M-Commerce

Mobile commerce is gaining increasing acceptance. The need for mobility is a primary driving force
behind mobile banking, mobile entertainment and mobile marketing, and is supported by an ever
increasing convergence of computers and mobile telecommunication devices.

Mobile commerce was born in 1997 when the first two mobile-phones enabled Coca Cola vending
machines were installed in the Helsinki area in Finland. The machines accepted payment via SMS text
messages. The first mobile phone-based banking service was launched in 1997 by Merita Bank of
Finland, also using SMS.

“Electronic” versus “mobile” The adjective “electronic”, used within the specific contexts of “e-
business” or “e-commerce”, signifies an “anytime access” to business processes. The access to computer
networks is in this case stationary. The services are therefore not completely independent of the current
geographic location of the user. The adjective “mobile”, used within the specific contexts of “m-
commerce” or “m-business”, signifies an “anytime and anywhere access” to business processes. The
access takes place using mobile communication networks, making the availability of these services
independent of the geographic location of the user. At this point it would be also helpful to differentiate
between the terms “mobile” and “wireless”. As opposed to the term “mobile” that signifies an “anytime
and anywhere” access to computer-mediated networks, “wireless” is just a method of communication
between electronic devices, e.g. with the help of infrared interfaces. Whereas a mobile device is per se
wireless, not every wireless device may be suitable for feasible mobile applications. For example,
wireless local area networks (WLAN), with their limited maximum range of 300metres, cannot support
feasible mobile applications.

Defining e-Commerce
A simple definition of e-commerce describes it as “the buying and selling of
products and services over the Web”

Defining m-commerce: M-commerce is sometimes referred to as “mobile e-commerce”12, because its

transactions are basically electronic transactions, conducted using a mobile terminal and a wireless
network. Mobile terminals include all portable devices such as mobile telephones and PDAs, as well as
devices “mounted in the vehicles that are capable of accessing wireless networks” and perform m-
commerce transactions
Features of m-commerce

Ubiquity. Ubiquity means that the user can avail services and carry out transactions largely independent
of his current geographic location (the “anywhere” feature)

Immediacy. Closely related to ubiquity is the possibility of real-time availment of services

Localization. Positioning technologies, such as the Global Positioning System (GPS), allow companies to
offer goods and services to the user specific to his current location.

Instant connectivity. Ever since the introduction of the General Packet Radio Service (GPRS) mobile
devices are constantly “online

Pro-active functionality. By virtue of its ability to be immediate, local and personal, m-commerce opens
new avenues for push-marketing, such as content and product offers. Services like “Opt-in advertising”
can be offered, so that a user may choose those products, services and companies that he wants to be kept
informed about.

Simple authentication procedure. Mobile telecommunication devices function with an electronic chip
called Subscriber Identity Module (SIM).
M-Commerce applications and methods of payment

Mobile banking
• Mobile accounting
• Mobile brokerage
• Mobile financial information
Mobile entertainment
• Mobile gaming
• Download of music and ring tones
• Download of videos and digital images
• Location-based entertainment services
Mobile information services\
• Current affairs (financial, sport andother news)
• Travel information
• Tracking services (persons and objects)
• Mobile search engines and directories·
• Mobile office
Mobile marketing Mobile couponing
• Direct (context-sensitive) marketing
• Organization of mobile events
• Mobile newsletters
Mobile shopping
• Mobile purchasing of goods and services
Mobile ticketing Public transport
• Sports and cultural events
• Air and rail traffic
• Mobile parking
Telematics services
• Remote diagnosis and maintenance ofvehicles
• Navigation services
• Vehicle tracking and theft protection
• Emergency services

Mobile Commerce

Mobile Commerce refers to wireless electronic commerce used for conducting commerce or
business through a handy device like cellular phone or Personal Digital Assistant (PDAs). It is
also said that it is the next generation wireless e-commerce that needs no wire and plug-in
devices. Mobile commerce is usually called as ‘m-Commerce' in which user can do any sort of
transaction including buying and selling of the goods, asking any services, transferring the
ownership or rights, transacting and transferring the money by accessing wireless internet service
on the mobile handset itself.

The next generation of commerce would most probably be mobile commerce or m-commerce.
Presuming its wide potential reach all major mobile handset manufacturing companies are
making WAP enabled smart phones and providing the maximum wireless internet and web
facilities covering personal, official and commerce requirement to pave the way of m-commerce
that would later be very fruitful for them.

Advantage of m-Commerce
M-commerce has several major advantages over its fixed counterparts because of its specific
inbuilt characteristics such as ubiquity, personalization, flexibility, and distribution, mobile
commerce promises exceptional business market potential, greater efficiency and higher
fruitfulness.

Thus it is not surprising that mobile commerce is emerging much faster than its fixed
counterpart. M-commerce is more personalized than e-commerce and thus needs a gentle
approach to appraise m-commerce applications.

Areas / Uses of m-commerce

In the current commerce industry, mobile commerce or M-Commerce has been entered in
finance, services, retails, tele-communication and information technology services. In these
sectors, M-Commerce is not only being widely accepted but also it is being more used as a
popular way of business/ commerce.

Finance Sectors

Mobile Commerce works vastly in finance sector including all big and major financial institutes,
banks, stock market and share brokers. Whenever any user needs money or wants any sort of
banking and finance related services, he/she can access the services or register services via voice
calling or via Short Message Services (SMS) services. WAP based mobile handsets allow the
user to access the official website of the institute.

User can transact money or transfer money, or pay the bill from its bank account using mobile
commerce facilities. Banks also provide round the clock customer care services, which can be
used any time through voice calling. Some customer care services are also provides non-voice
services on mobile that is known as insta-alert facility.

While in the stock market, the user can access the stock market quotes and get in live touch with
current trading status on its mobile in two forms either voice (customer assistance) or non-voice
(sms alerts) or both.

The share broker sends market trends and tips of trading on their clients' mobile. Also broker can
suggest the appropriate stock for intra-day trading to their users.

Telecommunication Sectors

Mobile has played a giant role in communication technology through its versatility and
superiority. The ubiquity and easy usage has further made it extremely popular across the globe.
It has already surpassed the fixed phone in the world. Software platform is essential for operating
any mobile and this tool has revolutionized the communication world because of its functioning
as a small computer.

The booming popularity has forced the corporate world to develop a new commerce platform
that can reach to masses. Mobile commerce has attracted massive traffic because of its unique
characteristics. The user can change the service of any financial institute or banks if gets better
product and service or user is unsatisfied with the service of the subscribing company.

Besides this several bills can be paid using mobile and user can also check the available balance,
the status of cheques, the status of requested processing and customer care support.

Several dealings can be handled through mobile phones.

Service / Retail sectors

Service and Retail sectors are also among the leading sectors, which have nurtured most from
mobile commerce. M-Commerce has proved a major boon for these sectors. Several business
dealings no matter how big or small are being finalized on the mobile phone. Customer would be
able to book the order, can hire carrier/courier services and above all could also pay the dues
related to it through mobile.

Information Sector

After the bursting of dotcom bubble, e-commerce has gone downwards to hell. But the evolution
of mobile commerce has again worked as ambrosia for them. A separate sector has been evolved
to exercise on this field for the IT experts. The webmasters have skillfully exploited this new
area of IT-enabled commerce.

In the IT field, mobile commerce has been used massively to deliver financial news, stock
updates, sports figures and traffic updates and many more onto a single handheld device
‘mobile'.

History of m-commerce

Despite of huge popularity of mobile commerce, it is yet in the initial stage and can be further
expand in to all the fields, which affect the human life. The assumption of mobile commerce is
not so young as it mushroomed so early from adopting this technology.

It initially begins with the use of wireless POS (Point Of Sale) swipe terminals and has since
then made its way into cellular phones and PDA's (Personal Digital Assistants). The first
enabling m-commerce technologies were presented through Wireless Application Protocol
(WAP) and i-mode mobile Internet service. WAP builds on digital phone technology and first
emerged on 2.5 G phone technology that allowed users to browse the Internet. This technology
cemented the way of m-commerce, which has strongly developed on 3G-phone technology.
Nokia has first introduced m-commerce application software Nokia toolkit version 4.0.

The future of m-Commerce seems extremely bright because several experiments are going on to
introduce the upgraded version of mobile likely to emerged with the evolution of 4G mobile
technology.
Growth of Mobile Commerce in India

Mobile Commerce services are evolving rapidly in India due to the coming together of mobile
service providers, banks and payment service providers to offer more products and secure
transactions through mobile networks.

While eCommerce is limited to PC users only, Mobile Commerce is open to almost everyone
with a cellphone and mobile connection. Mobile Commerce is expected to grow because the
mobile usage and ownership penetration is more than 4 to 5 times than a PC and growing at a
very fast rate.

With mobile commerce offerings expanding, customers in India have the hand-held convenience
of using their mobile phones for making payments for taxi fares and recharging prepaid phone
cards.

Emerging Services of Mobile Commerce in India

1. Increased mobile penetration and use of GPRS on handsets has resulted in the digital
downloads market to cross Rs.2.55 Billion by end of March 2008.
2. Monetary transfers or transactions through mobile phones are found to be much cheaper
than traditional bank transfers as the transaction costs are much lower in the former.
3. Innovative solutions for daily use such as payment of auto or taxi fares
4. Inter-bank transfers services are also on the anvil. ICICI Bank Ltd, India’s largest private
bank, has already started offering all its services through mobile phones (called mobile
banking) since January 2008. Standard Chartered bank has launched a service that
enables money transfer from any ATM to any mobile phone across the country. The
recipient receives a pin number on his or her mobile phone and the sender has to convey
the order number to the recipient. Using these two the recipient can withdraw money
from the bank’s ATM’s.
5. Feasibility studies are being conducted to offer mobile commerce to microfinance firms
to enable them collect payments from remote areas.

Challenges faced by Mobile Commerce in India

1. Security of transactions through Mobile Commerce: The biggest challenge to

Mobile Commerce is the security of payment through mobiles. Mobile Commerce
 Services like the mobile wallet which helps make payments at retail outlets through text
messages have been hindered by the guidelines issued by the Reserve Bank of India due
to security concerns.

Mobile Payment Service Providers like Obopay Inc and mChek India Payment Systems
Pvt. Ltd are planning on services that would work within the RBI prescribed guidelines
like bank account-linked services and mobile debit cards.

2. The other challenges faced by Mobile Commerce are – the speed of GPRS and user
interfaces.

The State of the mCommerce or Mobile Commerce Industry

in India
eCommerce has arisen as a consequence of technological progressions, particularly in computers
and internet. eCommerce has led to an increase in productivity and higher customer satisfaction
levels due to business processes becoming more simplified, efficient, quick, and accurate.
Improved processes have reduced the production and transaction costs, thereby increasing
overall profitability. The expanding wireless and mobile networks have extended the scope of
eCommerce to another dimension called mCommerce.

Mobile phone usage has picked up to a great extent, due to ease of use and improved
connectivity. Indians are good adaptors to mobile services. A study conducted by Informa
Telecoms & Media reveals the growing number of mobile subscriptions in India. Whereas
number of active mobile subscriptions in the year 2000 was 3.2 million, it grew to 508 million in
2008 and is projected to become 1.159 billion in the year 2013. The mobile subscription
penetration rate is expected to be 75% by the year 2011.

Though Indians are extensive users of mobile phones, mCommerce is still in its infancy in India
and the initial thrust is expected from banks, followed by point-to-point retail services.

RBI Guidelines for Mobile Commerce

Keeping pace with technological advancements and customer needs, the Reserve Bank of India
issued guidelines for mobile banking transactions in October 2008. These guidelines permit
banks to provide mobile banking transactions and to mandate that all transactions have to
originate from one bank account and terminate into another bank account. RBI has provided
approval to 32 banks to provide mobile banking services in India. However, till now, 21 banks
have started this service and the transaction volume is lower than the expected volume.

Issues with Mobile Banking

Mobile banking transactions have been low because of the following reasons, which have been
pointed out by these banks.

• Implementation of mCommerce is costly because of the end-to-end

encryption that is needed. Banks feel that low ticket transactions do not need
end-to-end encryption.
• Currently, the transaction limit of Rs 5000 needs to be revised upwards to Rs
10,000. Banks feel that this limit does not support transactions like purchase
of airline tickets.

These issues are still being examined by the RBI.

Private banks like ICICI and Standard Chartered, HDFC, Kotak Mahindra also provide mobile
banking facilities to their customers. ICICI bank currently has 8 million registered customers for
mobile banking, whereas Kotak Mahindra has 52,000 users.
eCommerce Industry in India – Future Potential and
Growth
India realizes the importance of eCommerce, as this is an emerging practice of businesses in
today’s world. For adopting eCommerce, two requirements need to be catered to: physical
connectivity and technology, and legal framework governing the flow of trade. To ensure a better
connectivity, there has been an increase in the number of Internet Service Providers following a
growth in the Telecommunication sector.

And to address trade related issues in eCommerce, the government has set up National Task
Force on Information and Technology.

Issues with eCommerce – Payment and Dispatch of Goods

One of the major factors for eCommerce not taking off in India as expected, is the dispatch of
goods on time and payment issues. Merchants start order processing and shipping only after the
receipt of money through Credit Card or online banking payment. Mostly, online payments are
credited to the intermediaries like paypal, who transfer these payments to merchants. To address
this situation, Reserve Bank of India has issued new norms for facilitating eCommerce
transactions.

As per the RBI directives, the payment will be credited directly to the merchants and not the
intermediaries. With this arrangement, money will be available to the merchant within 3 days of
transaction. This will expedite shipping of goods to the customer on time.

However, still there is an underlying problem of fixing responsibility for the goods delivered and
the payment. Online retailers do not take full responsibility of a clear e-transaction. So, the
customer problems still persist. However, India has taken a number of steps to facilitate
eCommerce transactions and steadily, the loop-holes are being plugged.

eCommerce in Rural India

With internet reaching a wider base of population, eCommerce transactions happen over a vaster
segment of Indian society. According to the survey conducted by Internet and Mobile
Association of India (IAMAI), the rural internet users have outgrown the number of urban
internet users.

According to the eBay Census Guide 2009, India has 2471 eCommerce hubs. These hubs are
spread over the entire country and cover cities, towns, villages, and smaller towns. All 28 states
and 7 Union Territories have witnessed eCommerce transactions. It was also found that rural
Indians are actively involved in online shopping. Online buying and selling trends have been
observed in Bundi (Rajasthan), Thevaram (Tamil Nadu), Tezpur (Assam). Online shopping is
underway in 747 rural towns of India. The study reveals that 181 rural towns, including Andhra
Pradesh, Tamil Nadu, Kerela, Maharashtra, and Gujarat are active entrepreneurship hubs. These
hubs cater to online selling in India and world wide.

Successful eCommerce Ventures

Few successful ventures in eCommerce include: Naukri.com, which is a portal for employment,
ICICIDIRECT.com has simplified stock trading. Bazee.com is a shopping portal and is India’s
answer to eBay.

eCommerce in India: Overview and Reasons for

Growth
India’s eCommerce industry is on the growth curve and experiencing a spurt in growth. The
Online Travel Industry is very well developed and is booming largely due to the Internet-savvy
urban population. The rest of the segments, categorized under online non-travel industry, include
e-Tailing (online retail), online classifieds and Digital Downloads (still in a nascent stage).

Though eCommerce took a beating in the dotcom bust, it seems set to grow globally. The global
revival of eCommerce is having a ripple effect in India too where the B2B (Business to
Business), B2C (Business to Consumer), C2C (Consumer to Consumer), G2B (Government to
Business) and G2C (Government to Citizens) segments are showing rapidly increasing activity
over the past few years.

India has its share of success stories in the B2C segment in the form of Indiatimes.com,
Rediff.com, Shaadi.com, Indiamatrimony.com, ebay.com, MagicBricks.com, Monster.com and
Makemytrip.com etc. These and such other portals are generating a lot of interest and increasing
transaction traffic. Smaller businesses have jumped onto the bandwagon by offering products
and services online and have successfully carved out niches for themselves. The online
community is growing by leaps and bounds as an increasing number of consumers have started
transacting online because the initial fears and apprehensions are being laid to rest.

Research studies have indicated several factors responsible for the sudden spurt in growth of
eCommerce in India such as:

• Rapidly increasing Internet user base

• Technology advancements such as VOIP (Voice-over-IP) have bridged the gap between
buyers and sellers online
• The emergence of blogs as an avenue for information dissemination and two-way
communication for online retailers and eCommerce vendors
• Improved fraud prevention technologies that offer a safe and secure business
environment and help prevent credit card frauds, identity thefts and phishing
• Bigger web presence of SME’s and Corporates because of lower marketing and
infrastructure costs.
 • Longer reach – Consumers in the Tier II & Tier III cities are fast realizing the potential of
the Internet as a transacting medium
• The young population find online transactions much easier

eCommerce offers several benefits to businesses

• Easy reach to a fast growing online community

• Unlimited shelf place for products and services
• Fuse the global geographical and time zone boundaries
• Helps reach national and global markets at low operating costs

There is a growing awareness among the business community in India about the opportunities
offered by eCommerce. Ease of Internet access and navigation are the critical factors that will
result in rapid adoption of Net commerce. Safe and secure payment modes are crucial too along
with the need to invent and popularize innovations such as Mobile Commerce.