viruses inside a body while explor-
ing concepts in immunology.70 The Oregon Trail game
teaches history and geography while engaging students
in a set of tasks and challenges that expose them to
pioneer life in the early 19th century in America. In
addition, Web sites such as FunBrain.com offer chil-
dren online games and activities that reinforce skills
and subjects taught in schools. Children also benet
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from a host of new “intelligent” tutoring programs,
like Carnegie Mellon University’s “Cognitive Tutor,”
software, that teach a variety of subjects at different
levels, from foreign languages to physics. Research has
shown that such tutoring programs can improve stu-
dents’ performance as much as one letter grade. The
software may accomplish less than a human tutor can
accomplish, but at $30 to $60 a student, the software is
also signicantly less expensive.71
E-learning is not limited to youth, and has proven ef-
cient and cost-effective for organizational or profes-
sional training. For example, Web sites such as Mango
or Rosetta Stone allow users to study a foreign lan-
guage online rather than take a class with an instruc-
tor. In Kenya an e-learning program was used to rap-
idly train over 22,000 nurses to greatly improve the
basic medical skills of the healthcare workers treating
critical diseases such as HIV/AIDS, malaria and tuber-
culosis. Online learning also gives individuals access
to educational opportunities that might otherwise be
unavailable.
Using online legal services, individuals can draw up a will, lease,
or other simple contract and save 75 to 80 percent over using a
lawyer.72
PROFESSIONAL SERVICES
IT also empowers consumers to do for themselves what
they used to have to pay professionals to do for them.
In particular, online and ofine applications allow
consumers to do a host of costly professional and semi-
professional functions. For example, individuals can
also use self-service technology for their legal needs.
Using online legal services, individuals can draw up a
will, lease, or other simple contract and save 75 to 80
percent over using a lawyer.72 Similarly, individuals can
use companies such as E*Trade and Charles Schwab for
Internet stock trading, rather than using a stockbroker.
For individuals looking to manage their money, invest-
ment strategies used to be limited by the lack of access
to robust, real-time information. Now many individu-
als choose to forgo stockbrokers to manage their own
investments because there is very little information
available to professionals that cannot be found by ama-
teurs through online research. In addition, the process
of buying a stock or bond is just a few clicks away. In
Japan, online trading has exploded, with the number
of accounts at Japanese electronic brokerage rms
growing from fewer than 300,000 to nearly 8 million
since 1999, and Internet trading now accounts for more
than one-quarter of all equity trades in the country.73
Using the Internet for stock trading has decreased the
price of stock trading 90 percent.74
Self-service technology also allows consumers to take
on many of the functions provided by travel agents.
Consumers can research and plan their own itinerar-
ies using the thousands of online resources that offer
detailed information about destinations. Web sites like
Orbitz and Expedia let consumers bypass travel agents
and directly make air, hotel, and car reservations. Nei-
ther must consumers rely on the advice of single agent
for travel recommendations; Web sites like TripAdvi-
sor, Virtual Tourist, and IgoUgo offer detailed sugges-
tions on where to stay, what to eat, and where to visit
while traveling. As a result, the use of travel agents
has declined: today only 25 percent of car rentals, 30
percent of hotels, and 50 percent of airline tickets are
booked through travel agents.75
Consumers also use the Internet to purchase insur-
ance, a task previously fullled by an insurance agent
or broker. Using the Internet, consumers can research
costs and benets of various types of insurance, in-
cluding property, life, health, disability, and long-term
care, rather than relying exclusively on an agent for
this service. Consumers can use online tools to request
quotes and submit applications. For example, Geico
offers discounted insurance, in part because it is able
to have its customers use self-service options to man-
age their insurance. Using the Geico Web site, policy-
holders can view their current insurance options and
policy documents, make changes to their policies, such
as changing a deductible or modifying their coverage,
and make an online payment. As a result of self-service
technology, insurance agents and brokers can service
more clients and spend their time on more complex
issues, such as answering insurance questions. In ad-
dition, it has lowered costs for consumers: purchasing
term life insurance online has already reduced prices
by 8 to 15 percent.76
Self-service is also allowing taxpayers to bypass using
tax accountant services. Intuit’s TurboTax software
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revolutionized the tax preparation business by offering
a software program with as much (or more) tax exper-
tise as a typical tax accountant, but at a considerably
lower price. Using electronic tax preparation software
yields more accurate tax returns for taxpayers: after
the IRS enabled e-ling, the error rate on tax returns
declined from 20 percent for paper returns to under
1 percent for electronic returns.77 In addition, because
the private companies that make electronic ling soft-
ware are competing intensely for market share, they
have strong incentives to make their programs as easy
to use and comprehensive as possible.
Buying contact lenses over the Internet enables consumers to save
between 10 and 40 percent of the cost of buying from an
optometrist.
Home buyers and sellers can take advantage of self-
service options offered by real estate companies to
accomplish for themselves what they used to have to
pay a real estate agent to do. Improved access to in-
formation also allows individuals to learn about things
without having to be physically present. Virtual tours
of houses, for example, save prospective homebuyers
hours on the road going from property to property by
letting them rst see inside a building before deciding
if it is worth a trip to view the property in person.
For example, Web sites like Zillow and Trulia provide
potential buyers and sellers detailed property infor-
mation, estimates of the value of a home, historical
pricing data, and a list of comparable properties on
the market. Companies like Zip Realty, an online real
estate brokerage, use self-service technology to lower
their operating costs and then share the cost-savings
with their clients. By giving their clients unrestricted
online access to the Multiple Listing Services (MLS),
relevant property information, and online tools to rate
and review homes, prospective buyers can maximize
the value of the time they spend with their agent. In
return, after buying or selling a home, buyers receive
a cash rebate equal to 20 percent of the real estate
agent’s commission and sellers pay a discounted com-
mission to their broker. In addition, since homeowners
now have access to the same information as real estate
agents, some sellers to forgo using an agent altogether,
thereby allowing them to save the money it costs to pay
a commission. To cater to these customers, Web sites
like ForSaleByOwner.com, offer fee-for-service op-
tions to home buyers and sellers who would rather not
use an agent at all. For example, sellers can purchase a
at-fee to list their property on the MLS, rather than
paying a commission.
RETAIL E-COMMERCE
Self-service technology gives consumers control over
their service encounter, and perhaps no service of-
fers a better example of this than e-commerce. Buy-
ing goods and services online allows consumers the
freedom to choose when and where to shop and the
opportunity to research the product, the seller, and
any other available options. Shopping has been trans-
formed through the availability of online information.
Currently, for example, two-thirds of U.S. consumers
use the Internet to research purchases before going to
the store.78 Just about anything that can be bought in a
store can be bought online, even perishables like gro-
ceries. And consumers have embraced these possibili-
ties around the world, with more than 85 percent of
the world’s online population having purchased some-
thing using the Internet.79 The Internet has also in-
troduced many online services that substitute physical
goods for digital goods. Online services like Netix,
iTunes, and the Amazon Kindle store allow consumers
to nd and purchase digital goods like movies, music,
and e-books without ever interacting with a service
worker. E-commerce retail sales provide signicant
savings. For example, buying contact lenses over the
Internet enables consumers to save between 10 and 40
percent of the cost of buying from an optometrist.8 0
Figure 7: E-commerce retail sales as a percent of total
sales, 2000-200982
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2009200820072006200520042003200220012000
%
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More broadly, one study found that rms engaged in
e-commerce had 4 percent lower prices than rms that
did not.81
E-retail is still a modest share of the economy (see Figure
7), but in some sectors it is emerging as a sizeable share
of transactions. For example, more than half of comput-
er hardware and software sales are purchased electron-
ically. Similarly, a large portion of travel reservations,
such as airline tickets, are made online. In 2005, over
one-quarter of sales in the travel industry were made
online, and today that gure is likely at 50 percent.83
In addition, business-to-consumer ecommerce in-
dustries such as event tickets, books, and consumer
electronics show strong online sales. Online retail has
grown approximately six times faster than total retail
sales and will continue to grow in part because the lon-
ger people are online the more likely they are to make
online purchases.84
CUSTOMER SERVICE
Many companies provide self-service options for
customers to receive customer service online. The
service options range from a simple list of frequently
asked questions to advanced online applications that
give customers access to detailed information and
services so that many of them can solve their own
problems. Instead of consumers contacting customer
service representatives, they can go online and do the
work themselves and nd a solution in the same time
or less. For example, the shipping companies FedEx
and UPS allow customers to track their packages on-
line rather than call a customer service agent to nd
out its status. Computer manufacturers like Dell allow
customers to look up product information and get
support based on the unique serial numbers printed
on each device. Many businesses also give their cus-
tomers online access to their accounts. For example,
utility companies, cable companies, and telephone
service providers all typically offer online access so
that their customers can pay their bills online, see
past statements, and make changes to their service.
The savings here can be substantial: Gartner esti-
mates that automated online customer service costs
businesses approximately $0.24 per encounter versus
$5.50 to provide customer service by telephone.86
Some companies have gone a step further with online
self-service and created human-like automated
customer service agents. For example, the furniture
retailer IKEA has created “Anna,” an interactive vir-
tual agent that responds to questions from customers
on its Web site (see Figure 8). Customers type ques-
tions and Anna displays an answer while an animated
image of her smiles, blinks and nods. The British ver-
sion of Anna even includes a text-to-speech option so
that customers can hear her replies. Other organiza-
tions have implemented similar “chatbots” including
the U.S. Army which created Sergeant STAR, a self-
described “self-service virtual guide” to answer the
questions of visitors to its Web site.
Some companies have made self-service customer sup-
port a key part of their business. For example, Cisco
used self-service technology early on to manage the
customer service demands of their rapidly expand-
ing customer base. Cisco built an extensive catalog
of online self-service products to allow customers to
solve their own problems, often without even using a
Cisco employee. These tools include an online discus-
Figure 8: Anna, the IKEA online assistant
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sion forum, troubleshooting engine, software center,
parts ordering site, and service contract center. Cisco
reported that 80 percent of its customer service was
handled through self-help tools, and the company also
reported increased productivity and customer satisfac-
tion. Overall, these self-service tools save Cisco over
$500 million annually.87
ONLINE CUSTOMIZATION
Self-service tools also let consumers customize prod-
ucts online. In the old economy, only the well-to-do
could afford to buy customized goods. For the rest, op-
tions were limited to “off the rack.” Now self-service
Internet technologies are bringing customization to a
wider array of consumers. Dell pioneered this approach
with its use of the Internet to enable build-to-order per-
sonal computers. Other companies have embraced on-
line customization as well. For example, consumers can
design their own shoe on Nike.com or put a personal-
ized message on M&M’s. Lands’ End allows customers
to submit measurements online to produce custom-t
clothing. American Quantum Cycles lets customers
order bikes online to t their unique measurements.
Using the Internet to receive orders, CafePress takes
basic commodities like t-shirts, hats, and coffee mugs,
and then prints onto them the designs submitted by
customers. The Web site Partypongtable.com lets us-
ers design their own game tables, including the type of
material, design, and logos.
Even vehicles can be customized online. The BMW-
owned Mini brand popularized the practice of allow-
ing customers to design their own vehicles on the
Internet. Scion (a Toyota brand) adopted this practice
and is probably the second-most mass customized au-
tomobile brand in the world. Unfortunately, American
automobile manufacturers have limited ability to offer
build-to-order, mass customized automobiles over the
Internet due to automobile franchise laws in all 50 U.S.
states which prohibit U.S. automobile manufacturers
from selling vehicles directly to customers over the
Internet (rather than through locally franchised deal-
ers). Such regulations harm consumers and automobile
manufacturers alike. For example, one Yale University
BOX 3: CO-PRODUCTION
Many companies are using the Internet to allow consumers to participate more in their businesses, especially
with “Web 2.0” technology like social networking, blogs, and wikis. While not necessarily self-service, this
form of co-production enlists consumers to take on the role of traditional service workers including design-
ers, reporters, quality assurance specialists, and customer service agents. For example, the Web site Threadless
hosts weekly design competitions where users submit t-shirt designs and slogans and then the online commu-
nity evaluates the submissions and chooses winners. The best entries are produced and then sold online. Dell
uses IdeaStorm.com to collect suggestions from customers on how to improve their products and services.
Using the Web site, the community can vote on the best ideas and then track Dell’s efforts to implement the
suggestions. Blogs like DailyKos and Hufngton Post have blurred the line between reader and contributor
and extensively rely on guest posts for the vast majority of their content. Even mainstream news organizations
such as CNN have launched services like iReport, which encourages its audience to report the news by submit-
ting written commentary, photos and video which are then featured as part of the daily newscast.
Some online businesses, like YouTube, Facebook, or Second Life, exist entirely because of user-generated
content, and the value of these sites is directly related to the quality of content produced by consumers. Other
companies enlist users to create a better service and harness “the wisdom of the crowd” in designing prod-
ucts and services. For example, Netix distinguished itself from its competitors early on by providing online
tools to allow users to review and rate their favorite movies. Similarly, many e-retailers like Amazon have built
their brand around the wide availability product reviews from their customers. The online electronics retailer
Newegg has gone a step further and in addition to extensive user reviews, it has created an entire online com-
munity, eggXpert.com, as a self-service tool designed to have customers share their expertise and advice on
products. Not only does Newegg rely on customers for content, they have even enlisted “volunteer” modera-
tors to work jointly with staff moderators to help maintain the site.12
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study found that the average customer using an online
service to buy a vehicle pays approximately 2 percent
less than someone buying in person from a dealer;
these savings would likely be even greater if consum-
ers could go online and buy a car directly from the
manufacturer.88
ACCESS TO GOVERNMENT SERVICES
E-government can save taxpayers money and often im-
proving service. Government agencies are increasingly
offering self-service options online to renew driver’s
licenses, pay parking tickets, and request government
records. For example, in the United States, the Internal
Revenue Service (IRS) launched its “e-le” program
in 1999, allowing federal income taxpayers to le their
tax returns electronically. And in 2001 it launched
Free File, a partnership with third-party electronic tax
preparation companies, like Intuit, to allow millions of
taxpayers to get access to free online tax preparation
software. In 2006, more than 50 percent of individ-
ual income tax returns in the United States were led
electronically. Moreover, as Americans have switched
from paper to electronic lings, the IRS has saved over
1,600 staff years and closed three paper processing fa-
cilities.89 For each tax return led electronically instead
of on paper, the IRS saves an estimated $2.15 per re-
turn.90 Similarly, the United Kingdom has found that
processing electronic tax returns was over 40 percent
cheaper than processing a paper return.91
Governments can also use self-service to provide citi-
zens an easy way to nd important information such
as legal information, government forms, and property
tax information. As an example, the Kansas Highway
Patrol logs all accidents with injuries or fatalities on
its Web site to streamline the process of disseminating
crash information to the media and the public. Now
the media and public can get the latest accident infor-
mation without impeding the daily operations of the
dispatchers. Many government records are also avail-
able online such as vital records and criminal records,
allowing citizens to access this information online
rather than in person.
Government agencies also use Internet-based tools to
eliminate the need for in-person services. For example,
in the United States, the Social Security Administra-
tion (SSA) is a large citizen-facing government agency
with over 27,000 eld employees in 1,300 eld ofces.
The SSA offers a number of self-service options on-
line, such as estimating retirement benets, request-
ing a change of address, setting up direct deposit, and
requesting a Medicare replacement card. Citizens can
even use the SSA’s Web site to apply for retirement or
disability benets, rather than applying in person. In
part because of greater use of self-service technology
the SSA has seen an increase in worker productivity by
2.9 percent between 2005 and 2008.92
American automobile manufacturers have limited ability to offer
build-to-order, mass customized automobiles over the Internet due
to automobile franchise laws in all 50 U.S. states which prohibit
U.S. automobile manufacturers from selling vehicles directly to
customers over the Internet.
TICKETING AND RESERVATIONS
Electronic tickets (e-tickets) are another example of
self-service technology. Many businesses, including
those in the travel and the entertainment industries,
have replaced paper tickets delivered by mail or in-per-
son with e-tickets. An e-ticket may exist in electronic
form only, be printed by the consumer at home or at
a kiosk, or be displayed on a mobile device, such as a
smart phone. E-tickets provide consumers many ben-
ets. For example, e-tickets help eliminate the problem
of lost tickets: a lost paper ticket may be impossible
to reclaim, but a lost e-ticket can be easily replaced.
E-tickets also make it easier for consumers to make
changes, such as exchanging a ticket for a different
time or date.
E-tickets are now virtually universal with airlines. In
2004, the International Air Transport Association
(IATA), which represents about 93 percent of all air
travel internationally, mandated that all its member
airlines implement e-ticketing. As of May 2008 it had
reached 100 percent compliance. By using e-tickets air-
lines can charge lower prices: the cost of processing
a traditional paper ticket is $9 more than an e-ticket.
Overall, the conversion from paper tickets to e-tickets
saves the industry $3 billion annually.94
E-tickets are also used in the entertainment industry.
Many movie theaters, sports arenas, concert halls, mu-
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seums and theaters allow their patrons to purchase e-
tickets online rather than buy them in person at a box
ofce. For example, to purchase movie tickets, mov-
iegoers can visit Web sites like Fandango or MovieT-
ickets.com to buy tickets to upcoming shows. Tickets
purchased online can be printed at home, printed at
movie theater kiosks, or picked up at the box ofce.
Moviegoers typically pay a premium for this service,
in part because it allows them to avoid long lines at the
movie theater and be assured of having a seat for the
show.
Services like Ticketmaster allow consumers to pur-
chase tickets for events on their Web site. Using its
“TicketFast” service, Ticketmaster’s customers can
get their tickets immediately and print them at home.
Customers also usually receive a discount for printing
their own ticket, rather than having the tickets mailed
to them. As of 2007, approximately 70 percent of cus-
tomers choose to print their tickets at home when that
option is available.95 TicketMaster has also launched
“MobileTicket,” a service that allows customers to re-
ceive their ticket on their mobile phone. The ticket is
displayed as a two-dimensional bar code on their cell
phone and then this bar code is scanned at the point of
entry to allow access to the venue.
Consumers can also use Web sites to make reservations
for non-ticketed events and services. For example, Web
sites like OpenTable.com allow diners to make reser-
vations at restaurants. Outdoors enthusiasts can take
advantage of the government-run Web site recreation.
gov to make reservations in federal parks for camp
sites and picnic shelters. In Denmark and Finland, the
Omena Hotels chain runs hotels without any sales or
reception clerks; guests simply make reservations on-
line, receive PIN codes to access their hotel room, and
then can go directly to their rooms when they arrive.
There is no check-in or check-out procedure. Similarly,
many car rental companies have created expedited pro-
grams where pre-registered travelers can reserve rental
cars online so that when they arrive at their destina-
tion they can skip a long wait and go straight to their
vehicle.
Mobile devices, including smart phones and smart
cards
Mobile devices serve as one of the most important
channels for delivering self-service applications and
its use will likely continue to grow in importance as
wireless networks and low-cost mobile devices be-
come more advanced. In particular, 3G and 4G (third
and fourth generation) wireless networks allow mobile
devices to access multimedia content and today’s mo-
bile phones can support advanced applications. Mo-
bile devices include smart phones, such as the iPhone
or Blackberry, smart cards, and other portable mobile
electronics.
SMART PHONES
Like kiosks, smart phones provide another medium
for interacting with online applications and services.
One of the most interesting self-service applications
on mobile devices is mobile commerce, a concept de-
ned broadly as “commercial or nancial transactions
mediated through mobile phones or other handheld
electronic devices.”96 Mobile commerce is explod-
ing worldwide, with research rm Juniper predicting
that, by 2011, the global value of all commercial or -
nancial transactions effected through mobile phones
will exceed $587 billion.97 Much of this is driven by
browser-enabled smart phones that allow individuals
access to any Internet-based application from a mo-
bile device. But many companies and organizations are
also offering applications targeted specically for mo-
bile phones. By 2013, Juniper predicts that more than
2 billion mobile subscribers worldwide will have used
their mobile phones for contactless mobile payments,
mobile banking, or over-the-air person-to-person pay-
ments.98
Figure 9: Implementation of e-ticketing for air travel world-
wide, 2006-200993
2006
2005 2007 2008 2009
0
20
40
60
80
100
120
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In addition, many self-service applications currently
available online have been, or will be, adapted for
smart phones. For example, fast food restaurants like
Papa John’s allow customers to order a pizza via text
messaging. And banks have developed mobile applica-
tions so their customers can access their funds from
their mobile phones.
Airlines have developed mobile phone check in so
that travelers can check in for a ight from their smart
phone. As shown in Figure 10, the mobile phone re-
ceives an electronic boarding pass, including a two-di-
mensional bar code that can be scanned at the board-
ing gate. The entire process is paperless. At present,
use of mobile check in is low in the United States. At
Hartseld-Jackson Airport in Atlanta only 4.2 percent
of passengers in 2009 used mobile check in (up from 1
percent in 2008), although the number will likely grow
as more travelers begin carrying Web-enabled mobile
phones.99
Mobile check in is more advanced in other countries.
In Japan, for example, using mobile phones for board-
ing passes at airports is more common than in the
United States. Travelers can also pass through security
and board at the gate using their mobile phone instead
of a paper ticket. Moreover, travelers can use contact-
less technology (i.e., using an RFID chip embedded on
a mobile phone) or a standard barcode displayed on the
screen of the mobile phone.
MOBILE PAYMENTS
Another important self-service technology is mobile
payments systems, for example, using a cell phone as
an “electronic wallet.”100 An electronic wallet is a multi-
functional device possessing cash, information storage
and transaction, identication and authentication, and
communication functions. Combined with near eld
communication (NFC) technology, a specic stan-
dard of RFID technology, NFC-capable phones can
securely transmit data wirelessly over short ranges be-
tween electronic devices thus enabling contactless pay-
ments. Whereas a decade ago this technology was not
quite ready—the contactless microchips and mobile
phones were not adequate, lacking sufcient memory
and processing power—the technology has matured
substantially over the past decade to the point where
electronic wallets, NFC-capable phones, and NFC-en-
abled point-of-sale (POS) terminals are now ready for
full-scale implementation and use. Mobile payments
make transactions fast and easy, and either eliminate
or reduce the need for tellers for many transactions.
Many of the most interesting mobile self-service ap-
plications are found in Japan and South Korea, which
have more advanced mobile technology than the Unit-
ed States. For example, Japanese consumers use their
mobile phones as an electronic credential to check into
their ofces, apartment buildings, and health clubs,
and to register their attendance at school, eliminating
the need for a service worker to perform these tasks.
Japanese consumers can use their mobile devices as a
mobile wallet in lieu of cash or credit cards to pay rail
or subway fares (see Figure 11); to pay for taxi rides,
movie tickets, and parking meters; to make purchases
from kiosks and vending machines; to auction used
items; and to manage loyalty cards and programs.
Japanese consumers purchase hundreds of thousands
of items from tickets to groceries with mobile phones
every day in Japan. Because they spend an estimated 60
trillion yen ($514 billion) each year on low-value pur-
chases, the market is primed for cash to be replaced
with electronic money.
Similarly, South Koreans similarly use their cell phones
for a wide range of self-service application including
Figure 10: Electronic boarding pass on an iPhone
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contactless payment of railway, subway, bus, taxi or
limousine fare; contactless payment for purchases in
convenience, fast food stores, and kiosks; to buy movie
tickets and enter theatres; and as personal ID to check
into workplaces or apartment buildings. Rather than
require teachers to take attendance every day, students
touch their mobile phones to reader terminals outside
classroom doors to mark their attendance at school,
with the school’s server logging attendance and tardi-
ness.
One interesting self-service payment option in South
Korea is T-money. T-money is a pre-paid radio fre-
quency (RF)-based smart card developed by the Korea
Smart Card Company (KSCC) that is embedded with
a central processing unit (CPU) that enables calcula-
tion on the card. One’s T-money card serves as both a
transportation card and electronic money card, mean-
ing the same T-money card is accepted for payment in
public transit and by afliated merchants. T-money can
be used on all public, and most private, transportation
modes in Seoul, including bus, subway, and taxis, and
in other venues like parking garages and toll booths.
As an e-money card, T-money can be used in lieu of
cash or credit cards to make payments at convenience
stores, movie theatres, theme parks, vending machines,
museums, kiosks, bookstores, and some merchants.
Citizens can also use T-money to pay taxes and nes or
to pay for other civic services.
The savings from mobile payments is substantial. As
Seoul’s subway system has moved from paper tickets
to smart cards, it has eliminated the need for 450 mil-
lion paper magnetic stripe tickets at a savings of 3 bil-
lion won ($2.4 million) per year.102 As of March 2009,
customers use T-money for 30 million public transit
transactions per day (15.4 million bus and 14.6 million
subway). Beyond mass transit, South Korean consum-
ers make over 3 million e-money transactions per day
using T-money, including 1.4 million T-money transac-
tions at vending machines, over 1 million transactions
in convenience stores, and some 400,000 transactions
in public facilities.103 Within the Seoul metropolitan
area, 18 million T-money smart cards have been is-
sued, with T-money accepted at the reader terminals
of 19,750 buses; over 8,000 subway terminals; 73,000
taxi cabs; 21,000 vending machines; and 8,300 conve-
nience stores, fast food stores, and parking garages.104
T-money has also been used for gift giving, eliminat-
ing the need for consumers to purchase gift cards. SK
Telecom launched a popular service, Gifticon, which
combines barcode technology with mobile payments
to allow users to send gift vouchers for over 130 items.
For example, an individual can go to a mobile car-
rier’s online shop, buy an icon depicting coffee, and
send it to her friend’s phone, who can then go to the
Starbucks, ash the icon from the phone, and get the
drink. The Gifticon service has attracted 2.5 million
users and delivers 70,000 gifts daily. SK Telecom ex-
pects the service to generate $10 million in revenues
in 2008.105
Overall, Japan and South Korea lead the world in
terms of per-capita number of contactless-enabled
mobile phones and POS terminals deployed, the to-
tal number of contactless transactions, and the mar-
ket value of contactless payments. In Japan, 17 million
citizens make contactless mobile payments from their
cell phones, with 65 million regularly using contactless
smart cards, and 73 percent of mobile phones having
electronic wallet capability. In South Korea, close to 4
million citizens use their mobile phones to make con-
tactless payments, with 12 million phones having the
capability to do so.106 Also in South Korea, 33 million
contactless transactions are made daily using either
smart cards or mobile phones. While the United States
has made some progress in elding NFC-enabled cred-
it cards and POS machines, virtually no mobile phones
are equipped with NFC-enabled electronic wallets.
Figure 11: Mobile NFC Payment at a Railway Station in
Japan101
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SMART CARDS
Only a small number of mobile phones equipped
with NFC-mobile wallet capability exist in the United
States. However, the United States has made consider-
ably more progress in beginning to deploy NFC-capa-
ble contactless smart cards and credit/debit cards and
getting initial merchant deployment of NFC-capable
point of sale readers. A recent Nielsen survey found
that only 9 million Americans had made at least one
mobile commerce purchase, although 125 million
Americans said they were willing to make a mobile
commerce purchase in the near future, a sign of the
market’s immense potential.107 In-Stat’s David Cham-
berlain estimates that the number of wireless custom-
ers in the United States using their phones for mobile
commerce transactions will reach 20 million by 2011.108
The total size of the U.S. mobile commerce market is
expected to reach $2.6 billion by year-end 2009.109 The
Tower Group has estimated that the total value of con-
tactless micropayments (though made almost entirely
from contactless credit cards) in the United States will
reach $11.5 billion by 2009, and that 10 percent of U.S.
payments will be contactless in 2010.110
Where the United States has made more progress in
mobile payments is in the deployment of NFC-capable
contactless credit cards and with early-adopting re-
tail merchants that have deployed them. Each of the
major U.S. credit card issuers offer contactless credit
cards: American Express with ExpressPay, Master-
Card with PayPass, Visa with Visa payWave, and Dis-
cover Network Zip. Thus, unlike in Japan and South
Korea, where new forms of electronic money, such as
Edy and Nanaco in Japan or T-Money in South Korea,
were created to enable mobile electronic payments, the
strategy in the United States has been to add contact-
less payment capability to customers’ existing nancial
(primarily credit card) accounts. As of October 2009,
more than 100 million branded contactless credit
cards have been issued by U.S. card issuers.111 Chase
found that using contactless payments reduces time at
the point of sale by 30 to 40 percent.112 Another study
reported that contactless transactions were 40 percent
faster than those made with credit or debit cards and
55 percent faster than those made with cash. Market
research rm Tower Group estimates that contactless
payment can reduce individual transaction times by 10
to 15 seconds.
Historically, the United States has lagged behind lead-
ing countries in implementing electronic payment
methods for the mass transit market.113 But with nearly
33 million trips made daily on public transportation
in the United States, public transit represents an ideal
venue to generate a critical mass of initial demand for
mobile payments and acclimate customers to paying
for everyday retail purchases on a contactless basis.
And indeed, over the past several years, the United
City Terminals Projected Users Status
Atlanta 1,500 824,000 Fully Operational
Boston 4,000 1,800,000 Fully Operational
Chicago 5,000 3,500,000 Transitional
Houston 1,500 750,000 Fully Operational
Los Angeles 6,600 3,600,000 Mid-Launch
Miami 2,000 900,000 Initial Launch
Minneapolis 1,200 425,000 Fully Operational
New York (PATH) 350 400,000 Fully Operational
Philadelphia (PATCO) 200 35,000 Fully Operational
San Diego 1,200 370,000 Initial Launch
San Francisco 4,500 2,800,000 Mid-Launch
Seattle 3,000 947,000 Mid-Launch
Washington/Baltimore 4,500 2,700,000 Fully Operational
Table 1: Deployment of Contactless Fare Payment in U.S. Mass Transit115
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States has started to make much more progress in de-
ploying smart card–based (though not phone-based)
contactless payment systems in mass transit, with at
least 15 major U.S. metropolitan areas now in the pro-
cess of or having completed deployment of contact-
less smart cards.114 Washington, D.C.’s Washington
Metropolitan Area Transit Authority (WMATA) was
the rst major American city’s transit agency to deploy
a system-wide contactless smart card for mass tran-
sit (SmarTrip). Table 1 displays progress in deploying
smart card–based contactless payment systems in U.S.
mass transit. Unfortunately, most of these contactless
systems are proprietary to the issuing transit agency,
meaning that one cannot use Boston’s CharlieCard on
the Washington Metro, or vice versa.
The primary advantages of contactless systems (over
paper magnetic stripe fare cards) are lower mainte-
nance and operating costs, speed and exibility pro-
vided by the smart card application, better security
over payments, and increased ability to collect system
usage statistics. For consumers who have registered
their smart transit cards online, lost cards can be fro-
zen and new ones issued that retain the value already
purchased, as opposed to lost paper cards, which can-
not be recovered. One study in 2005 by a transit agency
study found that eliminating or substantially reducing
the need to handle cash could (by moving from cash-
to electronic-based collections) deliver up to a six-fold
reduction in aggregate incremental operating costs.116
On an ongoing basis, contactless payments are less
costly than other fare media because of their lower op-
erating and maintenance costs. In Washington, D.C.,
migration to electronic payments reduced staff by ap-
proximately 15 percent over a ve-year period.117 An-
other benet comes from reducing the risk of loss due
to fraud or fare evasion, which can represent from 5 to
15 percent of a transit operator’s annual fare revenue.118
Another advantage of electronic payment systems
for transit authorities is the valuable information that
smart card ticketing systems can generate; this data
helps transit operators better understand consumer be-
havior and service customers more effectively.119 The
information can also be used for trafc management
and logistics, leading to better allocation of resources,
efcient timetables, reduced delays, and improved safe-
ty. Mobile electronic payments further enable transit
agencies to better control, monitor, and inuence rid-
ership patterns through measures such as congestion
pricing techniques.120
MOBILE SELF-SERVICE IN THE DEVELOPING WORLD
The wide availability of mobile phones have even in-
troduced self-service in developing countries where
the low cost of labor and lack of Internet access often
serves as a disincentive to such applications. For exam-
ple, sub-Saharan Africa had only 5-8 million Internet
users in 2004, but 52 million mobile phone users.121
However, individuals in the developing world increas-
ingly use mobile applications for many purposes, from
mobile banking to mobile health care. For example,
in many instances, despite the availability of medi-
cine, tuberculosis (TB) patients still die because they
do not take the medication as regimented. To tackle
the problem, doctors in Cape Town came up with a
simple but effective idea: text message TB patients to
remind them to take their medication. The medical
team estimates that 71 percent of their patients had
access to cell phones, and after the pilot study only one
treatment failure was reported out of 138 patients. The
South African government is working to expand the
program nationwide to HIV patients.122
Whereas mobile commerce in the developed world has
complemented generally well-established banking and
nancial infrastructure, in many developing countries,
the mobile phone is stepping in to substitute for under-
developed or nonexistent nancial infrastructure. Ser-
vices such as Kenya’s M-Pesa allow mobile subscribers
to send text messages to make or transfer payments
from phone to phone. Mobile technology thus extends
nancial services to people who otherwise might not
have access to them. In some parts of the develop-
ing world, unused mobile phone minutes are actually
treated as a form of currency that is bartered in ex-
change for goods or services. For many consumers in
emerging markets, their rst banking transactions will
likely be made through cell phones rather than with a
bank teller.123 As The Economist notes, mobile phones
have “the potential to give the ‘unbanked masses’ ac-
cess to nancial services, and bring them into the for-
mal economy.”124 Cost-effectively equipping millions
more people with a mobile communications/comput-
ing device has the potential to lift the economic status
of a signicant number of people across the world.125
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Kenya and the Philippines lead the developing world
in adopting mobile payments (m-payments). As of
June 2009, there were 7.2 million m-payment subscrib-
ers in the Philippines and over 6 million in Kenya. In
the Philippines, the companies Smart Communica-
tions and Globe Telecom pioneered mobile payments
through their SmartMoney and GCash services, respec-
tively. Smart Money has just over 6 million users while
GCash has 1.2 million.126 Since its launch by Kenya’s
Safaricom in February 2007, M-Pesa has grown mas-
sively to reach 6.2 million registered users, accounting
for 46 percent of Safaricom’s 13.4 million users by the
end of March 2009, with the service enrolling 11,000
new subscribers per day.127 A total of Ksh 17.3 billion
($220 million) was transferred in March 2009 to a cu-
mulative total of Ksh 135.4 billion ($1.73 billion) since
the service’s launch. M-Pesa’s success in Kenya, and
Smart Money’s in the Philippines, has prompted many
emerging market service providers and banks to enter
the marketplace. GSMA (a global association of mobile
carriers using GSM technology) reports that over 100
mobile payment services have launched in emerging
markets to date.128
In Kenya, using mobile phones to transfer money is much cheaper
than using traditional money transfer channels, with informal
channels, such as bus or taxi drivers, costing up to 15 to 25 per-
cent of the transferred amount.
M-payments benet mobile subscribers in developing
countries in a variety of ways. They have played a sig-
nicant role in expanding the availability of micro--
nance to rural and underdeveloped communities.129 In
the Philippines, millions actually receive their salaries
paid directly into their phones’ mobile wallet, and then
pay others through text messages, sending the funds
directly from their phones. Filipinos nd it faster and
cheaper to get money from families overseas via text
message than by using a bank transfer. As another
example, many Filipino farmers have to commute for
hours to their banks to pay interest on their loans, and
their commuting cost alone often exceeds the interest
they owe; sending m-payments provides them tremen-
dous savings in both time and money.130 In Kenya, us-
ing mobile phones to transfer money is much cheaper
than using traditional money transfer channels, with
informal channels, such as bus or taxi drivers, cost-
ing up to 15 to 25 percent of the transferred amount,
and formal money transfer channels (such as banks or
Western Union Money Transfer) slightly cheaper at 10
to 15 percent, but requiring a trip to town to give in-
structions to an agent. With M-Pesa, however, moving
$5 costs only 7 percent of the funds transferred, $20
costs 3 percent, and $100 costs 1 percent.
Phone applications
IT also enables consumers to use the telephone to ac-
cess self-service solutions. In particular, telephone op-
erators have been largely replaced with digital technol-
ogy. The major reason why productivity for telephone
operators has increased approximately 12 percent a
year since 1950 is because customers, rather than op-
erators, now place the vast majority of calls through
direct dialing. In addition, when requesting a phone
listing, most consumers use a technology that allows
the phone company’s computer to ask the customer
to say the listing they want, saving an operator from
asking that. Voice recognition technology is getting
so effective that there is little need for the operator to
be the go-between for the customer and the telephone
company computer.
The potential to automate routine telephone transac-
tions goes far beyond telephone operators. Advances
in telephone technology have also replaced centralized
attendant services where individuals would call a single
number and speak with an attendant to get transferred
to the correct department. In its place, companies de-
ployed dual tone multi frequency (DTMF) phone sys-
tems that let callers navigate through a preset menu to
route their own call (e.g. “Press one for sales. Press two
for…”) or to access an employee directory.
Today, businesses are replacing these DTMF systems
with interactive voice response (IVR) phone systems
that use speech recognition technology to allow con-
sumers to interact with a computer system over the
phone using their voice. For example, many company
phone systems allow people to look up employees’ di-
rect phone extensions. In addition, some airlines use
speech recognition technology to let people check on
the status of ights. Text-to-speech technology has
also matured so that companies can provide informa-
tion over the telephone using electronically synthesized
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speech. The company TellMe even uses such systems
to let people verbally surf the Web from a telephone.
The cost of an American-based, customer-service telephone agent
is approximately $7.50 per phone call versus only about 32 cents
per call for an automated phone system.
Many organizations use this technology to offer self-
service customer service options by telephone. For ex-
ample, Amtrak created “Julie” an automated attendant
to answer questions about the status of trains, discuss
fares and timetables, and make reservations. In 2007,
Julie answered as many calls in a day as the average
Amtrak customer service agent answered in a year.131
Similarly, many banks and utilities use the technology
to allow their customers to check their account bal-
ances or hear recent transactions by phone. In 1999, 55
percent of bank call inquires were served by voice rec-
ognition systems, and without these, the number of call
center agents would have had to grow by 86 percent, a
large nancial burden for banks.132 The savings from
IVR is substantial—the cost of an American-based,
customer-service telephone agent is approximately
$7.50 per phone call versus only about 32 cents per call
for an automated phone system.133
Many applications that used to be delivered over the
phone are now increasingly delivered via an online ap-
plication instead. For example, online ight tracking
applications have replaced the automated phone sys-
tems that people could call to nd out the status and
estimated arrival time of a ight (which was the origi-
nal self-service technology intended to free up airline
agents). Similarly, many phone companies have dis-
continued their time of day services that people used
to call to hear a pre-recorded message stating “At the
tone, the time will be…” because of the wide availabil-
ity of alternatives to get this information, such as cell
phone or the Internet.
IMPACT OF LABOR COST ON SELF-SERVICE
TECHNOLOGY ADOPTION
The adoption of self-service technology is also driven
by the cost of labor. When the price of labor is high,
organizations invest more in self-service technol-
ogy to reduce labor costs. Not surprisingly, countries
with higher wages are generally more likely to adopt
self-service technology. However, even in the United
States, many organizations have not adopted self-ser-
vice technology when they otherwise might have be-
cause of the low costs of unskilled labor in the United
States. According to the World Bank’s Doing Business
2010 the United States ranks rst along with Singapore
for the ease of employing workers. The index calcu-
lates the overall costs of hiring and ring, training re-
quirements, and the minimum wage.134 While exible
labor markets are important for productivity growth,
if labor costs are too low organizations often sacrice
capital investments because at least in the short term
the returns on investment for low-skilled labor are of-
ten higher and more predictable than investments in
technology.
Compared with other advanced nations, low-skilled
labor is particularly cheap in the United States. In
2009 the minimum wage was raised for the rst time
in over a decade to $7.25 per hour; however, this is
still far below other developed countries. For ex-
ample, the minimum wage in the United Kingdom
is $8.00 per hour (and $10.90 in London), $11.60 in
Ireland, $11.75 in France, and $14.31 in Australia.
In these countries investing in self-service technol-
ogy makes more economic sense. Often referred
to as the “Webb effect,” the theory is that a higher
wage oor leads to higher levels of efciency.135
Indeed, one study on the effects of the minimum
wage on part-time employment concludes that “if the
federal government raises the minimum wage employ-
ers in some sectors may expedite the adoption of au-
tomated equipment and new technology to increase
labor productivity.”136
Policymakers in the United States have largely focused
on the effects of minimum wage on jobs, and not on
productivity. But even here, the focus is mistaken. For
example, many conservative neoclassical economists
argue that raising the minimum wage can have a nega-
tive effect on employment, since they argue if you raise
the price of something you get less of it (and thus lower
employment). While this can be true at the micro lev-
el, it is not true at the macroeconomic level. For the
most part macroeconomic employment levels are de-
termined not by whether the minimum wage is mod-
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estly higher but by overall scal and monetary policy.
Others worry that increasing the minimum wage will
reduce U.S. competitiveness especially with low-wage
nations. But what these observers fail to grasp is that
the lion’s share of industries affected by the minimum
wage are non-traded (e.g., restaurants, nursing homes,
lawn care). Most industries that face international com-
petition (e.g., much of manufacturing and services like
software development) pay workers well beyond the
minimum wage. Moreover, the competitive advantage
of the United States cannot be low wages, given such
low labor costs in nations like China. Indeed, even in
Brazil, one of the only developing countries with a
minimum wage, the minimum wage is $2.64 an hour,
far below anything the United States could compete
with. In order to remain internationally competitive
rms in the United States must adopt strategies to pro-
mote labor productivity, not low labor costs.
RESPONDING TO CONCERNS OVER
SELF-SERVICE
Self service is not new. After all, people push buttons
on elevators to signal their oor, self-dial telephones,
use vending machines, and drive cars. However, the
potential of self-service was vastly limited in the pre-
digital economy. In today’s digital economy, consum-
ers using digital tools from cell phones to smart cards
to kiosks to broadband-enabled computers are playing
a growing role in the economy.
In spite of the signicant benets of self-service, par-
ticularly for economic growth, self service sometimes
gets a bad rap. There are four major concerns that
have been raised: self service simply shifts work to the
consumer with only the company beneting; self ser-
vice eliminates consumer choice and robs individuals
of human contact; self service eliminates jobs; and -
nally, the economic benets of self-service will not go
to workers. All four of these concerns are either over-
blown or incorrect.
Concern: Self service simply shifts work to the
consumer
The efforts of companies to implement self service
is sometimes seen as creating work for the consumer
solely for the benet of the company. However, this
is seldom, if ever, the case. First, when companies in
competitive markets benet from self service, they
pass these benets on to consumers in the form of
lower prices, more convenience and better service.
Second, most self-serve applications do not cost the
consumer more time, they just involve one person (the
consumer) doing the work instead of two people (the
consumer and the service worker). In many cases the
provision of services involves the participation of both
service workers and consumers. In fact, this is largely
what differentiates manufacturing from services. In
manufacturing, the production and consumption of
goods is separate. In services, they are linked and of-
ten must be done at the same time. For example, when
a traveler checks in for her ight at an airport with a
ticketing agent, the traveler must stand at the coun-
ter while the customer service agent does the work. If
the customer uses a self-service kiosk to check in, the
time spent by the customer is the same (or less given
that there are shorter lines due the reduced need to
keep kiosks fully utilized at all times), but the overall
time to produce the service is cut nearly in half be-
cause now only one party, the customer, is engaged in
the provision of the service). Granted while some self-
service applications can be maddening and cost con-
sumers time, overall self-service technologies usually
cut overall labor time for both the service worker and
the consumer. Moreover, self-service technology con-
tinues to improve and, over time, will only become
easier to use.
Concern: Self service eliminates consumer
choice and robs individuals of human contact
Some consumers complain that self-service tech-
nology robs them of the choice to get service from
others. Clearly some consumers desire the ability to
have choices.137 However, in many cases, consumers
still have the option to choose full service over self
service. For example, airlines still allow travelers to
check in with customer service agents; banks still have
tellers to assist their customers; and grocery stores still
have clerks to ring up groceries. What these people are
usually really complaining about is that they do not
want to have to pay more to get service from a person.
Even in cases where the choices are more limited, the
reason is usually that people do not want full service
or they do not want to pay a premium. For example,
while drivers can still buy gas at full service gas sta-
tions, they make up only a small share of stations, with
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the majority being self serve. But the reason there are
not more full-serve gas stations is because very few
people are willing to pay more for the cost of full ser-
vice or wait longer to get their gas pumped for them.
Neither will a ban on self-service give everyone the
benets of full service without imposing additional
costs. Generally speaking, full service costs more than
self service, whether it is at a gas station, airport, park-
ing lot, or grocery store. Even where personal service
provides consumers with more value (e.g., a chauffeur-
driven car is seen as a luxury), it usually costs more
(which is why usually why only wealthy people have
chauffeurs). Other kinds of personal service are the
same. They cost more money to provide than self ser-
vice and these higher costs are passed on to consumers
in the form of higher prices. However, in the type of
competitive markets companies face, savings from self
service are passed back to consumers through lower
prices, at least over the moderate to long term. As a
result, the purchasing power of the average individual
goes up.
Other critics lament that self service robs individuals
of human contact (although these critics must have
never met a disgruntled service worker). Rather than
have a conversation with a person, people are being
forced to interact with cold, impersonal machines. In-
deed, one particularly strident critic argued that self-
service involves “the sacrice of our inherent humani-
ty.”138 Presumably this critic would have us go back to a
world of elevator operators, operator connected phone
calls, and teller-mediated bank transactions and the
lower productivity and higher prices that were associ-
ated with them. These complaints have been around
for a long time. When telephone companies replaced
operator dialing with self dialing early in the 20th cen-
tury, some complained that it was a sign that society
had become more impersonal and was losing the hu-
man touch. Likewise, some people initially disliked
ATMs for the same reason and refused to use them.
But research shows that as customers gain more famil-
iarity with self-service technologies that they are more
likely to use them and more likely to look favorably on
them.139 Moreover, as described earlier, many consum-
ers prefer interacting with a machine as opposed to a
human because it can be faster, easier to use, more in-
formative, more accurate, or simply just more fun. For
example, the National Restaurant Association found
that over two-thirds of U.S. consumers between the
ages of 18 and 34 would prefer to use self-service at
quick-service restaurants.140
However, even if self service does seem cold and im-
personal to some users, this is not a trade-off with-
out benets. As described throughout this report, self
service yields a whole host of benets to consumers
including lower prices and greater convenience. And
many people gladly choose to use self-service technol-
ogy precisely for the benets—to access their cash
24/7, to skip a long line and use self-checkout, or to
receive lower prices at the self-serve gas pump.
The National Restaurant Association found that over two-
thirds of U.S. consumers between the ages of 18 and 34 would
prefer to use self-service at quick-service restaurants.140
Concern: Self service destroys jobs
Some individuals and interest groups object to self ser-
vice on the grounds that it costs people jobs. Indeed,
with unemployment hovering just below 10 percent,
shouldn’t society be restricting, rather than promot-
ing, self-service technology? Why eliminate rules
prohibiting self-service gas stations if full-service sta-
tions employ thousands of workers? Why replace bank
tellers with ATMs that can do the same thing? The
answer is that it is better for consumers and the over-
all economy. Self-service gas pumps save consumers
millions of dollars a year, and bank ATM machines
allow customers to conduct banking transactions on
their own time. There is a tradeoff but the moderate
and long-term benets to society vastly outweigh the
short-term and limited benets to protecting these
jobs against change.
As such, some people may have concerns about wheth-
er the move to greater use of self-service in the econo-
my will result in fewer jobs. Such concerns are not new.
During the 1930s, a labor union wrote a letter to Presi-
dent Roosevelt proposing the following: “Remove
the loading machines from the coal mines, complete
all public work with man power, take the tractor off
the farms, go into the various industries and remove
enough labor-displacing machines to make employ-
ment for labor.” A few years later, Congress debated
legislation to require the Secretary of Labor to cre-
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ate a list of all labor-saving devices and estimate how
many people could be employed if these devices were
eliminated.141 When factory automation took off in the
late 1950s and early 1960s, increased national concern
centered on the employment effects of automation and
productivity. Such concerns entered into the popular
imagination of the day, with television shows and news
documentaries and reports worrying about the loss of
work. One particularly telling episode of “The Twi-
light Zone,” predating the movie The Terminator, docu-
mented a dystopian world in which a manager replaces
all his workers with robots, and in the nal scene, the
manager himself ends up being replaced by a robot. So
great was concern with automation and the rise of push
button factories that Congress’s Joint Economic Com-
mittee held extended hearings on the matter in 1955.
John Kennedy created an Ofce of Automation and
Manpower in the Department of Labor in 1961, identi-
fying, “the major domestic challenge of the Sixties – to
maintain full employment at a time when automation,
of course, is replacing men.” Others at the time even
considered schemes whereby the United States would
encourage migration of Americans to other nations as
the demand for labor contracted.142
However, both history and scholarly analysis have
clearly and consistently refuted the notion that in-
creased productivity (through automation or self-
service) leads in the moderate to long term to higher
unemployment. For example, new technologies (e.g.,
tractors, disease resistant crops, chemical fertilizers)
boosted agricultural productivity, spurring a decline
in agricultural employment. As food became cheaper,
consumers spent the money they saved from cheaper
food on other things (e.g., cars, appliances, entertain-
ment) thus creating employment in other sectors. Simi-
larly while auto factory automation makes it possible to
produce more cars with fewer workers, it also lowers
the price of cars, thereby boosting demand for cars and
creating employment.
Some self-service critics, when pressed, will be willing
to acknowledge this, but they argue that things are dif-
ferent now. Because technology is now displacing jobs
not only in agriculture and manufacturing, but also in
the service sector, there will be no new job-generating
growth sectors to employ all those who lose their jobs.
For example, author Jeremy Rifkin argues when mil-
lions of retail jobs are displaced by e-commerce and a
host of other service sector jobs undergo digital auto-
mation, there will be no new jobs to replace them. If
we boosted productivity in the retail, banking, insur-
ance, and other service sectors that were job genera-
tors up until now, where in the world will people nd
work?143
But this view fails to recognize that savings from a
more efcient industry, for example, the insurance in-
dustry, would ow back to the economy in one or more
of the following three ways: lower prices (e.g., lower
rates for policyholders), higher wages for the fewer re-
maining employers, or higher prots. In a competitive
insurance market, most of the savings would ow back
to consumers in the form of lower prices. Consumers
use the savings on lower premiums to go out to dinner
a few times, buy books, or any number of other things.
This economic activity stimulates demand that other
companies (e.g., restaurants, book stores, movie the-
aters, and hotels) respond to by hiring more workers.
Conversely, banning self-service technology would not
create jobs. For example, Monmouth University pro-
fessor Robert Scott claims that if states banned self-
service gas stations that they would, on average, each
create 3,000 jobs. But this ignores the fact that con-
sumers would be paying higher prices to support the
wages of these newly hired gas station workers (and
also waiting longer to get the cars lled up with gas)
and because of that would have to cut back spending
on other things by an equivalent amount, leading to
a reduction in jobs in other sectors by an equivalent
amount.144 The only thing that would have been ac-
complished is that consumers would be worse off as
they would be getting the same amount of gas station
services, but would be consuming less of other items.
This common sense view is borne out by economists.
For example, economists at the Federal Reserve write
that, “Productivity grew noticeably faster than usual
in the late 1990s, while the unemployment rate fell to
levels not seen for more than three decades. This in-
verse relationship between the two variables also can
be seen on several other occasions in the postwar pe-
riod and leads one to wonder whether there is a causal
link between them. The empirical evidence presented
here shows that a positive technology shock leads to a
reduction in the unemployment rate that persists for
several years.”145
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Likewise, in a denitive review of the studies on pro-
ductivity and employment, the OECD stated that,
“Technology both eliminates jobs and creates jobs.
Generally it destroys lower wage, lower productivity
jobs, while it creates jobs that are more productive,
high-skill and better paid. Historically, the income-
generating effects of new technologies have proved
more powerful than the labor-displacing effects: tech-
nological progress has been accompanied not only
by higher output and productivity, but also by higher
overall employment.”146 Using cross-country rm level
data, the OECD has shown that technology-using in-
dustries have higher than average productivity and em-
ployment growth.147
“A positive technology shock leads to a reduction in the
unemployment rate that persists for several years.”145
This is not to say that productivity-enhancing technol-
ogies, including self service, do not result sometimes in
short-term job loss. As discussed above, in some cases,
companies re-deploy workers to provide better servic-
es and these workers end up in higher value jobs. But
in other cases, companies are able to do the same with
fewer workers. In fact, several studies nd that in the
short-run there is a small positive effect on unemploy-
ment from productivity improvements.148 Other stud-
ies nd that productivity growth has some short-term
negative job impacts, but moderate- and long-term
benets. For example, Chen, Rezai, and Semmler nd
that while short-run productivity growth and unem-
ployment are weakly positively correlated, in the mod-
erate- and long-run productivity growth is strongly
negatively correlated with unemployment.149 In other
words, if economies want to create jobs over the longer
run, (e.g., up to ten years) embracing self-service tech-
nology is a key way to do that. The reason appears to be
two-fold. First, there are jobs created in the companies
providing self-service technologies. Second, and more
importantly, as consumers pay relatively less for goods
and services, they have more purchasing power, which
stimulates a growth in other sectors, leading to a self-
reinforcing economic expansion.
Finally, if some rms buy self-service devices to replace
low-skilled labor, job creation will follow in industries
that supply the new equipment. This means that, in
general, there will be an overall shift in the economy
in the direction of higher-skill and higher-wage jobs.
Moreover, if the United States becomes a leader in
producing self-service technology, it will experience
a growth in jobs serving foreign markets. Although
rms may cut some low-skilled, low-productivity jobs
after adopting technology, the added efciency of do-
ing so reduces the price of goods and services and in-
creases U.S. exports.
Concern: Even if self service boosts productivity,
workers will not benefit
In recent years it has been a common refrain of many,
particularly those on the left, that productivity increas-
es no longer benet average workers.150 If this is the
case, why support technological innovation, including
self-service technologies to boost productivity? How-
ever, as labor economist Stephen Rose has shown:
“the trends over the last 25 years in income
growth and nds that, contrary to the conven-
tional explanation embraced by many on the left,
the fruits of productivity growth have actually
been harvested by most working Americans.
Much of the difference in productivity and me-
dian income growth can be explained largely by
demographic change and rising non-wage bene-
ts. This is not to say that growth in recent years
has not been more inequitable than it should be,
or that recent tax and social policies have not
exacerbated this inequality. Both are true. How-
ever, the historical link between productivity
growth and wage growth is not broken and it
would be a grave mistake for our future if our
nation gave up on growth.”151
POLICY RECOMMENDATIONS
To encourage greater use of self-service technology
and its related benets, policymakers should do the
following:
Resist and overturn policies that restrict business use
of self-service technologies
Governments should actively resist pressure from
groups threatened by self-service technology to pro-
tect them from these changes. The list of such entreat-
ies is long and troubling. Car dealers have succeeded
in getting laws passed in all 50 states making it illegal
for automobile manufacturers to sell vehicles directly
to the consumer, including over the Internet. Realtors
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have tried to shut out Internet-based brokers to pro-
tect their 6 percent sales commissions.152 Optometrists
have worked with contact lens manufacturers to pre-
vent online lens sellers from getting products.153 Gas
station owners in Oregon and New Jersey have resisted
the move to self-service gas stations. Wine wholesal-
ers have opposed direct online sales from wineries
and out-of-state retailers.154 And in California, grocery
store unions and their allies have pressed for legislation
to restrict self-service checkout at grocery stores.155
In other cases, some groups try to pressure lawmak-
ers into passing bans on self-service discounts, or
conversely full-service surcharges.156 For example, in
Massachusetts critics derided a $5 surcharge at the
Massachusetts Registry of Motor Vehicles for citizens
conducting their business in-person rather than using
a self-service option such as using the Internet, the
agency’s automated phone system or by mail. The criti-
cism was so strong that the Massachusetts governor
rescinded the fee after only one day.157 Likewise many
states have been reticent to impose higher rates for tolls
collected by toll booth clerks instead of tolls using toll
transponders. Yet, these are the ip side of discounts
for using self-service channels and both methods sim-
ply try to ensure that customers are paying for the full
costs of their service and reward individuals who use
the self-service option.
These restrictions are not limited to the United States:
the European Commission is considering rules for
member states that would permit manufacturers to re-
quire retailers selling their products to maintain brick-
and-mortar stores and sell a certain amount of their
products in these stores.158 And a 2009 report from
the European Commission found that “60 percent of
cross-border transactions could not be completed by
the consumer because the trader did not ship the prod-
uct to their country or did not offer adequate means for
cross border payment.”159
Opponents of these innovations seldom are so crass or
politically naive as to say, “Stop this innovation, it is
hurting us (costing jobs, reducing prots, etc).” Rather,
they couch their anti-technology claims in terms of
protecting the public interest. Car dealers only wanted
to protect the consumer from unscrupulous manu-
facturers. Travel agents, in seeking to enlist the U.S.
Justice Department against the airlines forming online
travel site Orbitz, were doing it only because they “act
as the public’s representatives and help keep prices
low.”160 Optometrists say they are only trying to pro-
tect consumers from eye damage. Alcohol wholesal-
ers and grocery store unions are only trying to protect
youth from purchasing alcohol (see Box 4).161
While nobody expects these groups to become self-
service advocates, it is reasonable to expect policymak-
ers not to fall for their claims of protecting the public
interest, when what is really going on are efforts to
protect the narrow interests of a select few in business
or labor over the broader interests of consumers and
the economy. Policymakers need to side with the gen-
eral public and resist the pressure from those who op-
pose self-service innovation.
In some cases, legislative or regulatory changes are
sometimes necessary to clear legal hurdles that limit
the use of self-service technology. For example, the
Food and Drug Administration recently passed new
regulations that limit the use of self-service technol-
ogy to purchase tobacco products by requiring it to
be completed with a face-to-face transaction. While
stopping underage smoking may be an admirable goal,
a better, technology-neutral regulation would simply
require age verication, and provide multiple options
for satisfying that requirement, such as a face-to-face
transaction or via technology (when and if it is avail-
able as a robust solution). Similarly, the online sale
of alcohol is severely restricted by various state laws.
Sometimes using self-service technology can even cre-
ate stronger countermeasures to stop undesirable be-
havior. For example, a pilot project in Pennsylvania to
have a kiosk sell wine can use a computer to verify if
the ID card is fake, use remote monitoring to visually
match a shopper’s face to her ID card, and administer
a breathalyzer test to ensure the purchaser is sober.166
In other cases, government can make regulatory or leg-
islative changes that enable greater use of self service.
For example, the growing availability of ATMs that
can process checks would not have happened without
the legislative reform that gave the digital images of
checks the same legal status as paper checks. Likewise,
Congress passed the Fairness to Contact Lens Con-
sumers Act to give consumers the right to get their
contact lens prescription from their optometrist so that
they can ll it from the seller of their choice, including
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online stores or discount retailers like Walmart. Gov-
ernment should be more proactive in identifying and
overcoming these barriers. For example, the Federal
Trade Commission (FTC) should be vigilant in moni-
toring federal and state rules and regulations that limit
(or fail to encourage) self service in the private sector.
Support “prosumer” technologies like broadband, elec-
tronic IDs and mobile payment systems
Self-service is an important part of the economy, help-
ing to boost productivity and increase consumer con-
venience. In the old economy, for the most part, pro-
ducers produced and consumers consumed. Producers
invested in new capital equipment to produce goods
and services more efciently and consumers in turn
bought these cheaper goods and services. This dichot-
omy between producers and consumers is blurring in
the new digital economy where a whole host of digital
tools are enabling consumers to become, in the words
of futurist Alvin Tofer, “prosumers” who act at the
same time as both consumer and producer.167
Self-service technologies like broadband enable con-
sumers to become more efcient, thus in turn driving
higher rates of productivity and economic growth. For
example, using broadband application like telemedi-
cine and telework individuals can reduce their need to
travel. By substituting bits for atoms, broadband makes
distributing digital content, like movies, cheaper and
more efcient. Broadband is reducing a whole host of
transaction costs by making it easier to conduct busi-
ness and commerce online. However, the benets from
investments in “prosumer” capital equipment do not
accrue just to the individual, but they spill over to so-
ciety as a whole. Thus government should consider the
importance of self-service to the economy when faced
with policy issues, such as investing in broadband or
extending the Internet tax moratorium.
Other prosumer technologies also deserve government
support. As more services become digital, the need for
a robust system that allows individuals to electronically
identify and authenticate themselves will continue to
BOX 4: CALIFORNIA LEGISLATION WOULD RESTRICT SELF-CHECKOUT FOR ALCOHOL
The United Food and Commercial Workers (UFCW) union has been a vocal supporter of AB 1060, a bill in the
California Senate that would require all alcohol sales to be made with a cashier rather than using self checkout.
While ostensibly the legislation is to prevent minors from illegally purchasing alcohol, it would also have the ef-
fect of thwarting the newest entrant to the California grocery market, Tesco’s Fresh & Easy chain. Why would
UFCW target Fresh & Easy? First, unlike Safeway and Kroger, it is a nonunion retailer. And just as troubling
from the union’s perspective, it is hyper-efcient, employing fewer checkout workers due to the ubiquitous use
of self checkout systems.
UFCW’s efforts have been supported by the labor-allied Los Angeles Alliance for a New Economy (LAANE),
an advocacy organization committed to “growing industries which cannot be exported, including those in the
fast-growing service sector,” which co-authored a study claiming that self checkout is not reliable in stopping un-
derage alcohol purchases.162 But these claims are simply not supported by the facts. Self-service checkout systems
already provide signicant controls to protect against illegal alcohol purchases. The systems can automatically
alert the retail clerk when a customer scans alcohol, requiring the clerk to check the customer’s identication
and verify that he or she is at least 21 years old before the sale can be completed. Moreover, analysis of the bill
by the Senate Governmental Organization Committee reports that the staff of the California Alcoholic Bever-
age Control Department “notes that they have no evidence of any problems associated with minors purchasing
alcoholic beverages through self-service checkouts in California.”163
UFCW has made its position on self-checkout clear: “We don’t like self-checkout scanners because they put
cashiers out of work.”164 But it has had legislative success with AB 1060 by partnering with groups like Mothers
Against Drunk Driving (MADD) to change the focus from self service to underage alcohol use. As University
of Illinois sociologist John Walsh writes, “Unions would likely less successfully oppose scanning based on the
increased front-end productivity—their loss is consumers’ as well as companies’ gain.”165 Instead, Walsh notes
that in order to more effectively convince legislators to oppose these technologies, unions align with powerful
consumer groups to claim that they are only acting in the interest of consumers.
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grow. Consumers need a exible and interoperable
system of electronic IDs to be able to complete elec-
tronic transactions securely and privately. A nation-
wide system of electronic IDs would support applica-
tions such as age verication for retailers at kiosks and
help prevent fraudulent transactions. Electronic IDs
would also enable more secure e-commerce and give
consumers more control over sensitive information,
such as their online electronic health records.
Similarly, self-service can benet from a better mobile
payment system that allows consumers to use their mo-
bile phones to pay for goods and services.168 In many
advanced countries, consumers use their phones as
multifunctional electronic wallets to pay public transit
or taxi fares; to make purchases from merchants, res-
taurants, convenience stores, and automated devices;
and to check in at airports, hotels, and schools, as well
as a host of other functions. A secure mobile payment
system will help make self-service transactions more
consumer-friendly.
Encourage greater government use of self-service
technology
As the private sector pushes forward with self-service
technology in response to consumer demand for great-
er control and convenience, people increasingly expect
to have self-service options made available to them in
all aspects of their lives. Government has many op-
portunities to use self-service technology to improve
efciency, cut costs and provide better service to its
citizens. For example, less than 50 percent of citizens
that apply for benets from the Social Security Admin-
istration (SSA) do so online. Likewise, few U.S. Post
Ofces have installed self-serve kiosks and the U.S.
Postal Service has not done enough to encourage cus-
tomers to use them. To that end, government should
continue to nd ways to use self-service technology
to improve government-citizen interaction. Where
cost-effective self-service options already exist, gov-
ernment agencies should nd ways to encourage their
use. For example, the SSA can install kiosks or public
computer terminals in the lobbies of its eld ofces
to encourage citizens to use self-service options and
provide access to a self-service option to those with-
out Internet access. By using self-service technology
for routine transactions, agencies can redeploy staff to
higher value service and provide better quality service
to citizens. Government should also reward citizens
that use low-cost self-service options. For example, a
parking ticket that is paid online could be priced lower
than one that is paid in person. One strategy would be
for the Obama administration to create a self-service
task force co-chaired by the President’s CIO and CTO,
and made up of ofcials from federal departments, to
plan how the federal government can encourage the
use of self-service throughout the government.
Support creation of a Center of Excellence for
Accessible Design in IT-enabled Self Service
As discussed previously, self-service technology can be
used to provide more accessible service to consumers;
however, this is not always the case. Accessibility, much
like security or privacy, must be engineered early on
in the development of products and services. For ex-
ample, a self-service kiosk may not always be accessible
to an individual in a wheelchair or an online applica-
tion may not be compliant with accessible web stan-
dards. To ensure that as more self-service technology
becomes available it does not come at the expense of
any particular population, Congress should fund the
creation of a Center of Excellence (COE) for Acces-
sible Design in IT at a major U.S. university. The COE
would support the development of best practices for
accessible design for kiosks, online services, interactive
voice response systems, and mobile applications and
devices.
Increase the minimum wage in order to boost
self-service technology adoption
Creating an economy that encourages high-skilled la-
bor over low-skilled labor also increases the adoption
of technology, regardless of whether workers are par-
ticularly skilled in the specic technology adopted. For
example, Daron Acemoglu, an MIT economist, nds
that in the absence of minimum wage legislation the
labor market in the United States is inefciently biased
towards low-wage jobs.169 Industries with high-wage
workers promote the investment in technology, despite
skill levels, as the relative cost for performing a task
is much higher for higher paid workers, and therefore
the returns from training and new technology are also
higher.170 By allowing unskilled labor to be replaced
by self-service technology and increasing the number
of high-skilled jobs to operate these technologies, a
higher minimum wage, indexed to ination, could help
create a feedback loop where companies invest in tech-
nology to replace low-skilled workers, which increases
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their need for high-skilled workers, which then reduces
the relative costs of investing in technology.
An additional mechanism to increase the use of self-
service technology would be to replace the Earned
Income Tax Credit (EITC) with a higher minimum
wage. The EITC is a refundable tax credit aimed at
reducing the payroll tax burden on low-income work-
ers. Because the EITC is paid for by taxpayers and not
rms, rms are shielded from the cost of subsidizing
low-wage workers. On the other hand, because the
minimum wage is directly paid for by rms through la-
bor costs, paying to increase the minimum wage by re-
ducing the EITC would shift the cost burden to rms
without added any extra costs to the overall economy
(because the overall cost to the economy is the same
regardless if taxpayers are paying for the EITC or rms
are paying for the minimum wage). And as rms be-
gin to feel the pressure of an increased minimum wage
they will be more likely to replace low-skilled labor for
more efcient technology.
Provide stronger safety nets for workers adversely af-
fected by technological change
Self-service technology often involves replacing a hu-
man with a machine and, as a result, renders many
jobs obsolete, from the telephone operators who have
been replaced by automatic switching technology to
the elevator operators who have been superseded by
computer-controlled elevators that operate automati-
cally. Disintermediation, the elimination or reduction
of unnecessary middlemen from a transaction, yields
signicant productivity benets but is an unfortunate
effect of implementing self-service technology. While
this fact should not prevent policymakers from pur-
suing self-service technology, it should highlight the
importance of developing worker-friendly policies that
provide strong safety nets while still encouraging busi-
nesses to adopt productivity-enhancing innovations.
Policymakers can follow the “exicurity” model in
Denmark that moves away from policies that try to
protect jobs and instead focuses on policies to protect
people (i.e., an emphasis on employment security not
job security).171 This type of model recognizes that in
today’s economy changes in the labor market occur
rapidly and businesses need a exible labor market.
It also recognizes that both businesses and workers
benet more from employment security and income
security than from job security. Therefore policies em-
phasize unemployment support, workforce training,
and better services to assist workers getting back into
the labor market. One place to start would be to re-
form the unemployment insurance system in ways that,
among other things, increases the minimum benets
workers receive and expands coverage so that a larger
share of workers who lose their job through no fault of
their own are covered.
CONCLUSION
From ATMs to e-commerce to mobile payments,
self-service technology offers a broad set of benets,
including lower costs and more convenience, for con-
sumers and businesses. Moreover, the self-service
economy has the potential to contribute even more
to our national prosperity and quality of life. While
self-service technology is widespread, it is still rela-
tively new and will only continue to improve in quality
over time. However, policymakers must avoid enacting
policies to restrict self-service while at the same time
putting in place appropriate policies to stimulate the
self-service economy to realize these benets.
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ENDNOTES
1. The Social Security Administration’s 2009 OASDI Trustees Report assumes in their intermediate cost assumption that
productivity will grow on an annualized basis of 1.7 percent. The 2009 Annual Report of the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (Washington, DC: Social Security
Administration, Ofce of the Chief Actuary, 2009), http://www.ssa.gov/OACT/TR/2009/trTOC.html.
2. Lucy Lazarony, “Express checking: Cheaper, but less personal than traditional banking,” Bankrate.com, June 8, 1998,
http://www.bankrate.com/brm/news/chk/19980608.asp.
3. James M. Curran and Matthew L. Meuter, “Self-service technology adoption: comparing three technologies,” Journal of
Services Marketing 19, no. 2 (2005): 103-113.
4. NCR, “Self Service: The Next Generation,” a supplement to Hospitality Technology, June 2009,
http://www.ncr.com/documents/HT_09SelfServiceStudy.pdf.
5. For a review of this literature, see Robert D. Atkinson and Andrew S. McKay, Digital Prosperity: Understanding the
Economic Benets of the IT Revolution (Washington, DC: Information Technology and Innovation Foundation 2007), 14,
http://www.itif.org/les/digital_prosperity.pdf.
6. S.W. Kelley, J.H. Donnelly Jr., and S.J. Skinner, “Customer participation in service production and delivery,” Journal of
Retailing 66, no. 3 (1990): 315.
7. Ibid.
8. Peg Bost, A Roadmap for the Future (North Canton, OH: Diebold, 2006).
9. Ibid.
10. We derived our estimate based on potential savings from various service industries adopting self-service technology.
Occupations where we expect to see greater use of self-service include: tax preparers, cashiers, customer service agents,
counter and rental clerks, insurance sales agents, insurance claims processing clerks, travel agents, real estate agents,
correspondence clerks, receptionists, hotel and motel clerks, new account clerks, order clerks, library assistants, tellers,
loan interviewers, slot key persons, parking lot attendants, switchboard operators, telephone operators, postal service
clerks, license clerks, and service station attendants. We calculated a total estimated labor cost for each occupation and
ranked occupations based on the expected impact of self-service technology as high, medium or low. Data on labor costs,
including size of workforce, hourly wages, hours worked, and average employer-paid benets came from the Occupational
Employment Statistics at the U.S. Bureau of Economic Analysis, http://www.bls.gov/oes/.
11. Bruce Kopp, “Downside Up: Retail Technology Spending in the 2008 Economy,” Pervasive Retailing Journal 3, no. 2
(2008), http://www.fujitsu.com/downloads/SOL/fai/retailing/prjournal/PervasiveRetailingJournal-Summer08.pdf.
12. Rory Gardner and Andrew Nathanson, Kiosks for Self-Service and Interactive Applications: Technical and Vertical Market
Analysis, 2nd Ed. (Natick, MA: VDC Research, January 2008).
13. Global ATM Market and Forecasts, Overview (Surrey, UK: Retail Banking Research, August 2008).
14. Chin-S. Ou et al., “Can Automatic Teller Machine Investment Improve Bank Cost Efciency?”
Proceedings of the Third Workshop on Knowledge Economy and Electronic Commerce,
http://moe.ecrc.nsysu.edu.tw/English/workshopE/2005/SYS-06.pdf.
15. Bost, A Roadmap for the Future.
16. Peg Bost, US ATM Transactions - The Story Behind the Numbers (North Canton, OH: Diebold, 2004). “EFT Data Book,”
ATM & Debit News and Prepaid Trends 9, no. 45 (October 23, 2008).
17. Ou et al., “Can Automatic Teller Machine Investment Improve Bank Cost Efciency?” 102.
18. “7-Eleven Expands Vcom Services,” Convenience Store News, July 3, 2006,
http://www.csnews.com/csn/search/article_display.jsp?vnu_content_id=1002764958.
19. Stacie Babula and Heather Burke, “To Pump or Not to Pump: New Jersey Clings to Self-Serve Gas Ban,” Bloomberg.com,
April 24, 2006, http://www.bloomberg.com/apps/news?pid=10000103&sid=aIMEeJpjhVZk&refer=us.
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20. Gasoline Price Changes: The Dynamic of Supply, Demand, and Competition (Washington, DC: Federal Trade
Commission, 2005), http://www.ftc.gov/reports/gasprices05/050705gaspricesrpt.pdf.
21. The EPA estimates that the average driver drives 11,720 miles per year in a vehicle that averages 20.4 gallons per mile. This
works out to an average of 575 gallons of gas consumed per year. At an average savings of 5 cents per gallon from self-
serve, this works out to an annual savings of $28.715. (See http://www.epa.gov/cleanenergy/energy-resources/refs.html)
and Mouna Keiloun et al., “Exposure of Gas Station Attendants to Methylcyclopentadienyl Manganese Tricarbonyl (MMT)
Used in Gasoline,” Water, Air, & Soil Pollution 141, no. 1 (November 1, 2002): 155-163.
22. Mark K. Matthews, “NJ rejects self-service gas,” Stateline.org, May 8, 2006,
http://www.stateline.org/live/ViewPage.action?siteNodeId=136&languageId=1&contentId=110510.
23. Randy Alfred, “June 9, 1902: Put a Nickel In, Take Your Food Out,” Wired.com, June 9, 2008,
http://www.wired.com/science/discoveries/news/2008/06/dayintech_0609.
24. Patrick Seitz, “‘Holy Grail’ Nearing Local Grill: Food-Order Kiosks Rolling Out,” Investor’s Business Daily, October 8,
2009, http://www.gokis.net/self-service/archives/001890.html.
25. Deena M. Amato McCoy, “Connecting with customers,” Grocery Headquarters, December 1, 2009,
http://groceryheadquarters.com/articles/2009-12-01/Connecting-with-customers.
26. “Touchscreens integrated at drive-through kiosks,” Self Service World, March 9, 2010,
http://www.selfserviceworld.com/article_23953.php.
27. “Self-Service Economy Arrives Gradually,” The Washington Post,
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/02/AR2007080201193_2.html.
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29. Self-boarding gate at the Paris-Charles de Gaulle Airport, 2009. Photo courtesy IATA.
30. “Fast Travel,” IATA, updated March 2010, http://www.iata.org/pressroom/facts_gures/fact_sheets/fast-travel.htm.
31. Ibid.
32. Australian Customs Service, “SmartGate—Frequently Asked Questions,” modied December 21, 2009,
http://www.customs.gov.au/site/page5555.asp .
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http://www.cbp.gov/xp/cgov/travel/trusted_traveler/global_entry/global_entry_discription.xml.
34. The Hertz Corporation: An NCR Case Study (Duluth, GA: NCR, 2009), http://www.ncr.com/documents/hertz_cs.pdf.
35. Michael Kasavana, “Future of Vending, Search, Select and Satisfy - Innovative Self-service Dispensing Technologies,”
Hospitality Upgrade, November 1, 2009, http://www.hospitalityupgrade.com/_magazine/magazine_Detail.asp?ID=409.
36. “Redbox Fact Sheet,” n.d, http://redboxpressroom.com/factsheets/RedboxFactSheet.pdf.
37. Gregory Freeman and Christine Cooper, The Economic Implications of Low-Cost DVD Rentals
(Los Angeles, CA: Los Angeles County Economic Development Corporation, November 30, 2009),
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41. Robert D. Atkinson, The Past And Future Of America’s Economy: Long Waves Of Innovation That Power Cycles Of
Growth (Edward Elgar Publishing, 2005).
42. “New study says self-checkout terminals to quadruple by 2014,” Kiosk Marketplace, taken from Retail Banking Research,
July 21, 2009, http://kioskmarketplace.com/article_22715_346_120.php.
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44. Lee Holman and Greg Buzek, North American Retail Self-Checkout Systems Market Study (Overview) (Franklin, TN: IHL
Group, August 25, 2009).
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45. “New study says self-checkout terminals to quadruple by 2014.”
46. Amato McCoy, “Connecting with customers.”
47. IHL Research, 2009 North American Self Checkout Systems, August 2009.
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57. Ibid.
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59. Ibid.
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Solutions and Proven Performance for Photo Retailers,” news release, March 3, 2009,
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101. Cellular phone in Japan, 2009. Courtesy Christopher Billich.
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(Washington, DC: CTIA The Wireless Association, n.d.), http://www.ctia.org/content/index.cfm/AID/11316.
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http://www.textually.org/textually/archives/2006/09/013512.htm.
110. One World Income, “M-Commerce, the Next Big Investment Idea?” iStock Analyst, April 28, 2008,
http://www.istockanalyst.com/article/viewarticle/articleid/1776895.
111. Mohammad Khan, phone interview with Stephen Ezell, November 6, 2009.
112. Nasreen Quibria, Understanding Emerging Payments—Moving Towards a Cashless Society (Boston, MA: Federal Reserve
Bank of Boston, May 8, 2007), 17.
113. Ibid., 9.
114. NFC Forum, “Making Money with NFC,” presentation at CTIA Wireless San Diego, October 8, 2009,
http://www.nfc-forum.org/resources/presentations/CTIA_slides.pdf.
115. Ibid.
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116. Quibria, Understanding Emerging Payments, 21.
117. Ibid.
118. Dan Ilett, “Inside China: Oyster and Octopus—A Tale of Two Cities’ Contactless Cards,” Silicon.com, June 28, 2006,
http://www.silicon.com/research/specialreports/china/0,3800011742,39159958,00.htm.
119. Nasreen Quibria, Emerging Payments Industry Brieng: The Contactless Wave: A Case Study in Transit Payments, (Boston,
MA: Federal Reserve Bank of Boston, June 2008), 9.
120. Ibid.
121. Katrin Verclas, “Mobile Phones and Social Activism, An Ethan Zuckerman White Paper,” MobileActive.org, May 9, 2007,
http://mobileactive.org/mobile-phones-and-social-activism-ethan-zuckerman-white-paper.
122. “ICT-Enabled Development Case Studies Series: The Compliance Service uses SMS technology for TB treatment |
bridges.org,” Bridges.org, January 21, 2003, http://bridges.org/case_studies/137.
123. Tarmo Virki, “Kenya, Turkey, Japan lead mobile money trend,” Reuters, February 13, 2009,
http://www.reuters.com/article/technologyNews/idUSTRE51C3R720090213.
124. “A Cash Call,” The Economist, February 15, 2007.
125. “Bottom-of-pyramid poised to leapfrog with mobile wallet,” The Economic Times, June 26, 2009, http://economictimes.
indiatimes.com/News/News-By-Industry/Banking/-Finance-/Finance/Bottom-of-pyramid-poised-to-leapfrog-with-
mobile-wallet/articleshow/4705220.cms.
126. Alexander Villafania, “E-commerce spurs growth in mobile payments,” Inquirer.net, August 13, 2009.
127. Angel Dobardziev, “Pricing mobile payment services,” ITMatters.com, June 9, 2009,
http://www.itmatters.com.ph/ovum.php?id=060909a.
128. Ibid.
129. Seung Hwan Choi and David Collins, “Mobile payments in Asia Pacic,” KPMG, 2007, 2,
http://www.kpmginsiders.36. com/pdf/Mobile_payments.pdf.
130. “Bottom-of-pyramid poised to leapfrog with mobile wallet.”
131. Emily Yellin, Your Call Is (not that) Important to Us (New York: Free Press, 2009).
132. US Productivity Growth, 1995-2000 (McKinsey Global Institute, 2001),
http://www.mckinsey.com/knowledge/mgi/productivity.
133. Barbara D. Phillips, “Please, Stay On the Line,” WSJ.com, March 24, 2009, sec. Books,
http://online.wsj.com/article/SB123785194159219179.html.
134. World Bank Group, “Employing Workers,” http://www.doingbusiness.org/ExploreTopics/EmployingWorkers/.
135. Oren M. Levin-Waldman, “Linking the Minimum Wage to Productivity,” Abstract, Levy Economics Institute Working
Paper No. 219 (1997), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=104908.
136. Yu Hsing, “On the substitution effect of the minimum wage increase: new evidence,” Applied Economics Letters, 7 (2000):
225-228.
137. Machiel J. Reinders, Pratibha A. Dabholkar, and Ruud T. Frambach, “Consequences of Forcing Consumers to Use
Technology-Based Self-Service,” Journal of Service Research 11, no. 2 (November 1, 2008): 107-123.
138. Thomas B. Cavanagh, “Prosthetic gods: The posthuman threat of self-service technology,” Interaction Studies 9
(December 2008): 458-480.
139. Xinyuan Zhao, Anna S. Mattila, and Li-Shan Eva Tao, “The role of post-training self-efcacy in customers’ use of self
service technologies,” International Journal of Service Industry Management 19, no. 4 (2008): 492-505.
140. Patrick Avery, The Self-Order Kiosk (Louisville, KY: Selfserviceworld.com, 2008),
http://global.networldalliance.com/downloads/white_papers/EMN8_MG_UPDATE_01_09.pdf.
141. John Scoville, “Technology and the Volume of Employment,” Proceedings of the Academy of Political Science 18, no. 1
(May 1938): 84-99.
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142. Robert Atkinson, Understanding the Offshore Challenge (Washington, DC: Progressive Policy Institute, May 2004),
http://www.ppionline.org/documents/Offshoring_0504.pdf.
143. Jeremy Rifkin, The End of Work, 1st ed (Los Angeles, CA: Tarcher, 1994).
144. Scott Robert, “Fill’er Up: A Study of Statewide Self-Service Gasoline Station Bans,” Challenge 50, no. 5 (2007): 101-114.
145. Bharat Trehan, “Productivity shocks and the unemployment rate,” Economic Review (2003): 13-27.
146. The OECD Jobs Study: Facts, Analysis, Strategy (OECD, 1994), http://www.oecd.org/dataoecd/42/51/1941679.pdf.
147. Technology, Productivity and Job Creation: Best Policy Practices (OECD, 1998),
http://www.oecd.org/dataoecd/39/28/2759012.pdf
148. Susanto Basu, John L. Fernald, and Miles S. Kimball, “Are Technology Improvements Contractionary?” American
Economic Review 96, no. 5 (December 2006): 1418-1448; Pu Chen, Armon Rezai, and Willi Semmler, Productivity and
Unemployment in the Short and Long Run (New York: Schwartz Center for Economic Policy Analysis (SCEPA), The New
School, September 2007), http://ideas.repec.org/p/epa/cepawp/2007-8.html.
149. Chen, Rezai, and Semmler, Productivity and Unemployment in the Short and Long Run.
150. Robert Kutner, “What’s the Matter With Class?” The American Prospect, June 18, 2006,
http://www.prospect.org/cs/articles?article=whats_the_matter_with_class.
151. Stephen Rose, Does Productivity Growth Still Benet Working Americans?: Unraveling
the Income Growth Mystery to Determine How Much Median Incomes Trail Productivity
Growth (Washington, DC: Information Technology & Innovation Foundation, June 13, 2007),
http://www.itif.org/les/DoesProductivityGrowthStillBenetWorkingAmericans.pdf.
152. “New Jersey Home Buyers Now to Receive a Rebate from ZipRealty,” ZipRealty Blog, January 19, 2010,
http://ziprealty.typepad.com/blog/2010/01/new-jersey-home-buyers-now-to-receive-a-rebate-from-ziprealty.html.
153. Atkinson, “Public Versus Private Restraints on the Online Distribution of Contact Lenses.”
154. Charles Lane, “Justices Reject Curbs on Wine Sales,” The Washington Post, May 17, 2005,
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/16/AR2005051600441.html.
155. Rob Atkinson, “Innovation and Its Army of Opponents,” BusinessWeek, September 23, 2009,
http://www.businessweek.com/innovate/content/sep2009/id20090923_521177.htm.
156. See SEIU’s complaint against bank fees for calling customer service: http://www.seiu.org/a/prolebofa.php.
157. Massachusetts Department of Transportation, Registry of Motor Vehicles, “RMV statement on $5 fee,”news release,
March 1, 2010, http://www.boston.com/news/local/breaking_news/RMV%20statement%20on%20%245%20fee.pdf.
158. Greg Greeley, “Brussels’ Attack on Online Shopping,” WSJ.com, February 1, 2010, sec. Opinion Europe, http://online.wsj.
com/article/SB10001424052748704107204575039071694275514.html?mod=WSJ_Investing_MoreHeadlines.
159. EUROPA, “Consumers: 60% of cross border internet shopping orders are refused, says new EU study,” news release,
October 22, 2009, http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/475&format=HTML&aged=0
&language=EN&guiLanguage=en.
160. Elizabeth Wasserman, “Stuck in the Middle,” Industry Standard (March 6, 2000). Wasserman quotes Paul Ruden.
161. Atkinson, “Innovation and Its Army of Opponents.”
162. Self-Checkout: Is It Reliable for Selling Alcohol? (Los Angeles, CA: Los Angeles Alliance for a New Economy, 2009),
http://www.laane.org/downloads/SelfCHeckout%20report.pdf.
163. AB 1060 Assembly Bill - Bill Analysis (Sacramento, CA: California Assembly Committee on Governmental
Organization, April 30, 2009),
http://info.sen.ca.gov/pub/09-10/bill/asm/ab_1051-1100/ab_1060_cfa_20090429_165614_asm_comm.html.
164. Steve Berberich, “Grocers turn to hand-held personal scanners for shoppers,” Maryland Gazette, August 10, 2007,
http://www.ufcw.org/your_industry/retail/industry_news/grocers.cfm.
165. John P. Walsh, “The Social Context of Technological Change: The Case of the Retail Food Industry,” The Sociological
Quarterly 32, no. 3 (Autumn 1991): 447-468.
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166. Jan Murphy and John Beauge, “Wine kiosks that check IDs, breath planned at supermarkets,” The Patriot-News, December
18, 2009, http://www.pennlive.com/midstate/index.ssf/2009/12/wine_kiosks_that_check_ids_bre.html.
167. Alvin Tofer, The Third Wave (New York: Bantam, 1984).
168. Ezell, Explaining International Mobile Payments Leadership.
169. Daron Acemoglu, “Good Jobs versus Bad Jobs,” Journal of Labor Economics 19, no. 1 (2001): 1-21.
170. Lex Borghans and Bas ter Weel, “What Happens When Agent T Gets a Computer? The Labor Market Impact of Cost
Efcient Computer Adoption,” IZA DP No. 792, (2003).
171. “What is Flexicurity?” European Commission, n.d , http://ec.europa.eu/social/main.jsp?catId=116&langId=en.
172. Robert Atkinson, Modernizing Unemployment Insurance for the New Economy and the New Social Policy (Washington,
DC: Progressive Policy Institute, February 19, 2002), http://www.ppionline.org/documents/Unemployment_Feb02.pdf
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ABOUT THE AUTHORS
Daniel Castro is a Senior Analyst with Information Technology and Innovation Foundation. His research interests
include technology policy, security, and privacy. Mr. Castro has a B.S. from the School of Foreign Service at Georgetown
University and an M.S. in information security technology and management from Carnegie Mellon University.
Dr. Robert Atkinson is President of the Information Technology and Innovation Foundation. He is also author of the
book, The Past and Future of America’s Economy: Long Waves of Innovation that Power Cycles of Growth (Edward
Elgar, 2005). Dr. Atkinson received his Ph.D. in City and Regional Planning from the University of North Carolina at
Chapel Hill in 1989.
Stephen Ezell is a Senior Analyst at the Information Technology and Innovation Foundation, with a focus on
international information technology competitiveness and national innovation policies. Mr. Ezell holds a B.S. from
the School of Foreign Service at Georgetown University, with an Honors Certificate from Georgetown’s Landegger
International Business Diplomacy program.
ABOUT THE INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION
The Information Technology and Innovation Foundation (ITIF) is a Washington, DC-based think tank at the cutting edge
of designing innovation policies and exploring how advances in technology will create new economic opportunities to
improve the quality of life. Non-profit, and non-partisan, we offer pragmatic ideas that break free of economic philoso-
phies born in eras long before the first punch card computer and well before the rise of modern China and pervasive
globalization.
ITIF, founded in 2006, is dedicated to conceiving and promoting the new ways of thinking about technology-driven
productivity, competitiveness, and globalization that the 21st century demands. Innovation goes far beyond the latest
electronic gadget in your pocket – although these incredible devices are emblematic of innovation and life-changing
technology. Innovation is about the development and widespread incorporation of new technologies in a wide array of
activities. Innovation is also about a mindset that recognizes that information is today’s most important capital and that
developing new processes for capturing and sharing information are as central to the future as the steam engine and
trans-Atlantic cable were for previous eras. This is an exciting time in human history. The future used to be something
people had time to think about. Now it shows up every time we go online.
At ITIF, we believe innovation and information technology are at the heart of our capacity to tackle the world’s biggest
challenges, from climate change to health care to creating more widespread economic opportunity. We are confident
innovation and information technology offer the pathway to a more prosperous and secure tomorrow for all citizens of
the planet. We are committed to advancing policies that enhance our collectivecapacity to shape the future we want -
beginning today.
ITIF publishes policy reports, holds forums and policy debates, advises elected officials and their staff, and is an active
resource for the media. It develops new and creative policy proposals to advance innovation, analyzes existing policy is-
sues through the lens of advancing innovation and productivity, and opposes policies that hinder digital transformation
and innovation.
ACKNOWLEDGMENTS
We would like to thank Emiko Guthe and Monique Martineau for their editorial support.
We want to express our gratitude and appreciation to those who provided valuable input, including Scott Andes,
Jennifer Cole, David Drain, Stephen Kendig, Francie Mendelsohn and Janet Webster.
For more information contact ITIF at 202-449-1351 or at mail@itif.org, or go online to www.itif.org.
ITIF
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Washington, DC 20005
