M-Commerce: Pay On The Way!

VoicenData Bureau
New Update

The Indian mobile subscriber base has crossed the 113 mn mark. And every

month approximately 5 mn plus subscribers are added to this huge user base.

Another interesting aspect is that though volumes in the Indian telecom segment

are high but the margins are low, so the key for success here is innovation. The

mobile market is maturing and competition between service providers is

intensifying. The operators cannot realize substantial margins only with mobile

voice services. So, as they work towards creating new business models, mobile

commerce is emerging as a service which has great potential to help service

providers to make substantial profit. It is been touted as the next big thing.

The reason being mobile phone users outnumber credit and debit card holders, and

also Internet users 2.5 to 1.


Probir Roy, co-founder, director, PayMate, says, “As mobile use is

overtaking the Internet, so using mobile as a transaction medium is a logical

transition. It's a matter of time when it picks up as an integral part of


M-commerce is emerging as an exclusive channel of distribution leveraging on

the fact that mobiles are quickly becoming more than just communication devices.

According to the ARC group, by 2007 approximately 546 mn users will spend around

$40 bn on m-commerce.

The Take-off

The idea of m-commerce took shape a long time back, yet it has only been an

overly ambitious goal of the industry. One of the main reasons being that

cellular networks capable of securely routing transactions to a payment gateway

are new to India. The other reason: lack of appropriate technology and the

issues pertaining to security and reliability of networks.


However, the Asia Pacific region has emerged as the leader in m-commerce

application deployment. Countries like Japan, South Korea, Singapore, and Hong

Kong are adopting the mobile payment system enthusiastically. In Japan and South

Korea, major wireless operators like NTT DoCoMo and SK Telecom have successfully

implemented m-commerce. Japan has nearly 65% of mobile penetration and now

mobile phones are also doubling up as 'mobile wallets' (cash and credit

cards) combined with services such as GPS and location-based targeting, which

are opening new market possibilities with new revenues streams.

M-transaction has worked mostly in the APAC region, says Balachandran Unni,

head, Mobile Commerce, OnMobile, “There is not too much happening in the US.

Europe is getting into it now but the action is in Japan, Korea, Thailand, the

Philippines, and Singapore. Here it is flourishing because it is really


Between the two types of transactions-low end (downloads and alerts) and

high end (credit and debit card transactions)-the latter is more prevalent in

India. Movie ticket booking, railway ticket booking, impulse shopping etc are

the areas that are gaining considerable traction.


Technologies in Use

M-commerce has the potential to provide huge satisfaction to end users,

generate business opportunities, and provide quick access. There are a number of

technologies that enable mobile commerce such as infrared, SMS, interactive

voice response, mobile scan and contact-less chips. These technologies are

transforming the mobile phone into a replacement for petty cash, and debit and

credit cards; here the payments are charged either through the mobile phone bill

or to the bank account.

  • Virtual SIM Card: Can be

    placed in any mobile device. Can be used for transactions on mobile networks

    and can be issued by merchants or service providers. They can be used

    through keypads or through voice commands using interactive voice responses.
  • GPRS: This technology can be

    used for online mobile shopping from independent portals or service

    provider's portal. The limitation here is that the mobile has to be

    compatible and the end user must be educated on how to use it. In a country

    like India, where Internet is still an urban phenomenon, GPRS has a long way

    to go before mass deployment.
  • SMS: This service is driving

    the Indian VAS markets to new heights and is all set to be the most popular

    medium for m-commerce too. Its strengths are familiarity with the end user

    and mass acceptability. 
  • Voice: Voice being a

    convenient medium for those who are not very tech savvy will take m-commerce

    to a larger user base including the rural areas of the country.

Bumps in the Way

Despite all the hype, m-commerce has still has not gained speed in the

country. According to Roy of PayMate, “The overriding hype and expectation has

kind of built a wall around m-commerce. The prevalent assumption is that this

service is for the elite, which is not the case.”


Another area which needs to be dealt with is the issue of security and

reliability. The Indian user is still not comfortable with the idea of giving

away his debit or credit card number over the phone. Also, security is a major

concern for m-commerce to flourish. But as Balachandran Unni says, “There are

a number of payment options for people such as cheque pick up, cash on delivery

etc, so the number of people actually paying through cards is not very

significant. Security is not a concern technologically, it is just a matter of

the mindset that needs to be changed.”

There are ways such as tamper-proof digital certificates to authenticate the

identity of users, for example PIN or passwords. Biometrics such as voice

recognition is another area, which can be used to offer greater protection.

Wireless PTAs (personal Trust Agent), which is a micro client code embedded in a

phone and allows use of private keys, digital signatures etc, are some more

advanced security features.

“The services that are introduced are tested properly and after extensive

parameterising,” says Roy. “Once the desired levels are achieved, the issues

of security and reliability are addressed to a large extent.”


The 'Convenience' Factor

Other than the obvious factors such as rising subscriber base and falling

ARPUs of the service providers, there is one more aspect, which will play a

crucial role in growth of m-commerce as a utility service-and that is


M-commerce provides the end user the ease of payment anywhere, anytime and

this is the feature which is expected to popularize the service.” What is

critical is to ensure that whatever service we have to offer, convenience and

ease of use has to be the key,” says Unni of OnMobile.

“Customer adoption will drive m-commerce,” says Roy. “How they adopt

it, will be the key driver as it's a new paradigm. It will require a change of

mindset so that people can feel comfortable and acknowledge the convenience of

the service.”


The Big Opportunity

Although in a nascent stage, a number of players have ventured into the

Indian m-commerce segment. OnMobile provides services such as movie ticket

booking through its voice systems. Paymate has tied up with Citibank to provide

SMS-based m-commerce services and Jigrahak has launched a payment platform

called “NGpay” for online mobile shopping, to name a few. Telecom service

providers such as Reliance and Airtel have been providing services such as bill

payments, railway and airline ticket booking etc.

To sum it up, it is evident that the opportunity is immense and mobile

commerce can be seen as a potential revenue driver for the industry players. On

the retail section, m-commerce provides new sales channels; and financial

institutions can gain real competitive advantage by offering services such as


The possibilities are innumerable. Once the pace is set, m-commerce will

become the way of life on mobile.

Sonia Sharma