After studying this lesson, the students would be able to understand
Meaning of mobile commerce
Challenges faced by mobile commerce
Advantages and disadvantages of M-commerce
Mobile Commerce also known as M-Commerce is viewed as the next generation of E-Commerce
which is based on the wireless telecommunication networking technologies and mobile handheld
devices, in order to exchange, buy or sell commodities, services or information.
The need for mobility seems to be the driving force behind M-Commerce. It allows consumers the
ability to conduct commerce, using a mobile device e.g. a mobile handset (cell phone), smart
phone and other emerging mobile equipment.
It represents an enormous opportunity for businessmen to increase sales and customer loyalty.
M-commerce: Meaning and Definitions
Mobile Commerce is the subset of e-commerce, which includes all e-commerce transactions,
carried out using a mobile (hand held) device.
M-commerce is defined as "The delivery of trusted transaction services over mobile devices for
the exchange of goods and services between consumers, merchants and financial institutions".
The use of wireless handheld devices such as cellular phones and laptops to conduct
commercial transactions online is called m-commerce.
M-Commerce is the process of purchasing or selling items using mobile devices. The buyer
can use a variety of electronic devices, such as cell phones, smart phones or portable
Netbooks to browse and process orders.
Characteristics of Mobile Commerce
Mobile commerce allows the user to process a transaction fast. Not only does the customer
receive his item almost instantly via download, e-mail or another form of electronic delivery, the
businessman receives payment for his product or service more quickly compared to traditional
Reduced Business Costs
Mobile commerce also helps reduce costs for the seller. Seller rarely needs to pay for a separate
office space, overhead costs or employees. In some cases a small businessman who sets up a
mobile commerce operation doesn't need an office at all. The seller can monitor sales online or by
receiving statements from a processing service.
Characteristics of Mobile Commerce
Little need for maintenance
It requires very little maintenance from the seller. The owner sets the product up for mobile
delivery one time and then receives payment for sales automatically. From time to time, he may
need to perform a few maintenance duties, such as correcting a technology error or updating the
product, but overall it is a selling format that requires very little management compared with other
Advantages of m-commerce
Accessibility: Mobile device enables the user to be contacted at virtually any time and place.
Convenience: The portability of the wireless device and its functions from storing data to access
to information or persons.
Security: depending on the specific end user device, the device offers a certain level of inherent
Easy purchase process: This innovative process makes it easier for consumers the task of
purchasing products, since the applications designed for mobile phones are simpler and shows
the consumer the specific information of the product he/she needs to buy.
Easy to use: There is no need of skilled consumer. Buyers can have look thousands of items on
their cell phones and there is no need of online checkout process.
Disadvantages of m-commerce
Smart phone limitation: Mobile has no big screen like desktop or laptops, so sometimes users
tired to navigate more and more to choose just one item from thousands. It affects shopping rates.
Connectivity: Mobile commerce needs high speed connectivity of 3G. Otherwise it is become
hectic for user to go through entire product purchase process.
Habituate: Every new technology has some problem at the starting phase, hence they like to use
old ways, therefore, they habituate to buy products from e-Commerce.
The Problems of m-Commerce
Lack of awareness
Only a few practical m-commerce applications currently exist, although the number has begun to
increase. As a result, there is relatively little consumer awareness about the value of m-
Lack of high speed connections
Access to high-speed networks is important to providing “rich” applications. Even in the face of
these barriers, creating useful m-commerce applications that can serve a wide audience is still
Imbalance between service providers and network operators
At present, there are many small service providers who must depend on a relatively few large
mobile network operators to reach customers. Because of this imbalance, the operators are able
to capture the lion’s share of the revenues generated by value-added services.
Tickets can be sent to mobile phones using a variety of technologies. Users are then able to use
their tickets immediately by presenting their phones at the venue.
Mobile vouchers, coupons and loyalty cards
Mobile ticketing technology can also be used for the distribution of vouchers, coupons and loyalty
Content purchase and delivery
Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones,
wallpapers, and games for mobile phones.
Mobile purchase allows customers to shop online at any time in any location. Customers can
browse and order products while using a cheap, secure payment method.
Mobile Payment Solutions
Mobile payment solutions may be classified according to the type of payment effected, and
based on the technology adopted to implement the solution.
Bank Account based M-Payment
In this model, the bank account is linked to the mobile phone number of the customer.
When the customer makes an m-payment transaction with a merchant, the bank account of
the customer is debited and the value is credited to the merchant account.
Credit Card based M-Payment
In the credit card based m-payment model, the credit card number is linked to the mobile
phone number of the customer. When the customer makes an m-payment transaction with
a merchant, the credit card is charged and the value is credited to the merchant account.
Technologies for Mobile Payments
Short Message Service (SMS)
SMS can be used to provide information about the status of one’s account with the bank (informational) or
can be used to transmit payment instructions from the phone (transactional).
M-payment application software that resides on the mobile phone with details of the customer which allows
the customer to make payments using the mobile phone is called as a mobile wallet.
Usually the m-payment application is integrated into the SIM card. If the m-payment application service
provider has to write an m-payment application in the SIM card, this has to be done in collaboration with the
telecommunications operator (the owner of the SIM).
Mobile Payment Characteristics
Simplicity and Usability: The m-payment application must be user friendly with no learning curve to the
customer. The customer must also be able to personalize the application to suit his or her convenience.
Universality: M-payments service must provide for transactions between one customer to another customer
(C2C), or from a business to a customer (B2C) or between businesses (B2B). The coverage should include
domestic, regional and global environments. Both low value micro-payments and high value macro-
payments must be possible.
Interoperability: Development should be based on standards and open technologies that allow one
implemented system to interact with other systems.
Security, Privacy and Trust: A customer must be able to trust a mobile payment application provider that
his or her credit or debit card information may not be misused. Secondly, when these transactions become
recorded customer privacy should not be lost.