What is Commerce
Commerce is a division of trade or production which
deals with the EXCHANGE OF ECONOMIC VALUES
from producer to final consumer.
It comprises the trading of economic value such as
goods, services, information, or money between two or
M-commerce is the buying and selling of goods
and services through wireless handheld devices.
M-Commerce is the process of paying for services
using a mobile phone or personal organizer.
Use of mobile devices to-
Is the ability to conduct commerce using a mobile
such as :
Personal digital assistant (PDA).
Mobile Commerce Services were first delivered in
1997, when the first two mobile-phone 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.
The M-Commerce server developed in late 1997 by
Kevin Duffey at Logica.
Since the launch of the iPhone, mobile Commerce has
moved away from SMS systems and into actual
Mobile Commerce from the Customer‘ s point of
The customer wants to access information, goods
and services any time and in any place on his mobile
He can use his mobile device to purchase tickets for
events or public transport, pay for parking,
download content and even order books and CDs.
He should be offered appropriate payment methods.
Mobile Commerce from the Provider`s point of
The future development of the mobile telecommunication
sector is heading more and more towards value-added
services. Analysts forecast that soon half of mobile
operators‘ revenue will be earned through mobile
Innovative service scenarios will be needed that meet the
customer‘s expectations and business models that satisfy
all partners involved.
M-commerce and E-commerce are business
transactions done online.
M-commerce stands for Mobile Commerce
while E-commerce stands for Electronic
M-commerce uses mobile devices for
commercial transactions while E-commerce
M-commerce is available anyplace you go,
even if there is no Internet. For E-commerce,
you still need to go to a place where there is
Internet to access your online transactions.
M-commerce is very handy and easy to carry
while E-commerce you cannot always bring
with you ,your computer or laptop anywhere.
M-commerce however is costly compared to
Ubiquity—easier information access in real-time
Convenience—devices that store data and have Internet,
intranet, extranet connections
Instant connectivity—easy and quick connection to
Internet, intranets, other mobile devices.
Personalization—preparation of information for individual
Localization of products and services—knowing where the
user is located at any given time and match service to them.
User is defined as a person who is authorized to use his
Personal Trusted Device (PTD). Every user of M-Commerce
is associated one or more PTDs. Users of m-commerce can
be divided into two main categories:
End users or system users: Retail subscribers of
mobile phone services who uses mobile phones for
commercial activity comes under this category. Here the
benefit or the end-result is received by the subscriber.
Suppliers: In this category the end-result or benefit
is obtained by an organization that utilizes M-Commerce
for increasing the productivity and efficiency
of its activities.
Network operators offer the transport facility for data
to pass across from the end-user to the destination
and vice-versa. Operators enable this by providing
network infrastructure with technologies such as
GSM, GPRS and 3G.
Service providers typically involve in activities that
develops new services on the common platforms
providing standardized functional interface to
application developers, and utilizes the network
infrastructure provided by the Network Operator to
provide the data in a consistent and user-friendly
format for the end-user.
Content providers aggregate mobile device content
from different sources. They also link up with
Commerce Mediators to handle the payment
Any organization that provides payment solutions or
services comes under this category. These
organizations act as mediators between content
providers and financial industry. This category also
includes firms providing security solutions for
Any commercial transaction on a media requires
framework and infrastructure to complete it with
payment for the item transacted on. Financial
industry has unique positioning and role in M-Commerce
value chain. It provides necessary facility
to carry out such a transaction.
For M-Commerce, the mobile phone is regarded as a
user centered Personal Trusted Device (PTD). The
mobile phone is small, personal, familiar, secure and
available at all times. As a PTD, the mobile phone will
be able to handle all transaction-related functions in
both the online world and the physical world.
This PTD may include mechanisms for user
verification, an area for secure key storage and
cryptographic processing, a certificate database, and a
Content providers Other service
Mobile Money Transfer
Content purchase and delivery
Mobile marketing and advertising
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Mobile Ticketing is the process where the customers
can order, pay for, obtain and validate tickets from
any location and at any time using Mobile phones .
Tickets can be booked and cancelled on the mobile
device with the help of simple application downloads.
Delivery of tickets to mobile phones can be done in
the form of a SMS or by a MMS.
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Mobile Tickets can be purchased in a
variety of ways including online, via
text messaging or in a secure mobile
Mobile Ticketing is used in many
1. Airline ticketing
2. Cinema ticketing
3. Railway & Bus ticketing
4. Concert/Event ticketing
5. Consumer voucher distribution
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Benefits to the ticket buyer
Instant delivery of mobile tickets at the time of
Individual mobile tickets can be forwarded to a friend.
Quicker entry with no waiting in lines.
Benefits to the Event organizer
Reduced will call lines and staffing.
Guaranteed security, only one entry per barcode.
Event is 'greener' with reduced paper waste.
Mobile Money Transfer refers to payment services
which are performed by using a mobile phone.
By using this service we can transfer money from one
person to other by using a mobile phone.
Ex: ICICI bank has started IMPS - Interbank Mobile
Payment Service. It is an interbank electronic instant
mobile money transfer service through mobile phones.
Mobile content purchase and delivery mainly
consists of the sale of ring-tones, wallpapers, and
games for mobile phones.
The convergence of mobile phones, portable audio
players, and video players into a single device is
increasing the purchase and delivery of full-length
music tracks and video.
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A wide variety of information services can be
delivered to mobile phone users in much the same way
as it is delivered to PCs. These services include:
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Banks and other financial institutions use mobile
Commerce to allow their customers to access
account information and make transactions, such as
purchasing stocks, remitting money, receive
notifications, transfer money to other banks.
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Mobile Banking Services are:
1. Mini-statements and checking of account history
2. Checking the balance
3. Recent transactions
4. PIN provision, Change of PIN and reminder over
5. Cash-in, cash-out transactions on an ATM
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The location of the mobile phone user is an important
piece of information used during Mobile Commerce or
Knowing the location of the user allows for location-based
services such as:
1. Local discount offers
2. Tracking and monitoring of people
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Some merchants provide mobile websites that are
customized for the smaller screen and limited user
interface of a mobile device.
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Mobile marketing is
highly responsive sort
of marketing campaign,
especially from brands’
experience point of
Corporations are now
using M-Commerce to
expand everything from
services to marketing
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Types of M-marketing and advertising:
• Mobile Web Poster
• SMS advertising
• MMS advertising
• Mobile games
• Mobile videos
• Audio Advertisements
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The voucher, coupon, or loyalty card is represented by
a virtual token that is sent to the mobile phone.
Presenting a mobile phone with one of these tokens at
the point of sale allows the customer to receive the
same benefits as another customer who has a loyalty
card or other paper coupon/voucher.
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• Short Messaging
• Multimedia Messaging
• Unified Messaging
• Video - conferencing
• Booking & reservations
• Mobile wallet
• Mobile purse
• City guides
• Directory Services
• Traffic and weather
• Corporate information
• Market data
Consumers can use many forms of payment in
mobile Commerce. They are:
1. Premium SMS / Premium MMS transaction.
2. Direct Mobile Billing.
4. Macro payment and Micro payment Services.
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In the predominant model for SMS payments, the
consumer sends a payment request via an SMS text
message or an USSD to a short code and a premium
charge is applied to their phone bill. The merchant
involved is informed of the payment success and
can then release the paid for goods.
Some mobile payment services accept “Premium
SMS payments." Here is the typical end user
1. User sends SMS with keyword and unique number
to a premium short code.
2. User receives a PIN (User billed via the short code
on receipt of the 38 PIN) Tuesday, December 9, 2014
3. User uses PIN to access content or services.
Inhibiting factors of Premium SMS include:-
Poor reliability - transactional premium SMS
payments can easily fail as messages get lost.
Slow speed - sending messages can be slow and it
can take hours for a merchant to get receipt of
payment. Consumers do not want to be kept waiting
more than a few seconds.
Security - The SMS/USSD encryption ends in the
radio interface, then the message is a plaintext.
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4. High cost - There are many high costs associated with
this method of payment. The cost of setting up short
codes and paying for the delivery of media via a
Multimedia Messaging Service and the resulting
customer support costs to account for the number of
messages that get lost or are delayed.
The consumer uses the mobile billing option
during checkout at an e-commerce site to make a
payment. After two-factor authentication
involving a PIN and One-Time-Password (often
abbreviated as OTP), the consumer's mobile
account is charged for the purchase.
It is a true alternative payment method that does
not require the use of credit/debit cards or pre-registration
at an online payment solution such as
PayPal, thus bypassing banks and credit card
companies altogether. This type of mobile
payment method, provides the following benefits:
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Security - Two-factor authentication and a risk
management engine prevents fraud.
Convenience - No pre-registration and no new mobile
software is required.
Fast - Most transactions are completed in less than 10
Proven - 70% of all digital content purchased online in
some parts of Asia uses the Direct Mobile Billing method
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The consumer uses web pages displayed or additional
applications downloaded and installed on the mobile
phone to make a payment. It uses WAP (Wireless
Application Protocol) as underlying technology.
1. Follow-on sales where the mobile web payment can
lead back to a store or to other goods the consumer
may like. These pages have a URL and can be
bookmarked making it easy to re-visit or share.
2. High customer satisfaction from quick and
3. Ease of use from a familiar set of online payment
This kind of payments is used by traditional electronic
Commerce and they usually involve for large amounts
Payments by credit cards are the most common
method for Macro payments.
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A mobile wallet based payment strategy deals with
how, where and when the payments can be accepted
and processed using the user’s wallet accounts.
A mobile wallet payment option includes the
• Prepaid – Here the users top up their mobile wallet
accounts upfront and such mobile wallet accounts are
used to make the payments in context of the mobile
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• Post-paid – In this case, a user’s mobile wallet
account is linked to his or her carrier billing account.
The mobile sales transactions are paid with the user’s
mobile wallet account, which in turn is charged to the
associated mobile billing account that is usually paid
on a monthly or quarterly basis.
• Card linked mobile wallets – In this mobile wallet
strategy, the mobile wallet accounts are linked to
user’s debit or credit cards. In a mobile sales
transaction, with card linked mobile wallet payment,
the final payment is made from the wallet account
that is linked to user’s cards.
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There are security issues at several levels:-
Data Security: One of the concerns is the data
security among the different entities. There are no
standard interfaces which have been defined till now.
This has slowed down the developments in these areas.
Device Security: A Personal Trusted Device has
limited liability for a subscriber. The question is, if a
user can use someone else’s phone (he pays the
browsing costs) but pays for the purchase of
goods/services. SIM is a legal identity, as the
subscriber signs a contract with the operator.
The operator owns the card (like a bank card is owned
by the bank). If the equipment cannot be legally used
by multiple people, then this would put a restriction
on the popularity.
Service Security: Additional security features apart
from what is provided by the standard protocols are
needed for commercial organizations and other
entities to entrust their applications on mobiles. For
e.g., banks want personal devices with a second
control (e.g. a PIN number) to ensure that the person
who pays can confirm his willingness to pay the
small size of mobile devices (screens, keyboards,
limited storage capacity of devices.
hard to browse sites.
lack of a standardized security protocol.
Perceived Security: Perceived security is important
for success of M-Commerce. People are willing to give a
credit card in a restaurant but will not pay by card over
internet. This would reflect more in the case of M-commerce
where the user gets lesser information
compared to internet. However, mobile phone is more
secure than a PC and hence require lesser security
Security Overhead for M-Commerce security:
Initial systems must be highly conservative in terms of
security overheads for transactions. 53
Already these type of solutions have been introduced
in the market. The Telenor solution uses SMS or a data
call as a bearer to send authentication (PKI
certificates) from a mobile to a server (concatenated
Variations in security policies:-
Different security policies have to be formulated
according to scenarios. For e.g., for “small
payments” using a mobile device, an user would
not like to tolerate a long authentication
procedure. For large payments (e.g. airline tickets),
a more comprehensive security system would be
M-commerce using wireless technology:-
There is an increasing tendency to associate M-commerce
with mobile technology alone. There is a
definite roll for fixed wireless systems like WLAN and
also short-range communication systems like a
Bluetooth protocol device.
Development of applications:-
Hence applications needs to be created for two categories
Users having low bit rate connectivity or narrow band
connectivity: All 2G mobile users would come in this
category. For e.g., a GSM end-user can obtain a data rate of
Broadband mobile connectivity: This category would
involve all 2.5G and 3G users. The data rate of this
category of users would vary between 20kbps to
365kpbs depending on the technology and network.
M-Commerce offers highly lucrative opportunities for
all entities in telecom sector. Some of the key
opportunities are listed below. These have to be
communicated so as to develop interest and
motivation for organizations to contribute to the
development of M-Commerce-
Network Operators: With increase in data traffic,
there would be increased efficiency in the network. This
can be catered to by the current systems. Mobile
operators can also provide technical support for
financial services across their network.
Equipment Vendors: With increase in data traffic
there is more demand for upgrade and next
generation products. This would trigger
development of more innovative products which
could handle data traffic more efficiently.
Service Providers: M-commerce provides an
opportunity for service providers to move up the
value chain by providing data and commerce
applications. This also opens up a new value chain
for service providers.
Financial Sector: There is increased for financial
institutions and banks that can provide additional
services and also expand their reach. It also give more
opportunities for other related organizations to
assume additional roles of a Commerce mediator.
Billing and Customer care vendors: New billing
systems and customer care systems are required for the
new systems developed. There is a Herculean task of
developing highly efficient billing systems for the
Other wireless equipment vendors: WLAN and
short term wireless vendors can find new applications
for their products. This would increase the usage and
hence boost the industry.