Poised to be the Future

Over the past few years, growing telecom markets in Africa, Latin America,
and India have recorded over 50% y-o-y growth in mobile customer acquisition.
Thanks to this growth, mobile commerce or m-commerce, is gaining momentum in
India with an addressable market of over 210 mn subscribers.

An increasing number of commercial transactions through mobiles are taking
place, poising m-commerce to be the next big thing in the telecom market. While
the concept of remote payment is already commonplace, with many developed
economies operating in a cashless environment, e-commerce and Internet banking
have further digitized the payment process. And as the penetration of mobile
phones continues, and the need for real time cashless payments grows, m-commerce
will find user acceptance.

M-commerce would be beneficial especially in emerging markets, where a large
number of individuals are unable to access banking services because conventional
banking is expensive, in relation to an individual's income. Its ability to
provide quick access to end-users can generate a lot of business opportunities.
But m-commerce in India is in its nascent stage, and the services and bouquet of
offerings is yet to evolve.

Next-gen m-Commerce

Like e-commerce, next-generation m-commerce enables users to access the
Internet without the need to find a place to plug in. It is one of the fastest
growing e-business segments and will involve the development and design of a
host of new applications, services, business models, and technological
solutions. Dependent on the availability of mobile connectivity, m-commerce is
seen as a complementary service option to both B2B and B2C businesses. Though a
large number of mobile users are ready to embrace m-commerce, what could really
propel its growth is the flourishing organized retail industry.

The fact is that every fourth Indian is now connected through a mobile and
will be a significant driver of m-commerce in India. According to Naveen
Thangiah, director, Market Development, mChek, “Intensifying competition is
compelling mobile service providers to differentiate their offering, and they
are keen to provide m-commerce services.”

As technology evolves, customers would demand services at their fingertip
rather than at their doorstep. Banks, financial service providers, and a host of
merchants are vying to deliver goods and services through the mobile, and with
the growing number of services available on m-commerce platforms, adoption and
usage will grow too.

Vijay Shekhar Sharma, MD of One97 Communications, says, “The biggest factors
that would potentially take mobile commerce to the next level are high mobile
penetration and less than impressive Internet penetration. Also, the fact that
mobile phones have become a part of life and more and more people are looking
for a single medium to conduct transactions for daily convenience, time saving,
etc, will further drive the growth of m-commerce.”

Agreeing that m-commerce is on a significant growth path, Hemant Jain, senior
vice president, Domestic Business, Hungama Mobile, says, “Versatile growth in
the telecom sector makes economy of scale, effective target marketing, ability
to offer location-based services, quicker and easier way of delivery open to the
entire mobile population, some major drivers of this segment.”

“Simplicity is the key to proliferation of m-commerce coupled with the idea of developing thrust with audiences” Anil Gajwani, CTO, Bharti Telesoft	“High growth in the telecom subscriber base makes the addressable  market very large” Hemant Jain, senior VP, Domestic Business, Hungama Mobile

According to Saurabh Jain, VP, ngpay, low cost data plans, high quality of
service networks, and GPRS handsets penetration will further drive adoption of
m-commerce. Fierce competition among operators has driven down mobile tariffs,
and there is a marked decrease in voice ARPU along with increase in data service
adoption.

Jagdish Mitra, CEO of Canvas M says that growth of certain verticals like
banking and finance, travel and transport, media and entertainment, and retail
will benefit quicker from m-commerce, and are also likely to drive growth.

Hurdles in the Way

The uptake of a technology-based service is dependent on a host of
technological, commercial, and regulatory factors. Foremost will be technology
evolution and adoption of industry standards based on government policies.
Subsequently, making it a marketing success lies with the service/technology
providers.

Sharma of One97 Communications says that the initial guidelines issue with
regulators, that were taking more than expected time, seems to be getting sorted
out. Now the next challenge will be creating compelling 'use cases' for
m-commerce.

Low penetration of credit cards, and low awareness of m-commerce among
subscribers act as major barriers for the growth of m-commerce services. The
unavailability of 3D security and low speed of GPRS (the current speed of GPRS
is only 128 Kbps) are the other common issues.

For VAS providers, another challenge would be to provide consistency in terms
of technology and security. Installation of commerce capable cellular networks,
which can route real time transactions over cellular networks to a remote
payment gateway, and guarantee security, are a must for m-commerce to gain
credibility and popularity among subscribers as a safe and user-friendly option
for money transactions.

Anil Gajwani, CTO, Bharti Telesoft, says, “Most constituents in the
m-commerce business are betting on bill payments and ticketing to be the initial
driver for consumer adoption. India is a price-sensitive market where consumers
want value for money, and at the same time get all possible features with
guaranteed security over transactions. Simplicity is the key to proliferation of
m-commerce coupled with the idea of developing thrust with audiences.”

“Low cost data plans and GPRS handsets, high quality of service networks and GPRS handset penetration will further drive m-commerce adoption” Saurabh Jain, CEO, ngpay	“Low penetration of credit cards and low awareness of m-commerce among masses act as a major barrier to the growth of m-commerce services” Jagdish Mitra, CEO, Canvas M	“Intensifying competition is compelling mobile service providers to differentiate their offerings” Naveen Thangiah, director, Market Development, mChek

Major advances in m-commerce will not happen until higher bandwidth networks
are deployed and wireless service providers cooperate with each other. Revenue
modeling across various VAS players and lack of suitable m-commerce applications
are some other factors hampering the growth of m-commerce in the country.

In addition, VAS providers should make available high utility services in
return for what customers invest in downloading, accessing, and even learning a
particular service. Easy to use and fast accessibility are also important
regardless of network or region along with certified end-to-end security.

“The different parties involved in the entire m-commerce value chain like
wireless infrastructure and service providers, certifying authorities,
application software providers, equipment manufacturers, credit cards companies
and banks, as well as media houses and global brands, should coordinate and come
together to establish industry standards for m-commerce transactions,” says
Mitra of Canvas M.

Picking up Steam

Most operators have adopted the policy of pay anytime, anywhere for the
billing process. Now consumers can pay their bills, recharge prepaid accounts
and even transfer money from their mobile. Companies like Airtel and Reliance
Communications have already taken the lead in offering m-commerce services in
India. Reliance Communications has a partnership with ICICI, HDFC, Axis, IDBI,
and Corporation Bank to provide seamless mobile banking services in the country.
Airtel and Bank of Punjab have also introduced mobile banking services for their
customers.

Considering the current pace of technological progression, and market savvy
companies, all evolving technologies and related services will require lesser
time in becoming a mass phenomena; m-commerce will be no exception to this.

JiGrahak from ngpay provides end-to-end m-commerce services to consumers
anywhere in the India, using entry-level handsets on any existing telecom
network. Customers can bank, pay bills, book tickets, make donations, shop, and
even order food more easily and securely from their mobile handsets. Having
partnered with MakeMyTrip.com, Deccan Airlines, Yatra.com, and IRCTC, ngpay
provides travel and mobile ticketing facility through mobile as well. Bill
payment, shopping, entertainment, and charity through m-commerce are its other
services.

Another major player in this space is Canvas M. It has developed the unique
and state-of-the-art Mobile Wallet which enables an individual mobile user to
securely and conveniently manage personal finances, fund transfer,
point-of-sales purchase and perform other transaction electronically, using
mobile device. Additionally, Canvas M has also designed and developed proof of
concepts for mobile payment, ticketing, banking solutions, and innovative
methods of point-of-sale integrations. It is in talks with financial
institutions, loyalty program companies, marketing agencies, etc to bring their
solution to the end-users.

Another prominent player, Bharti Telesoft has partnered with Barclays Global
Retail and Commercial Banking to deliver the technology architecture for its
mobile banking service, Hello Money. It enables Barclays' customers to access
banking services anytime, anywhere on their mobile phones. Bharti Telesoft also
offers m-payment system where users get an interactive menu driven interface.
Mobiquity, mBanking, mMoney, and mTop-up are other services provided by Bharti
Telesoft over the mobile.

One97 Communications have done their bit to facilitate m-commerce in India.
The initial efforts have been in the enterprise space, where it has mobile
enabled service applications based on voice and GPRS for the travel and
entertainment segments.

Obopay is one of the player leading in the mobile payment service and has a
plethora of offerings such as money transfer, salary payments, international
money transfer, merchant transactions, insurance collections, and payments.
Oxigen Services has recently launched OxiCash, a prepaid stored value wallet,
accessible through the mobile or PC, which allows users to make payments for a
host of services and offers a hassle free transactions. OxiCash is especially
beneficial to subscribers waiting to pay or buy from remote locations without
using GPRS.

A Flourishing Future

Jain of Hungama Mobile says, “Phenomenal growth in the telecom subscribers
base makes the addressable market for m-commerce very large. With this huge
subscriber base, m-commerce is an industry looking for exponential growth. The
mobile phone, unlike PC, does not require any physical connection and makes it
accessible from anywhere and at anytime. Thus, it gives users the freedom to
access the Internet and do the transaction at any given time.

He adds that the mobile market is maturing and the competition between
service providers is intensifying. The operators cannot realize substantial
margins only with mobile services. So they are working toward creating new
business models. Mobile commerce is emerging as a service with great potential
to help service providers make substantial profit.

Sharma of One97communications says, “With the introduction of 3G technology
and better m-commerce applications, the acceptance and penetration of m-commerce
among the consumer will grow. With such a huge subscriber base that continues to
grow, the future of m-commerce is nothing but bright. What remains to be seen is
how best it is utilized. Mobile operators have to play a key role together with
enterprises in getting consumer confidence, especially related to security.

Trade and commerce in rural areas to accelerate development are other
m-commerce growth drivers in India. Due to geographically scattered villages,
telephone companies are finding it extremely difficult to make these areas good
business cases. But a right mix of wireless technology, newer business models
and directed policy initiatives, like e-choupals, can overcome these hurdles.

According to Bose of ngpay, “M-commerce will be a billion dollar market as
long as innovative companies can provide consumers high utility e-commerce
services that can be easily consumed over the mobile.”

Mobile commerce in India will reduce the friction in transactions associated
with time, space, and security. But in the coming years, 100% adoption of
m-commerce would be a challenge.

Arpita Prem

arpitap@cybermedia.co.in